Thursday, April 20, 2017

unexplained income

Source of unexplained  Income
  1. Unexplained Credit [Liability side of Balance Sheet is not justified].
  2. Unexplained Investments [Asset being money?s worth not recorded in Balance Sheet ].
  3. Unexplained money etc. [Asset being money not recorded in Balance Sheet ]
  4. Investments, etc.. not fully disclosed in Books Of Accounts [Asset being money?s worth not fully recorded in Balance Sheet ]
  5. Unexplained expenditure [P&L debit not recorded leading to source not being taxed]
  6. Amount borrowed / repaid on hundi other than A/c Payee Cheque
Consequences of unexplained  Income
  1. Increase in rate of tax & SC on income from unexplained sources from 30% to 60% + 25% Penalty on income
  2. Assesse now permitted to disclose such income on his own in Income Tax Returns. Earlier, it was considered AO's prerogative to invoke this provision.
  3. Penalty in case of income from unexplained source –10% of tax payable u/s.115BBE may be levied by AO.
  4. NA if assesse voluntarily declares such income & pays required advance tax.
  5. Tax implications under different situations are depicted in pictorial diagram in the next slide.

Dagliya & Co.,
Charted Accountants

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