John, an old friend of Eddie, who is also a registered chartered accountant, has requested a tax opinion from Eddies Inc. John has been selected by the South African Revenue Service (SARS) for an audit on his assessment for 2019. John prepares and completes his own annual income tax return (ITR12). John identifies investment opportunities and invests large sums of money accordingly. Every year John works through his bank statements to identify the various entries and transaction codes for purposes of completing his tax return. In completing his 2019 ITR12, John decided to omit a certain amount of income reflected on the one bank statement. John was not familiar with the particular transaction code reflected against the entry, but he ran out of time and decided to omit the amount without making any enquiries as to the origin and nature of the amount. Considering the upcoming SARS audit, John is concerned that the omitted amount is taxable and that he understated his normal tax liability for the 2019 year of assessment. John will give his full co-operation during the audit, but he does not want to act in advance and alert SARS to the omitted amount. He has never dealt with an issue like this in the past. John wants to know if he will be penalised and if so, what the penalty implications would be if SARS identifies the amount as being taxable. In the event of this happening, John wants to submit an argument to SARS that he completed his return with reasonable care and that he, at the time of preparing his tax return, decided to omit the amount from his tax return as a result of his lack of knowledge and experience. John, however, admitted to Eddies Inc. that he intentionally decided not to investigate the origin of the amount to determine its nature and willingly opted to rather omit the amount from his tax return. John is in a taxpaying position and is taxed at the marginal tax rate of 45%. He has no refunds owing to him by SARS and no assessed loss brought forward from a prior year of assessment. Question

Eddies Inc. has been requested to provide a tax opinion to John to advise if SARS will impose a penalty if it is found that the omitted amount is taxable and, if penalised, what the amount of the penalty would be if it is assumed that the understated tax does not constitute a substantial understatement. Furthermore, John wants to know if it would make any difference to the imposition of a penalty by SARS if he were to notify SARS of this potential additional tax liability prior to the upcoming audit. Respond to all Johns queries by providing a tax opinion. Support your opinion with references to the relevant provisions of the Tax Administration Act, 2011 (Act 28 of 2011), as amended.