Answer

1. F

   Facts

   Yes. Under-reported income covers cases where the assessed loss is lower than the loss claimed. The penalty is worked out on the tax that would be payable on the difference, using the rules in Sec 270A.

2. P

   Provisions and law

   • Sec 270A (now Sec 439)Penalty of 50% of tax on under-reported income, or 200% where under-reporting is due to misreporting
   • Sec 72 (now Sec 112)Carry forward of business loss
3. A

   Analysis

   If you claimed a loss of ₹5,00,000 and it was assessed at ₹2,00,000, the under-reported amount is ₹3,00,000. Since no tax may be payable in the year, the law computes tax on that amount as if it were total income. Defend each disallowance as you would in a profit case, and appeal the assessment if the loss reduction is wrong.

4. C

   Conclusion

   1. 1List the items that reduced the loss
   2. 2Compute the possible penalty on the reduced amount
   3. 3Defend each item with documents
   4. 4Appeal the assessment if you disagree

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