• Penalty

Will my LLP incur a penalty if the Income Tax Department in India determines that there is additional tax payable during a re-assessment, even though I have declared all my income and information accurately. What it my LLP doesn't have money to pay the Tax and what are the liabilities of 3 partners having 60% 30% and 10% interest.
Asked 1 month ago in Income Tax

You will need to examine the order of the AO and if you find that the order is incorrect and the AO has made incorrect additions, file an appeal before the higher authorities and get relief.

Karthik R
CA, Bengaluru
7 Answers

Not rated

If your LLP in India is reassessed and found to owe additional tax despite accurate income declarations:


  1. No Penalty for Accuracy: Generally, no penalty if all income was accurately declared.

  2. Arrange Payment: If the LLP can't pay, it may need to arrange funds, possibly through loans.
  3. Liabilities of Partners: In an LLP, partners' liabilities are typically limited to their contributions to the LLP. This means:

    • For partners with 60%, 30%, and 10% interests, their financial responsibility towards LLP's obligations (including tax liabilities) would usually correspond to their share in the LLP.
    • However, if the tax liability arises from deliberate fraud or misrepresentation by the LLP, the protection of limited liability might not apply. This is a rare and extreme scenario.


  4. Appeal if Necessary: If you believe the reassessment is incorrect, consider filing an appeal with the tax authorities.

For detailed, personalized advice, consider a phone consultancy.

 

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

 

 

Shubham Goyal
CA, Delhi
177 Answers
2 Consultations

5.0 on 5.0

If all the incomes are appropriately disclosed, then we will just need to provide our submission along with documentary evidence. The Dept will consider your replies and drop the proceedings. We will need to submit appropriate responses and rebuttals for the queries raised by the AO

Karthik R
CA, Bengaluru
7 Answers

Not rated

For which Assessment year LLP got the notice? Section 270A deals with the penalty. From A.Y. 2017-18, quantum of penalty depends on whether the income was under-reported or misreported. If the reassessment proceedings has been completed and order has already been issued then you have the option to file an appeal. The appeal process is completely faceless. Please share copy of notice at aroravivek1982@gmail  

Vivek Kumar Arora
CA, Delhi
4810 Answers
1013 Consultations

5.0 on 5.0

For the assessment year in question regarding the notice received by your LLP, it appears to be AY 17-18, as per your previous messages. Regarding Section 270A:

  1. Section 270A Penalties: This section, effective from A.Y. 2017-18, differentiates penalties based on whether income was under-reported or misreported. The quantum of the penalty is contingent on this distinction.

  2. Under-reported vs. Misreported Income:

    • Under-reported income typically incurs a penalty of 50% of the tax payable on under-reported income.
    • Misreported income (due to misrepresentation, suppression of facts, etc.) attracts a higher penalty, usually 200% of the tax payable on the misreported income.

  3. Action Steps: If your LLP has received a notice for AY 17-18, it’s crucial to:

    • Determine whether the issue is under-reported or misreported income.
    • Prepare a comprehensive response to the notice.
    • Consult a tax professional for a detailed review and appropriate action, especially to mitigate potential penalties.

Ensure that your response to the notice is accurate and backed with all necessary documentation. Professional guidance is highly recommended in such scenarios to navigate the complexities of tax laws and notices effectively.

Shubham Goyal
CA, Delhi
177 Answers
2 Consultations

5.0 on 5.0

If you have declare everything correctly then why would income tax say anything. Also, in case of LLP, Income tax can take the amount equivalent to the capital invested in business and nothing more than that.

 

There is no such tendency as such to haras anyone specifically. Did you inform income tax department that your LLP has been dissolved?

 

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Thank you.

Naman Maloo
CA, Jaipur
4256 Answers
96 Consultations

5.0 on 5.0

If you do not pay the tax, the partners would be personally liable. It depends on what assessment order is passed. Further, appeal can be filed against the assessment order. You can email us the order or the notices so that we can help you.

Prerna Peshori
CA, Pune
192 Answers
10 Consultations

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