Under-reported income penalty framework sets liability, exclusions, and higher punishment for misreporting under income tax law. Penalty is leviable where a person has under-reported income during proceedings under the Income-tax Act, 1961, and the provision defines the circumstances in which income is treated as under-reported, including assessed income exceeding returned income, reassessment creating additional income, deemed total income under the special regime, and assessment reducing a loss or converting a loss into income. The section prescribes how under-reported income is quantified, excludes bona fide explanations and specified estimation or transfer pricing cases, and treats prior-year additions or deductions as under-reported income to the extent needed to cover a receipt, deposit, or investment.