T. Banusekar

In 2000-01, I sold an ancestral house and earned a long-term capital gain of Rs 1 crore. The same was not disclosed in my income-tax return.

I want to disclose the capital gains before the Income-Tax Authorities. How should this be presented to the tax authorities.

Kindly advise me on how to make this disclosure so as not to attract interest and penalty. Anonymous

You can now make a disclosure of the income before the tax authorities by merely filing a revised return before them. This return would not be valid but the departmental authorities may regularise the return by issuing a reassessment notice and, thereafter, reassessing the income.

There is no mechanism to avoid payment of interest in such a case.

As for the penalty, if you can show reasonable cause for the concealment, the penalty will not be levied. You may alternatively make an application under Section 273A to the Commissioner for waiver of such penalty.

The Commissioner may, on an application made in this behalf by an assessee and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that:

to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and

the assessee has co-operated in any enquiry relating to the assessment or any proceeding for; the recovery of any amount due from him.

Where the amount of any penalty payable under this Act or, where such application relates to more than one penalty, the aggregate amount of such penalties exceeds Rs 1,00,000 no order reducing or waiving the amount or compounding any proceeding for its recovery under this sub-section shall be made by the Commissioner except with the previous approval of the Chief Commissioner or Director-General, as the case may be.

You may alternatively choose to make an application for settlement before the Income-Tax Settlement Commission provided you satisfy the conditions for the maintainability of the application, which are as follows:

There is a valid proceeding pending in connection with assessment or reassessment or by way of appeal or revision in connection with such assessment or reassessment before an income-tax authority for the relevant year or years.

The circumstances of the case and the complexity therein require the matter to be settled by the settlement commission

Return of income has been furnished by the assessee for the respective year or years under any of the provisions of the Act.

The additional amount of income-tax payable on account of the additional income offered before the Settlement Commission exceeds Rs 1,00,000.

Where any books of accounts, other documents, money, bullion, jewellery or other valuable article or thing belonging to the assessee have been seized under Section 132, and a period of 120 days has expired from the date of such seizure.

The application is filed in quintuplicate in Form No 34B together with the annexure and required enclosures, accompanied by a fee of Rs 500.

The settlement commission may waive the penalty if you co-operate in the proceedings before them.

The settlement commission also does not have the power to waive the interest that will be payable.

Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

© Copyright 2000 - 2009 The Hindu Business Line