Penalties under Income Tax Act 1961

Income Tax : Penalties

1. Penalty under Section 270A (Penalty for under reporting and misreporting of income):
If during the assessment proceedings, it is found that an assessee have under reported or misreported his income, then penalty u/s. 270A will be imposed on the Assessee. This is the harshest penalty that can be imposed by the department. The amount of penalty will be 50% of the tax payable on under reported income. However, under reported income is a result of misreporting, then the penalty amount is increased to 200% of the tax payable on under reported income.

2. Penalty under Section 271A – Default in maintaining or retaining books of account:
If during the assessment proceedings, it is found that an assessee have not maintained any books of accounts or other documents as required under Section 44AA, or the Assessing Officer finds that an assessee have not retained the books of accounts and other necessary documents for the minimum time period (say 6 years), then a penalty of Rs. 25,000 will be imposed.

3. Penalty under Section 271B – Default in Tax Audit:
If during the assessment proceedings, it is found that an assessee were supposed to get his accounts audited under section 44AB, but fails to do so, then penalty under section 271B of the Act will be imposed.
The amount of penalty will be a sum equal to 0.5% of gross sales, gross turn over or gross receipts, as the case may be, but in any case this penalty cannot exceed Rs. 50,000.

4. Penalty under Section 271C – Default in deducting tax at source:
If during the assessment proceedings, it is found that an assessee has failed to deduct whole or any part of TDS as required by income tax laws, then the penalty will be a sum equivalent to the amount of tax not deducted.

5. Penalty under section 271CA – Default in collecting tax at source:
If during the assessment proceedings, it is found that an assessee has failed to collect whole or any part of TCS as required by income tax laws, then a penalty of a sum equivalent to the amount of tax not collected will be imposed.

6. Penalty under Section 271D – Accepting loans in cash:
If during the assessment proceedings, it is found that an assessee has accepted a loan or deposit from any other person in cash for a sum exceeding Rs. 20,000 in a financial year, then a sum equal to the amount of loan accepted will be demanded from the assessee by way of penalty.

7. Penalty under Section 271E – Repayment of loans in cash:
If during the assessment proceedings, it is found that an assessee has repaid any loan or deposit to any other person in cash for a sum exceeding Rs. 20,000 in a financial year, then a sum equal to the amount of loan repaid will be demanded from the assessee by way of penalty.

8. Penalty under Section 271F – Non-filing of Income Tax Return:
If during the assessment proceedings, it is found that an assessee has filed his or her Return for a financial year by the end of the following financial year for which the Return has to be furnished, then a penalty of Rs. 5,000 will be imposed.

9. Penalty under section 271H- Non filing of TDS Return
If during the assessment proceedings, it is found that an assessee has no furnished the TDS Returns even after expiry of 1 year from the due date of filing such returns or has furnished any incorrect information in the TDS Returns filed by him, then a penalty of a minimum of Rs. 10,000 and maximum of Rs. 1,00,000 will be imposed.

10. Penalty under Section 272B – Not having PAN or providing incorrect PAN:
If during the assessment proceedings, it is found that an assessee has not applied for a PAN even though it was required as per section 139A or where after obtaining a PAN, an assessee not intimated the same or provided incorrect PAN to any person under the provisions of the Income Tax Act, then a penalty of Rs. 10,000 will be imposed.

11. Penalty under Section 272BBB – Not having TAN or providing incorrect TAN:
If during the assessment proceedings, it is found that an assessee has not applied for a Tax deduction account number or a Tax collection account number as required by section 203A and Section 206CA respectively, or where after obtaining a TAN, an assessee provided incorrect TAN on the challans and certificates by him, then a penalty of Rs. 10,000 will be imposed.

Reference:
1. Taxmann’s Income Tax Act, as amended by Finance Act, 2016, 60th Edition
2. A N Aiyar’s Indian Tax Laws – 2016, as amended by Finance Act, 2016, 53rd Edition
3. Direct Taxes – Laws & Practice by Dr. Girish Ahuja & Dr. Ravi Gupta, as amended by Finance
Act, 2016, 7th Edition
4. Kanga & Palkhivala’s – The Law and Practice of Income Tax – Volume II, Tenth Edition.

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