Here’s a detailed explanation of Section 271K of the Income Tax Act, 1961, which deals with penalties for failure to furnish statements or reports required under certain provisions:
1. Overview of Section 271K
Objective: To enforce compliance with reporting requirements under specific sections of the Income Tax Act.
Applicability:
- Applies when a person fails to furnish:
- Statements under Section 285BA(reporting of financial transactions)
- Reports under Section 92E(transfer pricing documentation)
2. Penalty Provisions
- Amount: ₹100 per dayof default
- Maximum Cap: ₹1,00,000 per reporting requirement
- Authority: Assessing Officer imposes penalty after giving opportunity to be heard
3. Key Aspects
Triggering Conditions:
- Complete non-filing of required statement/report
- Filing incomplete/inadequate documents
- Missing prescribed deadlines
Defenses Available:
- Reasonable cause for delay (must be proven)
- Technical failures beyond taxpayer’s control
- Cases of genuine hardship
4. Comparison with Other Penalties
| SECTION | REQUIREMENT | PENALTY |
| 271K | Failure to furnish specified statements | ₹100/day (max ₹1 lakh) |
| 271H | TDS/TCS statement defaults | ₹10,000-₹1,00,000 |
| 271J | Incorrect reports by professionals | ₹10,000 per report |
5. Practical Implications
Common Scenarios:
- Non-filing of Form 61A (high-value transactions)
- Delay in submitting Transfer Pricing documentation
- Incomplete reporting in Form 3CEB
Compliance Tips:
- Maintain calendar for all reporting deadlines
- Implement internal review processes
- Seek extensions when genuinely needed
6. Recent Developments
- CBDT circular (2023): Clarified that penalty applies only after giving proper notice
- Tribunal rulings: Emphasized need to consider taxpayer’s explanation
7. How to Avoid Penalties
- Identify all applicable reporting requirements
- Allocate responsibility for compliance
- Maintain proper documentation
- File for extensions when necessary
Note: The penalty is in addition to any other consequences for non-compliance with reporting requirements.
