While showing Budget 2020 finance minister proposes about the Insertion of a new section for the penalty to a person who to evade tax liability made any false entry or oversight / omission of any entry which is important for computation.
If during any proceedings under this act, if assessing officer found any manipulation in the books of accounts kept by assessee, then he shall direct that person to pay penalty. The penalty ought to be a sum equal to the aggregate amount of such false entry or omitted made by assessee in the books of accounts.
Clause 98 of the Finance Bill 2020 has introduced Section 271AAD in the Income Tax Act relating to penalty for
(a) A false entry or
(b) Any entry relevant to computation of total income of such person has been omitted with the intention to evade any tax liability in the books of account maintained by him.
The penalty under Section 271AAD payable shall be equal to the aggregate amount of false entries or omitted entries and shall be applicable w.e.f. 01-04-2020.
It is very important to note that penalty under Section 271AAD can also be levied on any other person who is in any manner involved in making such false entries meaning thereby that the person who issues a false invoice or causes to make the wrongful entry is also liable to penalty.
- Without prejudice to any other provisions of this Act, if during any proceeding under this Act, it is found that in the books of account maintained by any person there is—
- A false entry; or
- An omission of any entry which is relevant for computation of total income of such person, to evade tax liability,
The Assessing Officer may direct that such person shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry.
- Without prejudice to the provisions of sub-section (1), the Assessing Officer may direct that any other person, who causes the person referred to in sub-section (1) in any manner to make a false entry or omits or causes to omit any entry referred to in that sub-section, shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry.
Explanation.––For the purposes of this section, “false entry” includes use or intention to use––
- Forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence;
- invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or
- Invoice in respect of supply or receipt of goods or services or both to or from a person who does not exist.