2. Procedure
◦ Before levying any penalty, assessee must be heard or
reasonable opportunity must be given to him to be heard
◦ Joint Commissioner’s approval must be taken if Income
Tax Officer imposes penalty of Rs 10,000 or Assistant of
Deputy commissioner imposes penalty of Rs 20,000
◦ Income Tax officer will send a copy of the penalty to the
Assessing officer if both are not the same person
3. Quantum of Penalty
◦ If the authority decides to impose penalty, it cannot be
less than the prescribed minimum, quantum shall be as
per date of default
Discretionary Power
◦ If the penalty to be imposed is a matter of discretion of
the authority, it should be exercised with reason (not
arbitrarily) and after considering relevant circumstances
of the case
Penalty maybe imposed under more than one
section at a time
4. Failure to file return, not furnishing the return in
specified period or not disclosing full income in case of
search [158 BFA(2)]
◦ Mini 100% , Max 300% of tax sought to be evaded
Penalty on tax in default [221(1)]
◦ Not exceeding ax in arrears
Failure to comply with notices (to get accounts
audited, to produce documents, produce evidence)
[271(1)(b)]
◦ Rs 10,000
Concealment or inaccurate particulars of income
[271(1)(c)]
5. Wrong distribution of profits of registered firm [271(4)]
◦ Upto 150% of Tax sought to be evaded
Failure to maintain or retain accounts, documents [271A]
◦ Rs 25,000
Penalty where search has been initiated on or after 1-jun-2007
[271AAA]
◦ 10% of undisclosed income
Failure to get accounts audited [271B]
◦ .5% of turnover, sales, gross receipts etc or Rs 1 Lakh whichever is less
Failure to deduct tax at source [271C]
◦ Equal to tax not deducted
6. Penalty for failure to collect tax at source [271CA]
◦ Equal to tax not collected
Failure to take or accept loan/deposit (greater than Rs
20,000) by cheque or draft [271D]
◦ Equal to amount of deposit of loan
Failure to repay loan/deposit (greater than Rs 20,000)
by cheque or draft [271E]
◦ Equal to amount of deposit or loan so re-paid
Failure to furnish return of income [271F]
◦ Rs 5,000
7. Failure to file return of fringe benefits [271FB]
◦ Rs 100 per day of default
Failure to answer questions, sign statements, allow
inspection [272A(1)]
◦ Rs 10,000 for each default
Failure regarding tax deduction and tax collection
account number [272B]
◦ Rs 10,000
Failure to furnish annual information return for special
transactions(u/s 285BA) [272BB]
◦ Rs 100 per day of default
8. In case of concealment of income
◦ Person has made full and true disclosure prior to the
detection of the Assessing Officer
◦ Person has cooperated with department in any inquiry
◦ Has paid or made satisfactory arrangements for payment
of tax or interest payable
Reduction or waiver benefits can once taken cannot
be received in any other year in future
If concealed income is greater than 5 lakh or
penalty exceeds 1 lakh permission of Chief
Commissioner is required
9. Commissioner must record the reasons for waiver
Every order made by the commissioner regarding
waivers is final and shall not be called into
question by any court
A person cannot be prosecuted in relation to
assessment of assessment year in which penalty
has been waived by chief commissioner
10. Contravention of order u/s 132(3), not to remove
books of accounts, money, jewellery etc without
permission of authorized officer [275A]
◦ Fine and imprisonment upto 2 years
Failure to provide officer necessary facilities to inspect
accounts or documents [275B]
◦ Fine and imprisonment upto 2 years
Removal, concealment, transfer or delivery of property
to thwart tax recovery [276]
◦ Fine and imprisonment upto 2 years
11. Transfer of property greater than 5 lakh without complying
with provisions [276AB]
◦ Fine and imprisonment of 3 months to 7 years
Failure to pay the tax deducted at source [276B]
◦ Fine and imprisonment of 3 months to 7 years
Failure to pay the tax collected at source [276BB]
◦ Fine and imprisonment of 3 months to 7 years
Willful attempt to evade tax(false book entries, omission of
entries etc) [276C]
◦ For amount > 1 lakh , fine and imprisonment of 6 months to 7
years, in other cases 3 months to 3 years
12. Failure to furnish return of income in search cases [276CC]
◦ If tax evaded > 1 lakh , fine and imprisonment of 6 months to 7
years, in other cases 3 months to 3 years
Failure to furnish return of income [276CCC]
◦ Fine and imprisonment of 3 months to 3 years
Failure to produce accounts and documents [276D]
◦ Rs 4 to 10 per day and imprisonment of upto 1 year
False statement in verification [277]
◦ If tax evaded > 1 lakh , fine and imprisonment of 6 months to 7
years, in other cases 3 months to 3 years
Abetment of false returns [278]
◦ If tax evaded > 1 lakh , fine and imprisonment of 6 months to 7
years, in other cases 3 months to 3 years
13. Upon liquidation of company, failure to give notice to assessing
officer in 30 days, set aside money for tax liabilities or parting
with assets of company in contravention on Sec 178(3) [276A]
◦ Imprisonment of 6 months to 2 years
Punishment for second and subsequent offences in section
276B,276C,276CC,277 or 278
◦ Fine and imprisonment of 6 months to 2 years
Disclosure of particulars by public servants [280(1)]
◦ Fine and imprisonment of 6 months
Offences by companies [278B]
◦ Liability will be of Managing Director of any such officer who has willfully
committed the offense
Offences by Hindu undivided families [278C]
◦ Liability will be of Karta of any such member who has willfully committed
the offense
14. If any prosecution of offence requires a culpable
mental state on the accused, court presumes the
existence of the mental state
Accused has to prove that he was in no such
mental state if defense has to be taken on this
ground
Culpable mental state includes intention, motive or
knowledge of fact or belief in or reason to believe,
a fact.
15. Offences under section 276B, 276C,276CC,277
an 278 are deemed to be non-cognizable
A police officer has not authority to arrest a person
without warrant
