There may be some cases where you have purchased Jewellery, purchased expensive cars, made huge investments, claimed false expenditures and didn’t disclose it in your books of accounts with the main intention of avoiding or escaping tax . Such cases are closely monitored by the department and if found it will be heavily taxed under income tax act 1961.
Keeping this in mind we will be covering following provisions of Income Tax Act 1961
1. Section 68- Unexplained cash Credit
2. Section 69- Unexplained Investments
3. Section 69A- Unexplained Jewellery , Bullion or other valuable articles
4. Section 69B- Unexplained Jewellery or investments recorded at less value
5. Section 69C- Unexplained expenditure
6. Section 69D- Borrowed amount repaid in cash
7. Section 115 BBE- Tax Rate on above incomes
1. Section 68– If any sum of money is found to be credited in the books of accounts of the tax payer but he has not offered such income to tax while filing return and it comes to the knowledge of Assessing officer he may demand explanation from tax payer on this
However if the assessee is not able to offer any explanation relating to the source of such income or any explanation offered is not satisfactory in the opinion of Assessing officer , then such income will be charged to tax as the income of the tax payer and he will be liable to pay tax on such income at higher rate u/s 115BBE .
2. Section 69– If any investments has been made by the tax payer but such investments are not recorded in the books of accounts and tax payer fails to give explanation regarding the source of income through which such investments are made or the explanation offered is not satisfactory as per the understanding of Assessing officer then such amount will be deemed to be the income of the assessee and will be taxed at higher rate .
3. Section 69A – If in any year tax payer found to be owner of any bullion , jewellery, valuable articles or any money and they are not recorded in any books of accounts and tax payer does not give any explanation regarding the source of money or any explanation offered is not satisfactory then such amount will be deemed to be the income of the assessee for that particular Financial year .
4. Section 69B– If in any year it was found that Jewellery, valuable articles, investments are recorded in books of accounts at value less then the actual expenditure incurred then in that case excess amount will be deemed to be the income of the tax payer for the particular assessment year provided tax payer fails to offer any explanation regarding the same or explanation offered is not satisfactory .
5. Section 69C– Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :, such unexplained expenditure will not be allowed as deduction under any head of income .
6. Section 69D- If the taxpayer in any financial year repays the amount borrowed on hundi or any any other amount repaid in cash i.e in any mode then bank , ECS, cheque then in such case amount repaid will be deemed to be the income of the person repaying such amount . Amount repaid will include amount of interest paid on amount borrowed.
7. Sec 115BBE- As per sec 115BBE . income tax shall be calculated @ 60% where the total income of the assessee includes any income referred u/s 68, 69, 69A, 69B, 69C, 69D . Specified tax rate will be further increased by 25% surcharge and 6% penalty i.e the final tax rate comes 83.25%
However 6% penalty will not be levied if such income is included in the return of income and tax has been paid on or before the end of relevant Assessment year . No deduction shall be allowed on such income referred under this section .
Regards
Team Palankarta
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