Various Income Tax Offences & Applicable Penalties
Income Tax

Various Income Tax Offences & Applicable Penalties

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  Posted on November 26, 2021

Various Income Tax Offences & Applicable Penalties

Under the Income Tax Act, if an assessee commits an offence he shall be subject to a penalty. This is an amount which shall be charged and levied from the assessee over and above the tax which is payable. And it shall be levied on the basis of the law in force during the time at which the offence was committed. The list of penalties has been provided below:

SL. NO. SECTION PENALTY
1 Section 158BFA:

It deals with determination of undeclared income for block period, when  search is initiated under section 132 of Income Tax Act or books of account, other documents or any assets are requisitioned under section 132A of Income Tax Act in the case of any person

Minimum penalty is 100% of the tax leviable in respect of the undisclosed income

Maximum penalty would be 300% of the tax leviable in respect of the undisclosed income.

 

The above penalty shall be charged only on the income determined by the ITO in excess of the income as per the ITR furnished by the assessee u/s 158BC and appeal is not filed against such assessment.

2 Section 221(1):

Default in making payment of taxes to the Income Tax Authority

The penalty amount shall be as directed by the assessing officer. However, the amount of penalty charged should not or cannot exceed the amount of tax in arrears as per the Act and its provisions (Income Tax Act).
3 Section 234E:

Failure to file return by the assessee with respect to the collection or deduction of TDS or TCS within the time prescribed as given under section 200(3) or 206C (3)

INR 200 for every day of default (continuing)
4 Section 234F:

Default in furnishing of return under section 139(1) within the time which is specified by the Income Tax Act

 

INR 5,000 if return is furnished before 31st of December of the relevant assessment year.

 

INR 10,000 shall be leviable in any other case.

 

Note: in case the income earned or declared here does not exceed INR 5 Lakhs, then the penalty also shall not exceed INR 1,000 for the assessment year.

5 Section 270A:

Penalty charged for under-reporting or the reporting of income lower than the actually earned or made income.

 

Penalty for under-reporting of income earned on account of misreporting of income.

 

50% of the amount of tax shall be payable on under-reported income by such assessee.

 

 

200% of the amount shall be payable as tax (this shall be on the amount underreported reported income).

6 Section 271(1)(b):

Failure to declare income and file returns and comply with notices

 

Note: Applicable up to AY 2016-17

INR 10,000 for every failure
7 Section 271(1)(c):

Concealment of the particulars of his income earned or fringe benefits earned or furnished wrong particulars of such income or fringe benefits to the department of Income Tax

 

Note: Applicable up to AY 2016-17

 

Minimum:100% of tax seeksto be eluded.

 

Maximum: 300% of tax seek to be eluded.

8 Section 271(1)(4):

Distribution of profits by a registered firm which is found to be not in accordance with the partnership deed and thereby partner disclosed or returned his income below the real amount

 

Note: Applicable up to AY 2016-17

Maximum-150% of the tax
9 Section 271A:

Failure to keep, maintain or retain the books of account, documents as required under Section 44AA

INR 25,000
10 Section 271AA (1):

Penalty arising with respect to an international transaction or a particularly prescribed domestic transaction with regard to:

-failure to keep and maintain any such information and document which is mandated by the provisions of Section 92D (1) or 92D (2)

– the failure to report an important transaction which was to be furnished

-Maintaining or providing of the wrong information or document related with.

2% of the value of the international transaction or specified domestic transaction entered into shall be charged.
11 Section 271AA (2):

Dealing with any failure to furnish or provide information and also any allied documents to the authority prescribed as required under Section 92D (4)

INR 5 Lakhs
12 Section 271AAA (1):

Deals with the search which has been initiated under Section 132 of the Income Tax Act between the dates of 1stof June, 2007 and 1stof July, 2012

10% of the undeclared income of the relevant previous year.
13 Section 271AAA (2):

Nothing contained in sub-section (1) shall apply.

If the person in question is agreeing onthe undeclared income and specifies the manner in which such income has been earned and then also provides proofsupporting the manner in which the undisclosed income was derivedpays the tax, together with interest, if any, in respect of the undisclosed income earned by the assessee during a previous year

No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall of Income Tax shall be charged.

14 Section 271AAB (1):

Where search has been initiated between 1stof July 2012 and 15th of December 2016.

a) At the rate of 10% of the undeclared income earned if:

 

-Assessee admits the earning of the undisclosed income along with the manner of earning the same.

-Substantiates or provides support for the manner in which undisclosed income was derived

-Pays the tax along with interest. And also furnishes the return of income for the relevant or prescribed previous year declaring undisclosed or the undeclared income on or before the prescribed date.

 

b) At the rate of 20% of the undeclared income if:

-The assessee is not ready to admit the undisclosed income

-Discloses and declares the income for the relevant previous year and pays the tax along with interest on the particular undisclosed income on or before the specified date.

 

c) If not covered under clause (a) or (b) above, then the penalty shall be charged at the rate of 60% of the undeclared income of the specified previous year.

15 Section 271AAB(1A):

Where search has been initiated after the date of 15th Dec 2016

a) At the rate of 30% of the undisclosed income now being targeted, if:

-Assessee is admitting the undisclosed income and also specifies or agrees on the manner in which it was derived

-Supports the manner in which the undisclosed income was derived by the person

-Pays the tax with interest and also furnishes the ITR for the relevant previous year declaring an undisclosed income on or before the date specified as such.

b) A rate of 60% of the undeclared income shall be charged if it is not covered under the provisions of clause (a).

16 Section 271AAC:

Income under section 68,69,69A,69B,69C,69D determined by the assessing officer if not included by assessee or the tax under Section 115BBE has not been paid

 

*Section 68- Cash Credits

Section 69- Unexplained Investments

Section 69A- Unexplained money Section

69B-69B- The amount of investments not fully disclosed in books of account Section

69C-Unexplained expenditure

At the rate of 10% on tax which is payable under Section 115BBE.
17 Section 271AAD:

Penalty for false entry, fake invoices etc. in books of account

If any assessing officer or the AO finds that:

a) A false entry, or

b) There was an omission of any entry which is considered to be relevant for computation of total income of an assessee, then

 

he may direct the assessee to pay a penalty of an amount which is equal to sum of such false or omitted entries.

 

The false entry here means the following:

a) Forged or false document which might be in the form of sales invoice which not real

b) Any invoice of supply or receipts of goods or services issued by any person, while there was no actual supply or receipt of goods or services taken place

c) An invoice which was issues or received in respect of supply or receipt of goods or services or both to or from a person who is not existing

 

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