Clause 444 of the Income Tax Bill, 2025, mirrors Section 271AAD of the Income-tax Act, 1961, imposing penalties equal to the aggregate amount of false or omitted accounting entries made with intent to evade tax. It applies to both the taxpayer and any person causing such entries, covering forged documents, invoices without actual supply, and transactions involving non-existent persons. The penalty can be imposed by the Assessing Officer and appellate authorities. While the provision aims to deter tax evasion and ensure accurate accounting, it introduces challenges including proving intent, defining third-party liability, and the absence of penalty mitigation mechanisms. Clause 444 consolidates existing policy with minimal changes, maintaining strict penalties and broad coverage, but may require further clarification to balance enforcement with fairness and reduce litigation over subjective elements like intent and causation.
Clause 444 of the Income Tax Bill, 2025, mirrors Section 271AAD of the Income-tax Act, 1961, imposing penalties equal to the aggregate amount of false or omitted accounting entries made with intent to evade tax. It applies to both the taxpayer and any person causing such entries, covering forged documents, invoices without actual supply, and transactions involving non-existent persons. The penalty can be imposed by the Assessing Officer and appellate authorities. While the provision aims to deter tax evasion and ensure accurate accounting, it introduces challenges including proving intent, defining third-party liability, and the absence of penalty mitigation mechanisms. Clause 444 consolidates existing policy with minimal changes, maintaining strict penalties and broad coverage, but may require further clarification to balance enforcement with fairness and reduce litigation over subjective elements like intent and causation.
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