Income Tax Rule: If you pay tax then this news is useful for you. The accountant member in the ITAT bench has clarified whether penalty will be imposed for not giving correct information about tax refund interest or not. Let us know in detail in the news below….
Recently, a case between a senior citizen and the Income Tax Department in Mumbai reached the Mumbai bench of the Tax Tribunal. In this case, the senior citizen said that the penalty imposed for not giving information about the interest received on tax refund is not valid. In this case, Amarjeet Singh, an accountant member of the ITAT bench, and Sandeep Singh Karhel, a judicial member, said in their order that until the tax is refunded, no decision can be taken on whether the interest will be taxed or not.
In such a situation, it cannot be considered a case of reporting income in income tax return. Let us tell you that under 270A of the Income Tax Act, if a taxpayer gives wrong information about income or understates the income, then a heavy penalty is imposed on him. Come, let us know what this whole matter is?
What is the whole matter
Taxpayer K Singh filed his income tax return in the financial year 2016-17. In this he declared his income as Rs 1.9 crore. When the investigation was done, it was found that his income was around Rs 2 crore. The difference of Rs 9.7 lakh in this was the interest being received on tax refund. This information was not given while filing ITR.
Under Section 244A of the IT Act, the Income Tax Department will have to pay 0.5 percent interest on the tax refund every month. If interest comes from any source other than tax refund, then tax is applicable on it.
In the case of K Singh, the Income Tax Officer has issued a notice under Section 270A. Even before this notice was issued, he gave information about the interest being received on IT refund. In such a situation, it will not be considered a case of false information about income.
Ketan Ved, partner, Deloitte India, who represented the taxpayer in this case, told TOI that the interest received in the tax refund is either deposited in the taxpayer’s bank account or adjusted in the previous tax demands. In such a situation, there is no issue of non-disclosure of income by the taxpayer.
