Answer

1. F

   Facts

   Unexplained credits, investments and money under Sec 68 to 69D are taxed at a special high rate under Sec 115BBE. A separate penalty of 10% of that tax can be levied under Sec 271AAC, unless the income was shown in the return and tax paid before the end of the year.

2. P

   Provisions and law

   • Sec 271AAC (now Sec 443)Penalty of 10% of tax payable under Sec 115BBE
   • Sec 68 (now Sec 102)Unexplained cash credits
   • Sec 69 (now Sec 103)Unexplained investments
3. A

   Analysis

   If ₹10,00,000 was treated as unexplained, tax under Sec 115BBE is 60% plus surcharge and cess, roughly ₹7,80,000, and Sec 271AAC penalty is 10% of the tax. No Sec 270A penalty applies on the same income. The best defence is to show the source, so the addition itself goes; that can also be argued in appeal. Check the rate in the order against the law for that year.

4. C

   Conclusion

   1. 1Check which section the addition is under and the tax charged
   2. 2Reply to the penalty notice giving the source explanation again
   3. 3Appeal the addition if you have evidence of source
   4. 4Keep the penalty appeal linked to the main appeal

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.