Penalty under the Income Tax Act

The Income Tax Act provides that if someone fails and/ or neglects to pay tax, penalty imposed on him and he is liable to pay the same. Section 271 of the Act deals with the penal provisions of Income Tax.

Provisions of Section 271(1) (b) of the Act:

It refers to cases where non-compliance of notice under section 142(1) for filing of returns or production of  documents needed by Assessing Officer or notice under section 143(2) for production of evidence upon which an assessee  relies or notice under section 142(2A) for getting the accounts  audited. The penalty imposed for these cases amounts to Rs. 10,000/-

Provisions of Section 271(1) (c) of the Act:

In case where the Assessing Officer is of the opinion that an assessee has concealed his income or has filed incorrect particulars of income, he may impose penalty. The first case refers to willful omission on behalf of the assessee i.e. where there is no mention of such income even in the books of record. The two circumstances are different though both of them have same effect.

Quantum of penalty imposed – The minimum penalty imposed in these cases amounts to 100% of the tax amount attempted to be evaded.

The maximum penalty imposed in these cases amounts to 300% of the tax amount attempted to be evaded.

When penalty cannot be levied:

Penalty cannot be levied in cases where the total income is negative which means there is loss.

Provisions of Section 271A of the Act:

Section 271A of the Act refers to cases of failure to maintain books of account or failure to keep documents which are required under Section 44AA of the Act.

Quantum of penalty imposed – It provides that the amount of penalty imposed is Rs.25, 000/-

Provisions of Section 27AA of the Act:

Section 271AA of the Act deals with cases of failure to retain information and documents which are required as per Section 92D.

Quantum of penalty imposed – The penalty in such cases amounts to 2% of the value of every international transaction.

Provisions of Section 27B of the Act:

Section 271B of the Act refers to cases of failure in getting accounts audited or failure in furnishing the report of such audit which is required according to Section 44AB.

Quantum of penalty imposed – The maximum quantum of penalty imposed in these cases is Rs. 1, 00,000/-

Provisions of Section 27C of the Act:

Section 271C deals with cases where assessee fails to deduct the whole or any fraction of the tax which is required as per chapter XVIIB or fails to pay the whole or part of tax as per Section 115-0.

Quantum of penalty imposed – The penalty amount is the tax which has not been deducted.

Provisions of Section 27D of the Act:

Section 271D refers to cases where any loan or deposit is taken in contravention of Section 269SS of the Act.

Quantum of penalty imposed – The amount of penalty is the loan or deposit which is taken or accepted.

Provisions of Section 27E of the Act:

Section 271E of the Act refers to cases where any deposit is repaid in contravention of Section 269T.

Quantum of penalty imposed – The amount of penalty is same as the deposit which is repaid.