Concealment of Income under Clause (13) (AA) of Section 2

Concealment of Income Clause (13) (AA) of Section 2: The Finance Bill has proposed the definition of Concealment of Income. Presently, there is no such definition given in law rather it was generally discussed in Section 111 (unexplained income or assets). The proposed definition is as under:

1. the suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax;
2. claiming any deduction or any expenditure not actually incurred; and
3. any act referred to in sub-section (1) of section 111 where tax payer could not offer explanation about nature and source of below mentioned events:

1. any amount is credited in a person’s books of account
2. a person has made any investment or is the owner of any money or valuable article;
3. a person has incurred any expenditure; or
4. any person has concealed income or furnished inaccurate or particulars of income including:

1. the suppression of any production, sales or any amount chargeable to tax; or
2. the suppression of any item of receipt liable to tax in whole or in part.

Explanation: Mere addition of any item of income declared by tax payer as exempt or disallowance of any expenditure by assessing officer shall not be treated as concealed income unless the assessing officer proves malafide claim of exemption about item of income or malafide claim of deduction/allowance of any expenditure.

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