Finance Act, 1971

Interest on income tax and sur-tax in cases of fraud or neglect.

20.—(1) In this section “neglect” has the same meaning as in section 186 (2) (d) of the Income Tax Act, 1967 .

(2) Where, for any year of assessment, an assessment is made for the purpose of recovering an undercharge to income tax or sur-tax which is attributable to the fraud or neglect of any person, the amount of the tax undercharged shall carry interest at the rate of .75 per cent. for each month or part of a month from the date or dates on which the tax undercharged for that year would have been payable if it had been included in an assessment made before the 1st day of January in that year to the date of payment of the tax undercharged.

(3) Subject to subsection (6), subsections (1) and (2) of section 550 of the Income Tax Act, 1967 , shall not apply to tax carrying interest under this section.

(4) Subsections (3), (4) and (5) of section 550 and section 551 of the Income Tax Act, 1967 , shall apply to interest chargeable under this section as they apply to interest chargeable under the said section 550.

(5) This section shall not have effect in relation to tax charged for any year of assessment prior to the year 1971-72.

(6) Where an assessment of the kind referred to in subsection (2) is made—

(a) the inspector concerned shall give notice to the person assessed that the tax charged by the assessment will carry interest under this section,

(b) the person assessed may appeal against the assessment on the ground that interest should not be charged under this section, and the provisions of the Income Tax Acts relating to appeals against assessments shall apply and have effect in relation to the appeal as they apply in relation to those appeals with any necessary modifications, and

(c) if, on the appeal, it is determined that the tax charged by the assessment should not carry interest under this section, subsections (1) and (2) of section 550 of the Income Tax Act, 1967 , shall apply to that tax.