One senior CA from Bombay gave his opinion - thought it will be helpful for all.
No penalty on high denominations notes deposited into bank if such amount is declared in return of income by paying appropriate tax:
Generally I refrain from expressing any professional opinion on Facebook. However, in view of prevalent panic created by certain media over imposition of penalty on unaccounted cash of high denominations that are deposited into bank, I give my professional opinion as under.
If unaccounted cash or black money are deposited into bank and appropriate tax (maximum 30% plus surcharge) is paid on this additional income, no penalty for under reporting or misreporting can be imposed by assessing officer u/s 270A of Income tax Act, which has been newly introduced from current year. Even, tax payer is not required to substantiate source of income and income can be declared without disclosing head of income. This is because penalty for concealment can be levied only on difference between assessed income and returned income. This view is based on bare reading of section 270A itself. So penalty of 200% under no circumstances can be levied on such income disclosed in return of current year. With due respect, I have to say that The news paper headlines that '200% penalty on unaccounted cash deposits of over ₹ 10 lakh' published in today's Time of India and other media are misleading.
I therefore advise not to sell the notes at discounted prices or deposit the cash into bank accounts of other benami persons in fear of penalty. Further, do not claim any bogus expenses or bogus loss to gain more trouble. Do not manipulate accounts by creating bogus cash on hand. Be good citizen and pay tax honestly to buy peace by building capital. This disclosure by paying tax at maximum of 30% will be advantageous compared to IDS where rate of tax was 45%.
