Answer

1. F

   Facts

   An addition in reassessment can lead to penalty for under-reporting, at 50% of the tax on that income, or 200% for misreporting. Immunity is possible if you accept the order, pay, and do not appeal. Penalty needs a separate notice and hearing.

2. P

   Provisions and law

   • Sec 270A (now Sec 439)Penalty of 50% of tax on under-reported income and 200% for misreporting
   • Sec 270AA (now Sec 440)Immunity from penalty and prosecution if you accept the order, pay and do not appeal
   • Sec 274 (now Sec 471)No penalty without giving you a reasonable opportunity of being heard
3. A

   Analysis

   For an addition of ₹10 lakh at 30% plus cess, tax is about ₹3,12,000, so under-reporting penalty under Sec 270A (now Sec 439) would be about ₹1,56,000. Misreporting, such as suppressed facts or false entries, carries 200%. Sec 270AA lets you apply for immunity in Form 68 if you pay the tax and interest and do not appeal, except in misreporting cases. Weigh appeal prospects against the immunity route with a CA.

4. C

   Conclusion

   1. 1Read the order to see whether penalty is initiated and on what ground.
   2. 2Estimate the penalty amount.
   3. 3Decide between appeal and the immunity route.
   4. 4Reply to the penalty notice within the time given.

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