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Under section 444 of the Income-tax Act, 2025, what penalty may be imposed where books of account are found to contain a false entry made to evade tax?

Question and options

Under section 444 of the Income-tax Act, 2025, what penalty may be imposed where books of account are found to contain a false entry made to evade tax?

  1. A sum equal to 50% of the tax on the false entries

  2. A sum equal to the aggregate of the false or omitted entries

  3. A sum of ₹10,000 for each false or omitted entry

  4. A sum equal to 200% of the tax on the false entries

Answer and explanation

Correct answer: B - A sum equal to the aggregate of the false or omitted entries

Section 444 of the Income-tax Act, 2025 allows a penalty equal to the aggregate amount of the false or omitted entries where books contain a false entry or omit a relevant entry to evade tax. Penalties of 50% and 200% of the tax are the rates for under-reporting and misreporting of income under section 439.

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