Guide to .. Tax Management ,Tax Planning and Tax Saving

Various Types Of Penalties In The Event Of Default


The Income Tax Act, 1961 prescribes various types of penalties in the event of defaults under the Act. These are :

1.         For failure to pay tax [ Penalties in the event of Default ] [ Sec. 221(1)]:

When an assessee is in default in making a payment of tax, he shall be liable to pay penalty as the Assessing Officer may direct,  and in the case of a continuing default, such further amount as the  Assessing Officer may  direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears.

2.         Penalty For Concealment Of Income [ Secntion 271(1)(B) Or (C) ]


  1. Where the income has been concealed. Concealed income is that income which has not been shown in the return of income. During the course of assessment assessee discovers concealed income. It can be calculated as Concealed In come = Assessed Income – Income shown in the return of income
  1. Inaccurate pariculars of the income has been furnished . it is the duty of taxpayer not only to furnish the return of income but also to furnish the correct return. He is committing an offence for furnishing an inaccurate particulars. It is held by Courts that the person may have disclosed his correct income ( i.e not concealed any income) but he may still be liable if inaccurate particulars of income is furnished.
  1. Fails to furnish his return of Income


Minimum Penalty = 100% of the amount of tax sought to be evaded.

Maximum Penalty = 300% of the amount of tax sought to be evaded.

Penalty is in addition to any tax payable by him.

3.         Registered Firm [ Penalties in the event of Default ] [ Sec 271(2)]

When the person liable to penalty is a registered firm or an unregistered firm which has been assessed u/s 183(b) , then the penalty imposable u/s 271(1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.

4.         For Wrong Distribution Of Profit By Registered Firm [ Penalties in the event of Default ] [ Sec. 271(4)]

IF the profits of the registered firm are distributed in such a way that the share of partner is shown below the real amount and if such a partner returns his income below the real amount, he shall in addition to tax, if any payable by him, be liable to pay  a penalty of 150% of the difference between tax on partner’s income assessed and tax on income as returned. In such a case no refund or other adjustment shall be claimable by any other partner by reason of such direction.

5.         Penalty for failure to comply with the provisions of section 133B [ Penalties in the event of Default ][ Sec. 272AA]

If a person fails to comply with the provisions of section 133B regarding entry of Income Tax Authorities in any building etc. The  penalty for non compliance may extend to Rs.1000.

Such Penalty can be levied only after the person has been given an opportunity of being hear.

6.         Penalty for failure to comply with the provisions of Section 139A. [ Sec. 272B]

(1)        If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of Rs.10,000.

(2)        In case assessee quotes a false or incorrect permanent account number on nay document an which he knows that it is false or incorrect, the  Assessing Officer may direct him to pay a penalty of Rs.10,000 . Such Penalty can be levied only after the person has been given an opportunity of being hear.

7.         Penalty for failure to comply with the provisions of section 206 CA i.e. Tax Collection Account Number  [ Sec. 272 BBB]

If a person fails to comply  with the provisions of section 206CA i.e. to collect Tax Collection Account Number, he shall, on an order passed by the Assessing Officer, pay, by way of penalty, a sum of Rs.10,00.

Such Penalty can be levied only after the person has been given an opportunity of being hear.

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Various Authorities
Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ]
Application Of Seized Or Requisitioned Assets [Section132(B)]
Power Of Survey [ Section 133a ]
Provision Relating To Power To Collect Certain Information [Section 133b]
Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ]
Payment of Tax
Modes of recovery of Tax
Introduction- Deduction of Tax at Source (TDS)
Deduction of Tax from the “Salary” [ Sec-192]
Deduction Of Tax From Interest On Securities [ Section-193]
Deduction Of Tax From Deemed Dividend [ Section-194]
Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
Winning From Lottery Or Crossword Puzzle Or Card game And Game Of Any Sort [Section 194B]
Winning From Horse Race [ Section 194BB]
Payment To Contractor And Sub-Contractor [ Section 194C]
Tax Deducted At Source From Insurance Commission [ Section 194D]
Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
Commission Or Brokerage [ Section 194H]
Payment Of Rent [ Section 194 I ]
Fees For Professional Or Technical Services [ Section 194J]
Time Limit For Filling Return Of Income [ Section 139(1)]
When Return Of Loss Should Be Filed [ Section 139(3)]
Can Return Be Filied Beyond Time [ Section 139(4)]
Can Revised Return Be Filed [ Section 139(5)]
What Is A Defective Or Incomplete Return [ Section 139(9)]
Who Should  Sign The Return Of Income [ Section 140]
Permanent Account Number (PAN)
Why Every Person Needs Tax Planning ?
How is Tool of Tax Planning Exercised ?
Methods Of Tax Planning
Tax Avoidance
Tax Evasion
The Difference Between ‘Tax Planning’ And ‘Tax Management’
The Difference Between ‘Tax Avoidance’ And ‘Tax Evasion’.
Procedure for imposing Penalty [ Sec. 274]
Various Types Of Penalties In The Event Of Default.
Salient Features Of FBT
Important Points Relating To Fringe Benefit Tax
Characteristics Of FBT
Classification Of Employer For FBT
Classification Of Not Employer For FBT
Direct Fringe Benefit
Deemed Fringe Benefit
Payment Of FBT To The Government
Filing Of FBT Return
Service Tax – Key Provisions At A Glance
Applicability Of Service Tax
Service Tax Rate
Registration Formalities
Payment & Refund Of Tax
Filling Or Returns
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Penalties & Prosecutions

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VAT Rates
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Items Covered in Indian VAT
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What are the conditions for CST Act to become applicable.
Rate of CST
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Classification of Seller for TCS
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Goods and Transactions classified under TCS.
Certificate of TCS
TCS Exemptions
Payment of TCS to the Government
Electronic TCS (e-TCS)
Filing of TCS Returns
For removing any Asset, Books of account, documents etc. found during search in contravention of order served under [Section 132 (3)]
Removal, Concealment, transfer or delivery of property to avoid tax recovery [Section 276]
Default on the part of Liquidator [Section 276 (A)]
Failure to comply with provisions regarding transfer of immoveable property [Section 276 AB].
Failure to pay the tax deducted at source [Section 276 W]
Failure to pay the tax collected at source [Section 276 (BB)]
Willful attempt to evade Tax, Penalty, Interest etc. [Section 276 C (1)]
Failure to furnish return of income (Section 276 CC)
Failure to furnish return of income in search cases u/s 158 BC (Section 276 CCC)
Failure to produce accounts and documents [Section 276 (D)].
False Statement in Verification [Section 277]
Falsification of books of account or document, etc. [Section 277A]
Abetment in False Return (Section 278)
Punishment of Second and Subsequent Offences (Section 278 A)
Punishment not to be imposed in certain cases (Section 278 AA)
Offences by Companies (Section 278 B)
Offences by Hindu Undivided Families. (Section 278 C)
Presumption as to Assets, Books of Account etc. in certain cases. (Section 278 D)
Prosecution to be at the instance of commissioner [Section 279]
Meaning of Settlement Commisions
Setting Up Of Settlement Commission
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Jurisdiction And Powers Of Settlement Commission [Section 245BA]
Vice-Chairman To Act As Chairman [Section 245 BB]
Transfer Of Cases [Section 245 BC]
Decision To Be Majority [Section 245 BD]
Application For Settlement Of Cases [Section 245 C]
Calculation Of Additional Income-Tax [Section 245C (1A)]
Bar On Making Application [Section 245C (1E)]
Procedure On Receipt Of Application [Section 245D]
Payment Of Additional Income-Tax [Section 245D (2A)]
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