Section 197 (c) of Finance Act 2016

[VIJAY GOYAL]

197 (c) of Finance Act 2016. This section says that after the end of IDS 2016 if undiscosed income/asset relating to period prior to commencement of IDS is found it would be taxed as deemed income of the year in which notice u/s 143 (2)/ 142 (1)/ 148/ 153A or 153C is issued. It means if search takes place on 1/10/2016 and UDI for AY 2009-10 AY 2010-11 AY 2011-12 is found and notice u/s 153A is issued on 1/1/2017; than these income would be taxed as deemed income of AY 2017-18. Since it is current year income for which return has not become due. If said income is declared in return of AY 2017-18 no interest u/s 234 A and 234B. No penalty u/s 271 (1)c). What you think?. CA Vijay Goyal

[Ganeshan Kalyani]

Sir, the income declared under IDS should not be included in the Income Tax Return. The scheme is opportunity to do what was not done which was supposed to have done. There is separate penalty provison given in the scheme. Hence to my mind if the provision in specifically given in the scheme then penalty under the section as mentioned by you should not apply. In any case penalty is paid. Thanks.

AI Summary

Section 197(c) of Finance Act 2016: Tax Rules for Undisclosed Income Found Post-Income Disclosure Scheme 2016 Section 197(c) of the Finance Act 2016 addresses the taxation of undisclosed income or assets found after the Income Disclosure Scheme (IDS) 2016. If such income is discovered for periods before IDS and a notice under specified sections is issued, it is taxed as deemed income of the year the notice is issued. For example, if a search on October 1, 2016, reveals undisclosed income for earlier years and a notice is issued on January 1, 2017, the income would be taxed as deemed income for the assessment year 2017-18. No interest or penalty would apply if declared in that year's return. A participant suggests that declared IDS income should not be included in the tax return, as the scheme provides a separate penalty provision.