Rs 2 lakh penalty for not answering tax authorities queries

Failure to answer questions from the tax department can entail a penalty of up to Rs two lakh from the next financial year under the new black money law, which has got the assent of the President.

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 provides for a minimum penalty of Rs 50,000.

Besides, tax authorities would be able to send summons or notices via electronic mails (emails) and fax to seek information from those under probe for suspected black money stashed abroad.

The Act got the President's assent on Tuesday and will come into force from April 1, 2016.
The new law, which has provisions to deal with the problem of the undisclosed foreign income and assets, was passed in the Rajya Sabha on May 13, two days after it got the Lok Sabha nod.

A person shall be liable to a penalty if he has, without reasonable cause, failed to answer any question put to him, by a tax authority in the exercise of its powers, the Act says.
The penalty will be imposed if he fails to sign any statement made by him in the course of any proceedings which a tax authority may legally require him to sign and also for their failure to attend or produce books of account or documents called in response to summons issued to him.

The penalty "shall not be less than fifty thousand rupees but which may extend to two lakh rupees", it said.

The service of any notice, summons, requisition, order or any other communication may be made by delivering or transmitting a copy to a person by post or by such courier service as may be approved by the Central Board of Direct Taxes (CBDT).

It can also be issued in the form of any electronic record and "by any other means of transmission of documents, including fax message or electronic mail message, as may be prescribed".

The CBDT may make rules providing for the addresses including the address for electronic mail or electronic mail message to which the communication may be delivered or transmitted to a person, as per the Act.

A notice or any other document required to be issued, served or given under the Act by any tax authority shall be authenticated by that authority.

"Every notice or other document to be issued, served or given for the purposes of this Act by any tax authority shall be deemed to be authenticated, if the name and office of a designated tax authority is printed, stamped or otherwise written thereon," it said.

The person shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice, issued for assessment, was not served upon him, not served upon him in time or served upon him in an improper manner.

However, this provision shall not apply, if the person has raised the objection before the completion of the assessment, the Act said.

The law provides for a short-time compliance window for people having undeclared assets abroad to come clean by paying 30 per cent tax and 30 per cent penalty, before the Act comes into force.

The person making such declaration shall, in addition, be liable to penalty at the rate of one hundred per cent of such tax, it said.

The Centre is in the process of notifying the date and detailed procedure for those wanting to come clean on assets stashed abroad.

However, after the end of the short-term period, an assessee will have to pay 30 per cent tax, and its three times as penalty on the tax computed on undisclosed foreign income and assets, and face criminal prosecution which could result in jail term of up to 10 years.