Chapter 17: Penalties

Tax Audit Transfer pricing

271A, 271B, 271AA, 271BA,
221(1)
271
i
Cash loan/Advance G GA GB
271 Under-reporting/Undisclosed

D DA E 270A, 271

SS ST T AAB AAC AAD

269 SFT
271FA, 271FAA sse

1) Cash Loan & Advances

sse loan or Any Transaction loan/deposit

deposit taken received paid

269 SS ST T
20,000 2,00,000 20,000 0
24
i oo P
271 D DA E Oo tut
Penalty 100% of 100% of 100% of
amount amount amount
of loan received of loan

2) Under reporting/ Undisclosed

211270 A - Under-reporting/ Mis-reporting of Income G 24000

primpedin soo
Patent
20
Penalty 50% of Tax 200% of penalty 10019loan
on URI Tax on URI and
19000 Penally

WE

17.1 URI= Under-reported Income

 271AA

mom
271AAB at 271AAC 271AAD now
Undisclosed Income Unaccounted False entry or Omission
found in Search Income 68-69D to evade tax liability.

30%/ 60% of 10% of Tax on 100% of such

Undisclosed Income unaccounted false or omitted
Income u/s 115BBE entry.

(3) Tax Audit

271A 271B
Failure to keep & maintain
books as per section 44AA. T
Failure to get Books of
Accounts audited u/s 44AB

Rs. 25,000 0.5% of Turnover or Gross Receipts

Max 1,50,000
Note: If Assessee has not maintained BOA, penalty shall only be leviable u/s 271A & not 271B
because if BOA are not maintained, the question of getting them audited doesn't arise

221(1) Failure to pay any tax - Self Assessment Tax, TDS, TCS, tax demand

Penalty → Maximum: Amount of Tax in Arrears

4) Transfer pricing
271AA 271BA DAmeCA
21 Failure to furnish report
Failure to
of CA u/s 92E
keep & maintain Report such maintain/ Rs. 1,00,000
docs as per docs. when Furnish
sec 92D required Correct info.

2% of Transaction Value

17.2
 271

G GA GB Globe

Failure to furnish/
Failure to 2% of Rs.5,00,000 Inaccurate reporting
furnish info Transaction in respect of International
as per sec 92D Value Group.

2% of value of Rs. 5000 per Rs.15000

International day upto one per day
Transaction month thereafter

Failure to Failure to
furnish u/s furnish report
285A or furnishing
inaccurate report
u/s 285A
Where transaction
has effect of transferring
right of management

Notes:
30%/60% - 271AAB

assessee admits the &

Income during search
&

Assessee explains the nature

Discloses 30%
& source of such Income
it in return

II
pays Tax + Interest &

on such Income
&

60%- If even 1 condition is not satisfied, 60% penalty will be leviable.

17.3
Note: Please watch video of Yash Sir's Penalties on Youtube

underatIum
270A Calculation Order of sian
Penalty amount- 50%/200% of Tax as calculated below Assessment

If Return is filed: 143(1) 101am

a
Tax on Baad - Tax on pehle oreIg
Wali Income Wali Income 143(3) Kian

At the time of:

team
rear
one
Ilka
147
at
Scrutiny Tax on Income asian
_ Tax on Income
Assessment u/s 143(3) u/s 143(1)

Re-assessment Tax on Income _ Tax on Income 147 193131

u/s 147 u/s 143(3) Income BasicExempt

for netfiled
Under Reported Income =Income u/s [143(3) - 143(1)]
Income u/s [147 - 143(3)] means

If Return is not filed: Tax On Assessed Income

a i
Assiut
01194 d
la Bsa
1519th
Best Judgement
URI = Company/firm - Assessed Income
Assent
Other Cases = Assessed Income u/s 144 - Basic Exemption
151am our
yay
one IIIa
If there is loss: Tax on Difference in loss (Reduction of loss/Increase in Income)
Penalty = Underreporting - 50 % of Tax
Misreporting - 200% of Tax

270A(6): Cases which are not considered as under-reporting

• The amount of income in respect of which the assessee offers an explanation

• The amount of under-reported income determined on the basis of an estimate

• The amount of under-reported income represented by any addition made in

conformity with the ALP determined by the TPO.
• The amount of undisclosed income on account of a search operation

17.4
 Statement of Financial Transactions(SFT)

31stMay 9 A Y
Due Date for filing SFT: 31st May of the year immediately following
the F.Y. in which the Transaction is recorded.

sit
See 271FA- PENALTY FOR NON-FILING OF SFT
n
gistmay
→ On failure to furnish SFT or Reportable Accounts
Penalty is Rs.500 per day till the period of Notice Ayn
15th

1stAugust STEEL
→ On failure to pay the same till expiry of notice: Isth
sept Iggy
Penalty would be Rs. 1000 per day after expiry of notice.

soo 1000 Ist sure II ftp.penojodg

my
7 1stSeptember isthsept Espn
Sec 271FAA: Inaccurate Info in SFT or Reportable A/cs tooo
pedal

Penalty = Rs. 50,000 + 5000 for every Reportable Account

Sec 271K - Where any College

regd. u/s 35
University
Research Association
Institution regd u/s 80G

Fails to deliver a prescribed → Penalty:

statement in prescribed time Rs. 10,000- 1,00,000

Sec 272A- Penalty on non- compliance of AO's Order. 10,000 100,00

Sec 271 AAE- Penalty

Any Trust regd. u/s 11/10(23C) gives any 1st Violation : 100% of the Amount
Subsequent Violation: 200% of the
benefit to related person u/s 13(1)
Amount
(eg.Benefit to trustee, founder etc.)

17.5
In
 271C

Failure to Deduct TDS/or In case of Sec 194R, 194S, 194BA

ensure payment of Tax to Govt.
Benefit/Gift VDA Winnings
in B&P from
Wholly in Kind Online
Where Payment is OR Games
Partly in Cash &
Partly in Kind
AND
Cash is not sufficient to
meet the TDS Liability

Penalty Amt: Amt of TDS that assessee failed to pay or failed to ensure payment of.