Answer

1. F

   Facts

   Sec 270A excludes some amounts from under-reported income, including where you give a bona fide explanation and disclose all material facts, and amounts based on an estimate where accounts were correct and complete. These are your main defences.

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 274 (now Sec 471)No penalty without giving the person a reasonable opportunity of being heard
3. A

   Analysis

   Show that the claim was made openly in the return, for example a deduction of ₹1,50,000 shown in the right schedule with a note, and that it is supported by a reasonable view. Point out that the addition is an estimate, like a 10% disallowance of expenses without finding any specific false bill. Attach the relevant pages of the return and earlier replies. A clean disclosure record is the best defence.

4. C

   Conclusion

   1. 1Show where the item was disclosed in the return
   2. 2Explain the bona fide basis for the claim
   3. 3Point out if the addition is an estimate
   4. 4Ask that penalty be dropped under the exclusions in Sec 270A

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