Penalty for under-reporting and misreporting imposes increased tax liability with specified calculation and enhanced rates for misreporting.

The provision authorises the Competent Authority to impose a penalty where income is under reported, defines circumstances triggering under reporting (assessments exceeding returns, reassessments increasing income, conversion of losses, and discrepancies from deemed total income), prescribes methods to calculate the amount of under reported income including a formula for deemed income, excludes certain bona fide or documented adjustments, sets a general penalty at 50% of tax on under reported income and a 200% penalty where under reporting results from specified misreporting, and requires a written order for imposition.

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