Clause 443 of the Income Tax Bill, 2025, modernizes and...

Clause 443 of the Income Tax Bill, 2025, modernizes and continues the penalty framework established by Section 271AAC of the Income-tax Act, 1961, targeting undisclosed or inadequately explained income such as cash credits, unexplained investments, money, expenditures, and hundi transactions. It imposes a fixed penalty of 10% on the tax payable for such income, in addition to the tax itself, to deter concealment and promote voluntary compliance. Exceptions apply if the income is disclosed and tax paid within the relevant year, and a bar prevents double penalties for the same income under other provisions. Procedural safeguards ensure due process. While both provisions share similar objectives and structures, Clause 443 updates references and procedural aspects to align with the new Bill. Potential issues include interpretation of 'income determined,' procedural application, and treatment of bona fide errors. The provision aims to balance deterrence with fairness, relying on effective implementation and judicial interpretation.