Meaning of tax for penalty

[sujittalukder]

Penalty u/s 271(1)(c) is imposed which may rnage from 100 to 300 percent of tax ought to be avoided. In this case, what does the 'tax' mean? Does it mean only the basic tax or tax including surcharge and education cess?
Please clarify.
Regards
Sujit

[prashantmaharishi]

Surcharge   i think answer lies in 83 ITR 346 yes
In case of Cess answer lies in following circular - NO
Rate or tax levied on profits - Omission of word "cess" from clause (a)(ii) - Effect of - Only taxes paid are to be disallowed

1. Recently a case has come to the notice of the Board where the Income-tax Officer has disallowed the "cess" paid by the assessee on the ground that there has been no material change in the provisions of section 10(4) of the 1922 Act and section 40(a)(ii) of the 1961 Act.

2. The view of the Income-tax Officer is not correct. Clause 40(a)(ii) of the Income-tax Bill, 1961, as introduced in the Parliament, stood as under :

"(ii)  any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains."

When the matter came up before the Select Committee, it was decided to omit the word "cess" from the clause. The effect of the omission of the word "cess" is that only taxes paid are to be disallowed in the assessments for the years 1962-63 onwards.

3. The Board desire that the changed position may please be brought to the notice of all the Income-tax Officers so that further litigation on this account may be avoided.

Circular : No. 91/58/66-ITJ(19), dated 18-5-1967.