1. Enabling the Commissioner (Appeals) to levy Penalty under Section 271AAB. 271AAC and 271AAD of the Act [Sections 271AAB, 271AAC and 271AAD amended w.e.f. 1-4-2022]
(A) Reason for making Amendment
Sections 271AAB, 271AAC and 271AAD of the Act under Chapter XXI contain provisions which give powers to the Assessing Officer to levy penalty in cases involving undisclosed income in cases where search has been initiated under section 132 or otherwise, or for false entry etc. in books of account.
tinder Chapter XXI of the Act which deals with penalties. Commissioner (Appeals) has concomitant powers with Assessing Officer to levy penalty in eligible cases under section 270A section 271. section 271A, section 271AA, section 271G. section 271J which deal with deliberate concealment, non-disclosure and omission by an as assessee to evade tax.
Similarly, sections 271AAB. 271AAC, 271AAD penalize actions pertaining to undisclosed income, unexplained credits or expenditures, or deliberate falsification or omission in books of account.
(B) Amendment made
Therefore. in order to improve deterrence against noncompliance among tax payers. the Finance Bill. 2022 has amended sections 271AAB. 271AAC and 271AAD by enabling the Commissioner (Appeals to levy penalty under these sections to the along with Assessing Officer.
2. Enhancing the penalty under section 272A (2) from Rs.100 per day to Rs.500 per day [Section 272 amended w.e.f. 1-4-2022]
(A) Reason for making Amendment
Section 272A of the Act provides for penalty for failure to answer questions, sign statements. furnish information, returns or statements, allow inspections etc. At present. the amount of penalty fur failures listed under section 272A (2) is Rs.100 for every day during which the failure continues.
As per the existing section 272A (2), if any person fails—
(a) to comply with a notice issued under section 94(6); or
(b) to give the notice of discontinuance of his business or profession as required by section 176(3); or
(c) to furnish in due time any of the returns, statements or particulars mentioned in section 133 or section 206 or section 206C or section 258B: or
(d) to allow inspection of any register referred to in section 134 or of any entry in such register or to allow copies of such register or of any entry therein to be taken; or
(e) to furnish the return of income which he is required to furnish under section 139(4A) and 139(4C) or to furnish it within the time allowed and, in the manner, required under those subsections: or
(f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in section 197A; or
(g) to furnish a certificate as required by section 203 or section 206C; or
(h) to deduct and pay tax as required by section 226(2);
(i) to furnish a statement as required by section 192(2C);
(j) to deliver or cause Lo be delivered in due time a copy of the declaration referred to in section 206C (1A);
(k) not relevant now:
(I) to deliver or cause to be delivered the statements within the time specified in section 206A (1),
(m) to deliver or cause to be delivered a statement within the time as may be prescribed under section 200(2A) or section 206C(3A),
he shall pay, by way of penalty, a sum of Rs.100 for every day during which the failure continues:
Provided, that the amount of penalty for failures in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns under sections 206 and 206C and statements under section 200(2A) or section 200(3) or the proviso to section 200(3) or under section 206C(3A) shall not exceed the amount of tax deductible or collectible, as the case may be:
Section 272A ensures compliance with various obligations under the Income lax Act by penalizing non-compliance and acting as a deterrent.
However, the penalty of Rs.100 had been commented upon by the CAG in their report on the entertainment sector as being too low. The penalty had not been increased since the section was introduced in 1999 and does not have an adequate deterrence value.
Therefore, the Finance Bill, 2022 has increased the amount of penalty for failures listed under section 272A(2) to Rs. 500 from the existing sum of Rs.100.
3. Alignment of the provisions relating to Offences and Prosecutions under Chapter XXII of the Act [Sunset clause to Section 276AB w.e.f. 1-4-2022]
(A) Reason for making Amendment
Sections 269UC/UE/UL along with other provisions of Chapter XX-C have been made inapplicable with effect from 01.07.2002. Vide Finance Act, 2002. section 269UP was introduced providing that the provisions of the Chapter shall not apply to, or in relation to. the transfer of any immovable property effected on or after 01.07.2002. Consequently, prosecution provisions under section 276AB are not relevant, as launching prosecution against offences committed more than twenty years ago, that is prior to 2002 would be beyond reasonable time.
Since such cases involve transfer of immovable property, it is not improbable that prosecution cases launched previously while the relevant provisions were still in effect might be ongoing. Therefore, in order to take those cases to logical conclusion without any interpretational issue arising on applicability of the section or otherwise, it is proposed to amend section 276A13 to align it with the provisions of the Act that have been made inapplicable, by providing a sunset clause .
(B) Amendment made
Hence, the Finance Bill, 2022 that no fresh prosecution proceeding shall be initiated under this section on or after 1-4-2022.
4. Amendment in Section 276B
(A) Reason for making Amendment
Section 276B provides for prosecution for a term ranging from three months to seven years with fine for failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. Under this section, a person shall be punishable for failure to (a) deduct the tax as required under the provisions of Chapter XVII-B which deals with deduction of tax at source, or (b) to pay the tax, as required by or under—
(i) sub-section (2) of section 115-O or
(ii) the second proviso of section 148B.
Section 194B was amended vide Finance Act 1999 w.e.f. 01.04.2000 by which the first proviso to the section was omitted and the section currently has only one proviso.
(B) Amendment made
Therefore, to avoid ambiguity among the sections 276b and 194B, the Finance Hill, 2022 has substituted the sub-clause (ii) of clause (b) of section 276B with “proviso to section 194B”.
Similar amendment has been made in Section 271C.
5. Amendment in Sections 278A mad 278AA
(A) Reason for making Amendment
Sections 278A and 278AA are related to punishment with prosecution against persons for failure to pay tax to the credit of Central Government under Chapter XVII- B for tax deducted at source. However, similar provisions for offence with respect to tax collected at source under Chapter XVII-BB. providing for punishment with prosecution against person failing to pay tax collected at source is not there under sections 278A and 278AA.
(B) Amendment made
Therefore, the Finance Hill, 2022 has included section 276BB under sections 278A and 278AA owing to the similar nature of offences that are punishable under section 276B and section 276BB.
