How a Simple Understanding and Calculation Saved 80 Lakh Rupees in a Tax Case

In this particular case, we were able to save 80 lakh rupees within the legal framework, without resorting to any extraordinary or illegal measures.

In the past, it was possible for people to influence tax officers or commissioners through bribes or connections. However, with the advent of faceless communication in the income tax system in India, the scenario has changed. Now, only those with real talent, knowledge, and expertise can effectively handle tax cases, regardless of their connections or lack thereof. This has leveled the playing field and allowed people with genuine skills to succeed in tax cases.

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Let’s delve into the details of the case. In the financial year 2017-18, a person sold a property and made a profit. However, due to an oversight, the person failed to file the income tax return (ITR) for that transaction. Subsequently, the income tax department issued a notice to the person based on information received from the registrar of properties. The person approached us for assistance, and we reviewed the situation.

80 Lakh Rupees

The Man had filed a belated ITR but had made a mistake in the calculation. The person had only considered the sale price of the property and the purchase price paid to the buyer, without factoring in other costs. As a result, the person had shown a net profit of one crore rupees and had paid taxes of 30 lakh rupees at the rate of 30% for short-term capital gains. However, the actual capital gain was 88 lakhs, considering other costs that were not accounted for.

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The person had filed the ITR and paid the taxes, but the income tax officer had issued a penalty notice, alleging that the person had willfully suppressed income and not paid taxes accordingly. The penalty imposed was 300% of the tax amount, resulting in a substantial penalty. The income tax officer also issued an assessment order for the remaining amount to be paid.

80 Lakh Rupees

We analyzed the situation and realized that the client had made a genuine mistake in the calculation and had not willfully suppressed income. We decided to challenge the penalty and assessment order on the grounds of incorrect calculation and lack of willful intention.

We presented our case to the income tax department, providing detailed calculations and supporting documents to prove that the person had not willfully suppressed income but had made an oversight in the calculation. We also emphasized that our client had filed the ITR and paid taxes, albeit based on incorrect calculations. We argued that the penalty and assessment order were not justified, considering the genuine mistake made by the person.

After thorough review and deliberation, the income tax department accepted our arguments and agreed to waive the penalty and revise the assessment order. As a result, the person was saved from paying the hefty penalty of 300% of the tax amount, which would have amounted to 80 lakh rupees. The person expressed relief and gratitude for our assistance, as this amount could have caused financial strain and even bankruptcy. 

This case highlights the importance of proper understanding and calculation in tax cases. Even a simple oversight or miscalculation can have significant consequences, including penalties and additional taxes. It is crucial to carefully analyze all relevant factors and costs before filing an ITR and paying taxes.


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