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CMA Final · Direct Tax Laws and International Taxation · Black Money Act, 2015

Meera Traders received a section 32(4) notice and stated on oath that it holds no money for the assessee. The officer later discovers the statement was false. The assessee owed tax arrear of Rs 6,00,000, and Meera Traders' own liability to the assessee on the date of the notice was Rs 4,00,000. What is Meera Traders' personal liability under section 32(10)?

Meera Traders is personally liable for Rs 4,00,000. Section 32(10) limits the liability for a false statement to the lower of its own liability to the assessee on the notice date and the assessee's dues under the Act, and the lower figure is Rs 4,00,000.

  1. ARs 6,00,000
  2. BRs 10,00,000
  3. CRs 2,00,000
  4. DRs 4,00,000Correct

Explanation

Section 32(10) makes the person personally liable to the extent of his own liability to the assessee on the date of the notice, or the liability of the assessee for sums due under the Act, whichever is less. Lesser of Rs 4,00,000 and Rs 6,00,000 is Rs 4,00,000. Rs 6,00,000 ignores the 'whichever is less' limit.

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