Preface
Human nature is such that many of the assessees tend not to fully co-operate with the governmental effort of revenue generation or collection, all for personal gains. As a matter of fact, violation of the rules or statutory provisions of any kind is almost the order of the day, more particularly in this country. It is this factor which is behind so many penal provisions in the Income Tax Act meant for imposing penalties for unintended failures on the part of assessees. A separate Chapter XXI, entitled "Penalties Imposable" comprising sections 270A to 275 is devoted thereto. Income Tax Act provides various kinds of statutory, procedural and other obligations, alongwith corresponding penalties for not meeting out any of such obligations. This is why the number of penalty provisions is so large.
Of all the litigations being contested at various levels beginning with that of the assessing officer to Supreme Court, those relating to penalties constitute a sizable percentage. Assessments, particularly those which undergo scrutiny, and matters emerging from reopening of the assessments, surveys, searches seizures, etc., invariably generate initiation of penalty proceedings culminating into imposition of consequential penalty. What usually, though unfortunately, happens in practice is that the officers imposing penalties go overenthusiastic and the quantum of penalties imposed attain fantastic proportions threatening the very existence of the assessees. But hope that such happenings would get reduced if not eliminated in this faceless era.
The Finance Act, 2016 had, made significant changes in penalty related provisions as penalty under section 271(1)(c) for concealment and furnishing of inaccurate particulars of income was replaced by penalty for underreporting and mis-reporting of income. For this purpose two new sections 270A and 270AA were inserted in the Income Tax Act with effect from the assessment year 2017-18. The basic objective of such a radical change was to rationalise and bring objectivity, certainty and clarity in the penalty provision and thereby reduce litigation. Under the currently applicable law, the main ingredients for imposing penalty are underreporting and misreporting of income.
The present book aims at analysing all penal provisions as currently applicable. The words "underreporting" and "mis-reporting" under section 270A despite being specifically defined, may create a new chain of litigations owing to different interpretations under varied fact situations. In this book the new penalty scheme is discussed with the help of practical instances and illustrative case law which appear to be helpful in interpretation of the new law.
The penalty under erstwhile section 271(1)(c) for concealment of income and furnishing of inaccurate particulars of income has also been discussed in quite detail for two reasons -
(i) Some of the cases applicable to section 271(1)(c) which may be pending in the courts may go to help in contesting a case relating to misreporting or underreporting of income under Section 270A.
(ii) The principles emerging from various case law relating to section 271(1)(c) may be helpful in interpretation of current provisions as well hence incorporated in this book to make it useful and relevant for its users in real terms.
Some penal provisions are in the form of levy of fee, i.e., sections 234E, 234F , 234G and 234H. The fee under these sections is levied for default in furnishing of TDS return, income-tax return and for certain statement or certificates respectively. These provisions are discussed in a separate part of the book.
As we know presently, the Government is on move to eliminating corruption and favouritism under proceedings before the Income Tax Department and for this purpose, Faceless Assessment Scheme and Faceless Appeal Scheme have already been introduced. The CBDT has now notified the Faceless Penalty Scheme also vide Notification No. 3/2021, dt. 12-1-2021. This scheme is made effective from 12-1-2021 and is on same lines as Faceless Assessment Scheme, 2020 and Faceless Appeal Scheme, 2020. Under the Faceless Penalty Scheme all penalty proceedings will be carried out without any human interface. All notices and replies shall be issued and submitted digitally. A separate part dealing with proceedings under Faceless Penalty Scheme is incorporated in the book to facilitate the assessees to represent their case in the new faceless era.
The subject matter of the book is divided in ten parts, as under --
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Part I |
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Basic Issues as to Penalty Proceedings |
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Part II |
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Penalty for Underreporting and Misreporting of Income [Sections 270A and 270AA] |
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Part III |
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Penalties Other than Penalty for Underreporting and Misreporting of Income |
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Part IV |
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Concealment Penalty Under Section 271(1)(c) [Imposable Upto Assessment Year 2016-17] |
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Part V |
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Levy of Fee Under Sections 234E, 234F, 234G and 234H |
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Part VI |
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Waiver, Reduction and Non-Imposition of Penalty [Sections 273A, 273AA and 273B] |
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Part VII |
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Procedural Aspects and Limitation Vis-a-Vis Levy of Penalty [Sections 274 and 275] |
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Part VIII |
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Proceedings Under Faceless Penalty Scheme [Effective from 12-1-2021] |
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Part IX |
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Part X |
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Handling Penalty Notices in the Present Faceless era with Appropriate Solutions |
A sort of logical and systematic classification of a rather comprehensive subject-matter as envisaged by us is likely to be of help in providing an easy grasp into, and appreciation of, the numerous penalty provisions that may be invoked.
Comprehensiveness and all pervasiveness of the text in the book may be judged by over 2000 Case Law citations discussed and incorporated therein.
We have tried our very best to make this book able to serve its objectives vis-a-vis assessees, consultants, assessing officers, courts, etc., without any prejudices or compromises. We hope that we will be blessed with enthusiastic response for this product as it certainly is of tremendous use for each and every person having anything to do with income-tax. We would however welcome constructive suggestions from our learned readers for any kind of improvement in our forthcoming editions.
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JODHPUR |
Dr. AVADHESH OJHA |
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21 JUNE, 2021 |
CA. (Dr.) NISHA BHANDARI |