PENALTIES CHART UNDER INCOME TAX ACTSection Nature of Default Basis of

ChargeQuantumof penalty

221(1)

Failure to pay tax; i.e., non-payment of tax required by notice u/s. 156

-

Amount of tax in arrears

271(1)(b)

Non-compliance with notice u/s. 142(1) to file returns or to produce documents required by assessing officer or u/s. 143(2) to produce evidence on which assesse relies or u/s. 142(2A) to get accounts audited.

Rs. 10,000

271(1)(c ) Concealment of the particulars of income, or furnishing inaccurate particulars thereof.

Tax sought to be evaded

100 % to 300 % of tax sought to be evaded

271A Failure to maintain books or documents u/s. 44AA. - Rs. 25,000

271B Failure to get accounts audited and furnish Tax Audit Report as required u/s. 44AB.

Total Sales, Turnover, or Gross Receipts

0.5% of total sales, turnover or gross receipts, or Rs. 1,00,000 whichever is less

271AA

Failure to keep and maintain information and documents u/s. 92D

International transaction

2% of International transaction

271BA Failure to furnish a report as required u/s. 92E.

- Rs. 1,00,000

271C Failure to deduct the whole or part of the tax as required by or under Chapter XVII-B (Ss. 192 to 196D) or failure to pay the whole or part of tax u/s. 115-O.

Tax failed to be deducted

Equal to the amount failed to be deducted

271D Contravention of the provisions of S. 269SS; i.e., by taking or accepting any loan or deposit otherwise than by ways specified therein.

Amount of loan or deposit so taken or accepted

Equal to the amount of loan or deposit so taken or accepted

271E Contravention of S. 269T; i.e. repayment of any deposit otherwise than by modes specified therein.

Amount of deposit so repaid

Equal to the amount of deposit so repaid

271F Failure to furnish Return of Income under sub-section (1) of S. 139 before the end of the relevant Assessment Year.

Rs. 5,000

Failure to furnish Return of Income under proviso to sub-section (1) of S. 139 by the due date.

Rs.5,000

271G Failure to furnish information or document u/s. 92D (3).

International transaction

2 % of such default

272A(1) Failure to answer questions, sign statements, attend summons u/s. 131(1), apply for permanent account number u/s. 139A.

Rs. 10,000

272A(2) Failure to:

Rs. 100 for every day during which the failure continues.

Comply with notice u/s. 94(6) furnishing information regarding securitiesGive notice of discontinuance of business – S. 176(3)Furnish in due time returns, statements, or particulars u/s. 133, 206 or 285BAllow inspection of any register(s) – S. 134Furnish returns u/s. 139(4A)Deliver in due time a declaration mentioned in S. 197AFurnish a certificate u/s. 203.Deduct and pay tax u/s. 226(2)Furnish returns/ statements/ certificate u/s. 206CFurnish a statement of particulars of perquisites and profits in lieu of salary u/s. 192(2C)

272AA(1) Failure to furnish the prescribed information required u/s. 133B (Refer to Form No. 45D).

Rs. 1,000

272B Failure to apply for Permanent Account Number (PAN)

Rs. 10,000

272BB(1) Failure to apply for Tax Deduction Account No. (TAN) (S. 203A)

Rs. 10,000

272BBB Failure to apply for Tax Collection Account No. (TCN)

Rs. 10,000

What is the minimum and maximum penalty leviable?

The quantum of penalty leviable depends upon the nature of default.  The relevant section of Income-tax Act prescribes the minimum and maximum penalties which can be levied.

Can the penalty be reduced or waived?

The Commissioner of Income-tax may reduce or waive the amount of any penalty imposed or imposable, if prescribed conditions are satisfied.  The assesse should voluntarily and in good faith make full and true disclosure of income prior to the detection of concealment by the Assessing Officer.  In certain cases of genuine hardship, the penalty levied can be reduced/waived if the assesse has co-operated in any enquiry relating to the assessment and recovery of taxes.  The waiver/reduction of penalties is discretionary and dependent upon satisfaction or prescribed conditions.  No assesse can a matter of right, claim waiver or reduction of penalty imposed or imposable upon him.  [Section 273A]

Office and prosecution under the income tax act.  Why is prosecution necessary?

In the fight against tax evasion, the imposition of monetary penalty alone is not sufficient.  A calculating tax evader finds it profitable to evade tax for years, if he knows that he may get away with it by paying penalty in the year in which he is caught.  However, the prospect of landing in jail is a far more dreaded consequence and works as a deterrent.  Further, for more serious defaults, sometimes launching of prosecution is prescribed without prescribing monetary penalties.

The Parliament has, therefore, been enacting deterrent laws for effective implementation of tax laws.  The Income-tax Act contains a separate chapter XXII wherein offences have been defined and punishment provided.

What are the offences punishable under the income tax act?

The following offences committed by a person are punishable:

(i)     Removal, parting with or otherwise dealing with books of accounts, documents, money, bullion, jewellery or other valuable article or thing put under restraint during the search. [Section 275A]

(ii)    Fraudulent removal, concealment, transfer or delivery of any property or any interest in the property with the intention to thwart recovery of tax. [Section 276]

(iii)   Failure on the part of a liquidator or receiver of a company to give notice of his appointment to the Assessing Officer or failure to set apart amount notified by the Assessing Officer, or parting away of company’s properties in contravention of income-tax provision. [Section 276A]

(iv)    Failure to enter into written agreement or failure to furnish the statement of immovable property intended to be transferred u/s.269UC, or failure to surrender or deliver the property u/s.269UE, purchased by the Appropriate Authority or doing or omitting to do anything u/s.269UL, which will have the effect oftransfer of property without the permission of the Appropriate Authority (under the provisions of Chapter XX-C) [Section 276AB]

(v)     Failure to pay to the credit of the Central Government the tax deducted at source.  [Section 276B]

(v)   Failure to pay the tax collected at source. [Section 276BB]

(vi)    Willful attempt to evade any tax, penalty or interest [Section 276C(1)]

(vii)   Willful attempt to evade the payment of any tax, penalty or interest levied under Income Tax Act. [Section 276C(2)]

(viii)  Willful failure to furnish in due time return of income.  [Section 276CC)]

(viii)    Failure to furnish return of income in Search Cases as required under section 158BC [Section 276CCC]

(ix)    Willful failure to produce accounts and documents as directed by issue of notice under section 142(1) [Section 276D]

(x)     Willful failure to get the accounts audited as directed by the Assessing Officer under section 142(2A). [Section 276D]

(xi)    Making of a statement in verification or delivery of an account or statement which is false and which the concerned person knows or believes to be false or does not believe to be true. [Section 277]

(xii)   Abetting or inducing another person to make and deliver an account or statement or declaration relating to any taxable income which is false and which he either knows or believes to be false. [Section 278]

(xiii)  Punishment for 2nd & subsequent offences in cases of certain defaults. [Section 278A]

No person shall be punished for any failure if he proves that there is reasonable cause failure. [Section 278AA].

Who is liable to be prosecuted?

Any person, committing the offence is liable to be prosecuted.  In this connection it is not necessary that the person should be an assesse under the Income-tax Act.  In the case of an offence committed by a Company, Firm, Association of Persons or Body of Individuals, every person in charge of or responsible for the conduct of the business of the concern as well as the concern are deemed to be guilty.  Similarly, in the case of an offence by a Hindu Undivided Family, the karta thereof is deemed to be guilty of the offence.

Fathima Sulaiman.