Taxmann Law Relating to Under-reporting & Misreporting of Income By D.C. Agrawal, Ajay Kumar Agrawal Edition August 2024

Under-reporting & Misreporting of Income By D.C. Agrawal

Under-reporting & Misreporting of Income By D.C. Agrawal

Law Relating to Under-reporting & Misreporting of Income is a comprehensive handbook that addresses the complexities of income tax penalties under Sections 270A and 271(1)(c) of the Income Tax Act. This book clarifies the differences between tax planning, avoidance, and evasion. It highlights how taxpayers may inadvertently cross into illegal territory by under-reporting or misreporting their income through accounting manipulations, non-disclosure, and misinterpreting legal provisions.

For assessment years up to 2016-17, penalties were imposed under Section 271(1)(c) for concealing income or furnishing inaccurate particulars. From the assessment year 2017-18 onwards, Section 270A replaced these provisions, introducing the concepts of under-reporting and misreporting of income. This book analyses the evolution of these provisions, their application, and the distinctions between under-reporting and misreporting.

This book is helpful for tax professionals, legal practitioners, and taxpayers seeking to understand the complexities of income reporting and penalties under the Income Tax Act. It combines theoretical analysis with practical tools, making it helpful for tax compliance or dispute resolution.

The Present Publication is the Latest Edition, amended by the Finance (No. 2) Act, 2024. This book is authored by D.C. Agrawal and Ajay Kumar Agrawal, with the following noteworthy features:

• Comprehensive Analysis] The book provides an in-depth examination of Section 270A, supplemented by relevant circulars and detailed commentary, outlining the transition from earlier penalty provisions under Section 271(1)(c) to the current framework
• [Historical Context and Principles] It traces the evolution of penalty provisions, analysing how judicial interpretations and tribunal judgments have shaped the current laws, helping readers understand the principles underpinning penal statutes
• [Practical Guidance] The book includes over 30 draft responses and submissions tailored to various scenarios involving penalties under Section 270A. These practical tools assist taxpayers and advisors in drafting effective defences against notices from tax authorities
• [Comparative Analysis] A thorough comparison of Sections 270A and 271(1)(c) helps readers understand the legislative intent and practical differences, including the interplay with other related sections like 271AAB
• [Digest of Case Laws] An appendix summarising significant case laws related to under-reporting and misreporting of income is also included in the book

The structure of the book is as follows:

Part One – Legal Framework and Analysis

• This section covers the evolution and current state of income tax penalties, with a focus on Section 270A introduced by the Finance Act, 2016
• Chapter 1 – Overview of Section 270A, relevant circulars, and a detailed analysis of the provision
• Chapter 2 – A historical review of penalty provisions, providing context and understanding of the evolution of current laws
• Chapters 3 to 12 – Cover various aspects, including the interpretation of penal statutes, burden of proof, evidentiary requirements, under-reporting and misreporting of income, and comparisons with earlier provisions under Section 271(1)(c).

Part Two – Practical Responses and Drafts

• This section provides practical assistance by providing over 30 draft responses to penalty notices and submissions against penalty orders, aiding taxpayers and professionals in preparing their defences
• Chapters 13 to 46 – Present scenario-specific drafts that cover various factual situations, helping readers tailor their responses to specific cases of penalty initiation or levy

About the authors

D.C. Agrawal

D.C. Agrawal, Advocate, brings a wealth of experience in taxation with a distinguished career spanning over 30 years in the Income Tax Department as an IRS officer. His journey in public service culminated in his elevation to the Income Tax Appellate Tribunal in 2005, where he served as an Accountant Member until his retirement in July 2011. Mr Agrawal held pivotal roles throughout his tenure, including the Assessing Officer, Investigating Officer, and Departmental Representative before the Income Tax Appellate Tribunal and Income Tax Settlement Commission. His investigative work in Delhi involved several high-profile cases, underscoring his expertise in the field.

Mr. Agrawal is an accomplished IRS officer and holds a Master’s degree in Science. He is a Law Graduate and is a qualified Cost and Works Accountant. As an Accountant Member of the Income Tax Appellate Tribunal, he authored numerous landmark judgments published in leading tax journals. He is also a prolific author of several books on Direct Taxes (all of which are published by Taxmann), including:

• Basic Concepts of International Taxation
• Taxation of Cash Deposits & Deposits after Demonetisation
• Law Relating to Reassessment
• Law Relating to Capital Gains

Additionally, he has penned around 250 articles analysing judgments by the Hon’ble High Court and Income Tax Appellate Tribunal, featured in esteemed journals like Taxmann’s Corporate Professional Today.

Mr Agrawal practices as an Advocate and Consultant, appearing before the Income Tax Appellate Tribunal. He has represented clients in numerous significant cases involving domestic taxes, Transfer Pricing, and International Taxation, solidifying his reputation as a leading expert in the field.

Ajay Kumar Agrawal

Ajay Kumar Agrawal, FCA, is a seasoned Chartered Accountant and a science graduate with over 30 years of continuous practice. As a Fellow Chartered Accountant, Ajay specialises in corporate consultancy, litigation in Direct and Indirect Tax laws, Regulatory Law, and Commercial Law, alongside extensive experience in auditing for corporates and banks. His consulting expertise spans mergers and acquisitions, corporate restructuring, and both domestic and international taxation, providing invaluable insights across various sectors for corporates and multinational companies.

Litigation remains a key focus of Ajay’s practice, where he has successfully advised corporate clients, including multinational corporations, on Direct Tax, FEMA & FDI laws, and Search and Seizure matters. Ajay also contributes to professional publications, sharing his knowledge and experience to guide others in the field.