Income tax notice: You may be fined, sentenced if you fail to comply with these provisions

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Updated: January 22, 2019 12:07:01 PM

If you fail to reveal your income and pay taxes, you may have to face penalties and even imprisonment from 6 months to 7 years, along with penalty.

income tax, income tax department, black money, income tax return, ITR, income tax notice, violation of income tax provisions, health insuracne premium, cash payments, 80D benefits, donations, 80G benefitsIn a bid to check tax evasion as well as meet its stiff revenue targets, the Income Tax Department is keeping an eye on black money and big transactions.

In a bid to check tax evasion as well as meet its stiff revenue targets, the Income Tax Department is keeping an eye on black money and big transactions. It is also reported to be sending tax notices under punitive provisions for mistakes in relation to income tax returns (ITR).

If you fail to reveal your income and pay taxes, you may have to face penalties and even imprisonment from 6 months to 7 years, along with penalty under various sections of the Income Tax Act, some of which are given below.

♦ In case you have failed to pay self assessment tax or interest or fee, either wholly or partly, then you will be treated as assessee in default in respect of unpaid amount. In such a case, you shall be held liable to pay penalty up to the amount of tax in arrears.

♦ Also, in case a demand notice under section 156 has been issued to you for payment of tax, but you failed to pay the amount within a period of 30 days of the service of the notice at the place and to the person mentioned in the notice, you will be treated as assessee in default.

♦ In such a case, you will be liable to pay penalty up to the amount of tax in arrears on being declared an assessee in default.

♦ You will also be held liable for penalty up to 50 per cent of the tax payable if you under report your income and up to 200 per cent in case of mis-reported income.

♦ You may have to pay penalty up to Rs 25,000, if you fail to maintain books of account as per the provisions of Section 44AA of Income Tax Act.

You may also come under the lens of taxmen on performing the following transactions:

♦ By accepting cash of Rs 2,00,000 or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion. To stay clear, you may use an account payee cheque or account payee bank draft or electronic clearing system through a bank account for such transactions instead of cash. Any assessee, except the government, any banking company, post office savings bank, co-operative bank or a person notified by the Central Government, who receives a sum in contravention of the provisions of section 269ST, may have to pay penalty equal to the amount of such receipt under section 271DA of the Income Tax Act, unless it is proved that there were good and sufficient reasons for such contravention.

♦ On receiving or repaying specified sum exceeding Rs 20,000 or more in cash for transfer of immovable property. Such specified sum under section 269SS includes any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. Penalty under section 271D up to an amount equal to loan or deposit taken or accepted may be levied if such payments exceeding Rs 20,000 are not made through an account payee cheque or account payee demand draft or electricity clearing system through a bank account.

♦ On paying more than Rs 10,000 in cash relating to expenditure of business/profession, instead of an account payee cheque drawn on a bank, or account payee bank draft, or use of electronic clearing system through a bank account. No deduction shall be allowed in the profit and loss account in respect of such expenditure exceeding Rs 10,000 in cash.

♦ On donating Rs 2,000 or more in cash to a registered trust or political party. Not only you won’t be able to claim deductions under section 80G of the Income Tax Act for such donations, but appropriate actions would be initiated against the trust or political party for encouraging money laundering.

♦ On paying health insurance premiums in cash, you won’t be able to get deductions under Section 80D of the Income Tax Act.

So, you should not violate the above rules, as the Income Tax Department is seeking information regarding such violations, and either file your income tax return (ITR) for the Assessment Year 2018-19 by paying penalty up to Rs 10,000 till March 31, 2009 or rectify the ITR as soon as possible in case there are some mistakes and file the revised return, provided you have filed the original return on or before the due date.

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