Determine the penalty leviable under section 270A of the Income-tax Act, 1961, in the case of Alibaba Ltd., an Indian company, considering that none…

Alibaba Ltd. is deemed to have under-reported its income since: (1) the assessment under 143(3) has the effect of reducing the loss determined in a return processed under section 143(1)(a); and (2) the reassessment under section 147 has the effect of converting the loss assessed under section 143(3) into income. Therefore, penalty is leviable under section 270A for under-reporting of income. Computation of penalty leviable under section 270A Particulars Particulars ₹ Assessment under section 143(3) Under-reported income: Loss assessed u/s 143(3) (5,00,000) (-) Loss determined under section 143(1)(a) (7,50,000) 2,50,000 Tax payable on under-reported income @ 25% 62,500 Add: HEC@4% 2,500 65,000 Penalty leviable@50% of tax payable 32,500 Reassessment under section 147 Under-reported income: Total income reassessed under section 147 4,50,000 (-) Loss assessed under section 143(3) (5,00,000) 9,50,000 Tax payable on under-reported income @ 25% 2,37,500 Add: HEC@4% 9,500 2,47,000 Penalty leviable@50% of tax payable 1,23,500 Note - The applicable rate of tax for Alibaba Ltd. for A.Y.2025-26 is 25%, since its turnover for the P.Y.2022-23 does not exceed 400crores.