What is the penalty for making false or misleading statements?


Where a person:
  1. Makes a statement to an income tax authority that is false or misleading in a material particular or omits from a statement made to an income tax authority any matter or thing without which the statement is false or misleading in a material particular; and
  2. The tax liability (including the liability for advance tax under section 147) of the person computed on the basis of the statement is less than it would have been if the statement had not been false or misleading (the difference hereinafter referred to as the ―tax shortfall the person shall be liable for a penalty equal to
    • where the statement or omission was made knowingly or recklessly, two hundred percent of the tax shortfall; or
    • in any other case (other than where sub-section (2) applies), twenty- five percent of the tax shortfall.
In the case of an assessment order under section 120, no penalty shall be imposed under subsection (1) to the extent to which the tax shortfall arose as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayer‘s position.
A reference in this section to a statement made to an income-tax authority is a reference to a statement made in writing or orally to that authority acting in the performance of the authority‘s duties under this Ordinance, and shall include a statement made –
  • In an application, certificate, declaration, notification, return, objection or other document made, prepared, given, filed or furnished under this Ordinance.
  • In information required to be furnished under this Ordinance.
  • In a document furnished to an income tax authority otherwise than pursuant to this Ordinance.
  • In answer to a question asked of a person by an income-tax authority.
  • To another person with the knowledge or reasonable expectation that the statement would be conveyed to an income tax authority.
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