Penalty under section 271AA

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Last updated on May 9th, 2021 at 06:46 pm

Penalty under section 271 AA under Income Tax Act 1961, for failure to keep and maintain information and document in respect of certain transactions

When penalty u/s 271AA is applicable?

Penalty u/s 271AA is applicable for failure to keep, maintain, report, furnish information and document, etc. in respect of an international transaction or specified domestic transaction.

Why is penalty u/s 271AA(1) imposed?

– If a person fails to keep and maintain any such information and document as required u/s 92D(1) or u/s 92D(2).
– If a person fails to report such transaction which he is required to do so or
– If a person furnishes incorrect information or document.
– If a person maintains incorrect information or document.

Why is penalty u/s 271AA(2) imposed?

If a person fails to furnish the information and the document required u/s 92D(4).

Who can impose the penalty u/s 271AA?

Penalty u/s 271AA can be imposed by the Assessing Officer or the Commissioner (Appeals).

What is the quantum of penalty leviable u/s 271AA?

Assessing Officer or Commissioner (Appeals) may direct the assessee to pay a penalty equal to 2% of the value of the international transaction or specified domestic transaction entered by the assessee.

If the assessee fails to furnish the information & the document as required u/s 92D(4) under sub-section (4) of section 92D, the prescribed income-tax authority referred to in the said sub-section may direct that such person shall pay, by way of penalty, a sum of five hundred thousand rupees.

Sec 271AA(2) – A penalty equal to Rs. 5,00,000/- shall be levied for contravention of section 271AA(2).

Note: Penalty under this section shall not be imposed unless the assessee is given a reasonable opportunity of being heard.

Whether Immunity / Relief from penalty as per section 273B can be provided?

If the taxpayer proves that there was a reasonable cause for failure, then in that case immunity from penalty will be provided in genuine cases.

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About CA Ankita Khetan 196 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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