BLOG on Income Tax Management for - AY 2022-23 & 2023-24

Overview of major Penalties imposable under the Income-Tax Act.

The following table highlights major penalties imposable under the Income-tax Act.

Nature of default/failure

Sections

Penalty

Default in payment of any tax due

Section 221(1)

Such an amount as the Assessing Officer may impose but not exceeding the amount of tax.

Determination of undisclosed income of block period

Section 158BFA(2)

Minimum : 100 per cent of tax leviable in respect of
undisclosed income
Maximum : 300 per cent of tax leviable in respect of
undisclosed income.

Under-reporting and
misreporting of income

Section 270A(1)

sum equal to 50% of the
amount of tax payable on
under-reported income.

However, if under-eported
income is in consequence of any misreporting thereof by any person, the penalty shall be equal to 200% of the amount of tax payable on under-eported income

Failure to comply with
notice issued under section 142(1) or section 143(2) and direction for audit under section 142(2A).

Section 271(1)(b)

Rs. 10,000 for each failure.
This section shall not apply to and in relation to any
assessment for the A.Y
commencing on or after the 1st day of April, 2017.

Concealment of income or
furnishing inaccurate
particulars of income

Section 271(1)(c)

100% to 300% of the tax
evaded.
This section shall not apply to and in relation to any
assessment for the A.Y
commencing on or after the 1st day of April, 2017.

Distribution of profits by
registered firm otherwise
than in accordance with
partnership deed and as a
result of which partner has
returned income below the real income

Section 271(4)

Not exceeding 150 per cent of difference between tax on partner's income assessed and tax on income returned, in
addition to tax payable

This section shall not apply to and in relation to any
assessment for the A.Y
commencing on or after the 1st day of April, 2017.

Failure to keep, maintain or retain books of account, documents, etc., as are required under section
44AA

Section 271A

Rs. 25,000

Failure to keep and maintain information and documents required in respect of international transaction or specified domestic transaction, failure to report such transaction, etc.

Section 271AA

2% of the value of each
international transaction or specified domestic transaction entered into by the taxpayer

Failure to furnish information and document as required under Section 92D(4)

Section 271AA(2)

Rs. 5,00,000/-

Penalty in case of search

Section 271AAB

10%, 20% and 60% of the
undisclosed income, as the case may be.

Failure to get accounts audited or furnish a report of audit as required under section 44AB

Section 271B

One-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less

Failure to furnish a report from an accountant as required by section 92E

Section 271BA

Rs. 1,00,000

Failure to deduct tax at
source, wholly or partly or
failure to pay wholly or
partly tax under section 115-O(2)

Section 271C

An amount equal to tax not deducted (in case of TDS) or tax not paid (in case of dividend distribution tax)

Failure to collect tax at Source

Section 271CA

An amount equal to tax not
Collected

Taking or accepting certain loans or deposits or specified sum* in contravention of provisions of section 269SS
*“Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

Section 271D

An amount equal to loan or deposit or specified sum so taken or accepted

Repaying loans or deposits
or specified advance* in
contravention of provisions
of section 269T
*“Specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an
immovable property, whether or not transfer takes place

Section 271E

An amount equal to loan or deposit or specified advance so repaid

Failure to furnish the return of income before the end of the assessment year

Section 271F

Rs. 5,000

Failure to furnish statement of financial transaction or reportable account (previously called as Annual Information Return) as required under section 285BA(1)

Section 271FA

Rs. 100 or Rs.500, as the case may be, per day of default

Failure to furnish an accurate statement of financial transaction or reportable account

Section 271FAA

Rs. 50,000

Failure to furnish statement or information or document [as required under Section 9A(5)] by an eligible investment fund within the prescribed time-limit.

Section 271FAB

An amount equal to Rs.
5,00,000

Failure to furnish any
information or document as required by section 92D(3)

Section 271G

2% of the value of the
international transaction or
specified domestic transaction for each such failure

Failure to furnish information or document under section 285A* by an Indian concern.

*Section 285A provides that where any share or interest of foreign company derives its value substantially from assets located in India, and such company holds such assets in India through
Indian Concern then such Indian concern shall furnish the prescribed information to the income-tax authority

Section 271GA

A sum equal to 2% of the value of the transaction in respect of which such failure has taken place, if such transaction had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern;

An amount equal to Rs.
5,00,000 in any other case

Failure to furnish report under section 286(2)

Section 271GB(1)

Rs. 5,000 per day up to 30 days and Rs. 15,000 per day beyond 30 days

Failure to produce the information and documents within the period allowed under section 271GB(6)

Section 271GB(2)

Rs. 5,000 for every day during which the failure continues

Failure to furnish report or
failure to produce information/documents
under section 286 even after
serving order under section
271GB(1) or 271GB(2)

Section 271GB(3)

Rs. 50,000 for every day for which such failure continues beginning from the date of serving such order.

Failure to inform about
inaccuracy in report furnish
under section 286(2)
Or furnishing of inaccurate
information or document in
response to notice issued
under section 286(6).

Section 271GB(4)

Rs. 5,00,000

Failure to file the TDS/TCS
Return

Section 271H

Not less than Rs.10,000 and
upto Rs. 1,00,000

Failure to furnish information or furnishing of inaccurate information under Section 195(6) in respect of payment made to non-residents.

Section 271-I

An amount equal to Rs.
1,00,000

Failure to co-operate with the tax authorities, (i.e., not answering any question, not signing statements, etc.) or failure to comply with notice issued under section 142(1)/143(2) or failure to comply with direction issued under section 142(2A).

Section 272A(1)

Rs. 10,000 for each
failure/default

Penalty under section
272A(2)

Section 272A(2)

Rs. 100 per day for every day during which the default continues.

Failure to comply with section 133B

Section 272AA(1)

An amount not exceeding Rs. 1,000

Failure to comply with provisions relating to Permanent Account Number (PAN)

Section 272B

Rs. 10,000

Failure to comply with provisions relating to Tax Deduction Account Number or Tax Collection Account
Number