Penalties under the Income Tax Act

For non-compliance with the different provisions of our Income Tax Act, Section 140A, 143(1A), 221 and 271 to 275 give the reference to levy penalty on a assessee. An assessee might be prosecuted for his comply with the provisions of the law. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of consideration of all the relevant circumstances of the case. Even if a minimum penalty will be justified in prescribed, the authority competent to impose the penalty will be justified in ignoring the penalty when there is technical or minor breach of the provisions of the Act.

QUANTUM OF PENALTY

An authority cannot levy the penalty less than the prescribed one. While imposing penalty it is very important to note that the quantum of penalty shall be as per the law on date of default and not as per the law on the date to which the assessment relates.

The Supreme Court’s decision in the case of Brij Mohan(supra) has ITRp.1(S.C)], following the Supreme Court’s decision, the Patna High Court held that the penalty imposed on account of the commission of a wrongful act is committed will be the law which is to be applied and in accordance with which the penalty is to be imposed.

Before the levy of any penalty, the assessee must have been heard or a reasonable opportunity of being heard must be given to the assessee. If penalty is imposed without such an opportunity, it will be invalid.

PENALTY IMPOSED UNDER MORE THAN ONE SECTION

Penalty may be imposed under more than one section at a time, if an assessee commits many defaults under various sections of the Act.

The various types of penalties can be summarized in the following manner:-

Section	Type of Default	Minimum Penalty	Maximum Penalty	Levied By
158BF	Determination of undisclosed income of block period.	100% of tax leviable in respect of undisclosed income.	300% of tax leviable in respect of undisclosed income.	Commissioner (Appeals) or Assessing Officer)
221(1)	Non -payment of tax and interest payable under section 220(2) within the prescribed time limit.	Such amount as the Assessing officer may impose.	Tax in arrears.	Assessing Officer.
271(1)(b)	Failure to comply with (i) a direction u/s 142(2A) or, (ii) a notice under section 115WD(2);115WE; 142(1);143(2)	Rs. 10000 for each failure.	Rs. 10000 for each failure.	Assessing officer.
271 (c)	Furnishing of inaccurate particulars of income or Concealment of the particulars of income.	100% of tax sought to be evaded.	300% of the tax sought to be evaded.	Commissioner (Appeals) or Assessing officer.
271(4)	Distribution of profit by registered firm otherwise than in accordance with the partnership deed and as a result of which partner has returned income below the real income.	Upto 150% of difference between tax on partner’s income assessed and tax on returned income in addition to tax payable.	Upto 150% of difference between tax on partner’s income assessed and tax on returned income in addition to tax payable.	-do-
271A	Failure to keep, maintain or retain books of account etc. as required under Section 44AA	Rs. 25000	Rs. 25000	Assessing Officer or Commissioner (Appeals)
271AA	Failure to keep and maintain documents and information in respect of international transaction.	A sum equal to 2% of the value of each international transaction.	A sum equal to 2% of the value of each international transaction.	-do-
271B	Failure to get accounts audited under Section 44AB or furnish audit report along with return of income.	½% of Total Sales, Turnover or gross receipts.	Rs. 100000	Assessing Officer
271BA	Failure to furnish report under Section 92E.	Rs. 100000	-	-do-
271BB	Failure to subscribe to eligible issue of capital.	20% of the amount subscribed.		Joint Commissioner.
271C	Failure to deduct tax at source or failure to pay wholly or partly the tax u/s 115-O(2) or second proviso to Section 194-B.	A sum equal to the amount of tax omitted to be deducted or paid.	-	-do-
271CA	Failure to collect tax at source.	100% of tax sought to be collected.	-	-do-
271D	Taking any loan or deposit in contravention of Section 269SS.	A sum equal to the amount of loan or deposit so taken or accepted.	-	-do-
271E	Repayment of any loan in contravention of Section 269T.	A sum equal to the amount of deposit.	-	-do-
271F	Failure to furnish returns as required by Section 139(1) and the proviso to Section 139(1) on or before due date.	Rs. 5000	Rs. 5000	Assessing Officer.
271FA	Failure to furnish Annual Information Return.	Rs. 100 for each day of default.	-	-do-
271G	Failure to furnish document or information under Section 92D.	A sum equal to 2% of the value of each international transaction.	-	Assessing Officer or Commissioner (Appeals).
272A(1)(a)	Failure to answer any question put to person legally bound to state the truth of any matter touching the subject of his assessment by an income – tax authority.	Rs. 10000 for each default.	Rs. 10000 for each default.	Joint Director or Joint Commissioner.
272A(1)(b)	Failure to sign any statement made by a person in course of income – tax proceedings.	Rs. 10000 for each default.	Rs. 10000 for each default.	-do-
272(1)(c)	Failure in compliance with summons issued under section 131(1) to attend office to give evidence and produce books of accounts or other documents.	Rs. 10000 for each default.	Rs. 10000 for each default.	Joint Director or Joint Commissioner
272A(2)	Failure to comply with a notice under section 94, to give notice of discontinuance of business/profession under Section 176(3); furnish returns/statements specified in Section 133,206,206A,206B or 285B; to allow inspection of (i) register mentioned in Section 134, or (iii) entry in such register, or (iii) allow copies thereof to be taken, furnish return of income under Section 139(4A) or, deliver declaration under Section 197A; furnish certificate under Section 203, deduct and pay tax under Section226.	Rs. 100 for every day of default	Rs. 100 for every day of default.	Joint Director or Joint Commissioner (Chief Commissioner or commissioner in case of default under Section 197A)
272AA(1)	Failure in compliance with Section 133B	Any amount subject to a maximum of Rs. 1000.	Rs1000.	Joint Commissioner/Asstt Director/Assessing Officer.
272B	Failure to comply with Section 139A (PAN).	Rs. 10000	-	Assessing Officer.
272BB	Failure to comply with Section 203A.	-	Rs. 10000	Assessing Officer.
272BBB	Failure to comply with Section 206CA (TCAN)	Rs. 10000	-	-do-