New Delhi, Sept. 18 -- Failing to disclose income in an income tax return (ITR) can result in a substantial penalty from the Income Tax Department. However, the penalty can depend on whether the omission is treated as simple under-reporting or as deliberate misreporting of income.

In a recent case involving a non-resident Indian (NRI) woman, the Income Tax Department had levied a penalty at 200% of the tax payable on income that was not disclosed in her return. The Income Tax Appellate Tribunal (ITAT), Mumbai, however, reduced the penalty rate to 50%, holding that the omission could not automatically be treated as misreporting.

The taxpayer had declared an income of Rs.43,796 for the assessment year 2020-21. During reassessment proceedi...