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Step Wise ProcessVarious Defaults and Penalties under Income Tax Act – Finance Act 2020 from April 2020

defaults & penalties under income tax act-min

Offence means a breach of law or rule, offence is an illegal act committed by a person. A penalty is a punishment imposed by law for committing an offence. Assessee & Taxpayers who commits any offence under the provisions of the Income Tax Act shall be liable for penalty or prosecution. The penalty is usually levied in addition to the amount of tax paid under the act. Penalty is to be levied at the time the offence is being committed and not as it stands in the financial year for which the assessment year is being made. The various penalties covered under the Income tax act 1961 are as under:

Section	Nature of default	Amount of penalty	Imposed by	Notes
221(1)	Failure to pay the whole or part of the assessment tax or TDS or TCS	Amount of tax in arrears	Assessing officer	This is in addition to interest under section 220
270A	Misreporting or underreporting of income	50% of tax on under reported income and 20% of tax on mis reported income	AO or CIT or CIT(A)
271A	Failure to keep, maintain or retain books of account as required by section 44AA	Rs. 25,000	AO or CIT(A)
271AA	Failure to keep and maintain information and documents as required u/ 92D i.e. transfer pricingFails to report such transaction which he is required to do so; orMaintains or furnishes an incorrect information or document	2% of the value of transaction	AO or CIT(A)
271AAB	Undisclosed income found in search	30% or 60% of disclosed income	AO	Penalty in case of search: Rate of 30% shall applyIf assessee during search admits the undisclosed incomeSpecifies the manner in which such income was earnedPays tax plus interest on undisclosed income andFurnishes the return of income declaring undisclosed income before due date or date specified in Income tax noticeRate of 60% in other cases
271AAC	Unaccounted income	10% of tax on unaccounted income	Assessing officer	Penalty shall not be leviable if such income is offered in returnNo penalty on unaccounted income shall be levied u/s 270A i.e. misreporting or underreporting of income
271B	Failure to get accounts audited up to due date u/s 44AB	0.5% of Sales turnover or gross receipts (Subject to maximum of Rs. 1,50,000	Assessing officer	If books are not maintained penalty u/s 271A shall be levied and not u/s 271B
271BA	Failure to furnish report of CA u/s 92E i.e. transfer pricing report	Rs. 1,00,000	Assessing officer
271BB	Failure to obtain TAN number	Rs 10,000	Assessing officer
271CA	Failure to collect TCS	Sum equal to the amount of tax which such person failed to collect	JCIT
271C	Failure to deduct TDS	Sum equal to the amount of tax which such person failed to deduct	JCIT
271D	Any loan or deposit or specified advance is taken or accepted in contravention of section 269SS	Amount of the loan or deposit so taken or accepted	JCIT
271DA	Any transaction of Rs. 2,00,000 or more in contravention of section 269ST	Sum equal to amount received	JCIT
271DB	Failure to accept payment through prescribed electronic modes as per section 269SU	Rs. 5,000 per day	JCIT
271E	Any loan or deposit or specified advance is repaid in contravention of section 269T	Amount of loan or deposit repaid	JCIT
271F	Failure to furnish return of income	Rs. 5,000
271FA	Failure to furnish Statement of financial transaction or reportable accounts within the prescribed time	Rs. 500 per day till period of notice	Assessing officer	However, on failure to pay the same after expiry of notice penalty would be Rs. 1000 per day from the date of notice
271FB	Failure to furnish return of fringe benefits	Rs. 100 day per day till the failure continues	Assessing officer
271FAA	Inaccurate information in statement of financial transaction or reportable accounts	Rs. 50,000	Prescribed Income tax authority	Penalty shall be levied only if the prescribed authority is satisfied that: The inaccuracy is due to failure to comply with the due diligence requirement or is deliberate on the part of that person; orThe person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable accounts =, but does not inform the prescribed Income tax authority or such other authority or agency; orThe person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to furnish correct information as per section 285A(6)
271G	Failure to furnish any information u/s 92D	2% of the value of international transaction
271GA	Failure to furnish information or document u/s 285A, i.e. by Indian concern where transaction has effect of directly or directly transferring the right of management or control in respect to Indian concern	2% of transaction value
271GA	Failure to furnish info or document 285A by Indian concern other cases	Rs. 5,00,000
271GB	Failure to furnish report u/s 286 i.e. report in respect of international group	Penalty of Rs. 5,000 every day for 1st one month where the failure continues and there after Rs. 15,000 per day beyond the period of 1 month
271GB	Fails to provide the information and document to the income tax authority in prescribed time mentioned in notice	Rs. 5000 per day from the day on which the period for furnishing the information and document expires
271GB	If failure referred above continues after an order has been served by the income tax authority	Rs. 50,000 for every day
271GB	Where entity provides inaccurate information in report u/s 286	Rs. 5,00,000
271H	Failure to furnish TDS or TCS statement	Penalty equal to minimum of Rs. 10,000 which may extend to Rs. 1 Lakh
271I	Failure to furnish information or furnishing inaccurate information under section 195 i.e. TDS on sum payable to Non resident	Rs. 1,00,000	AO
272AA	Failure to comply with section 133B i.e. failure to provide information to income tax department	Sum which may extend to Rs. 1000	AO, JCIT
272B	Failure to comply with section 139A i.e. does not quote PAN no or quotes wrong PAN	Sum which may extend to Rs. 10000	AO
271J	Furnishing incorrect information in reports or certificates	Rs. 10,000 for each such report or certificates	AO, CIT(A)
271FAB	Failure to furnish statement or information or document by an eligible investment fund	Rs. 500,000
272A	Failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.	Rs. 10,000 for each default
271AAD	Penalty for fake invoices and false entries	Equal to the amount of fake invoice or false entries	Assessing officer

Step Wise ProcessVarious Defaults and Penalties under Income Tax Act – Finance Act 2020 from April 2020

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