12 August 2024


Notifications & Circulars

Ministry of Finance 

26.04.2016

Direct Taxation

AOs to not issue penalty notices under Sections 271D,E of IT Act

MANU/DTCR/0012/2016

The Central Board of Direct Taxes set forth a “Departmental View” to assuage conflicting notions on the limitation for imposition of penalty under Section 271D and 271E of the Income Tax Act 1961. Confusion prevail over whether such penalties commenced at the level of the Assessing Officer or from the Joint/Additional Commissioner of Income Tax. The Board clarified that Assessing Officers are not empowered to impose such penalties.

It accepted the ruling of the Kerala High Court in a 2015 case in which it determined that penalty proceedings could only be initiated by the Joint Commissioner, with the Assessing Officer unable to do so. If the AO’s assessment order was taken as the point of initiation of initiation of penalty, the same would be inconsequential, and proceedings thereupon would be redundant.

The CBDT’s “view” may be scripture for officers of the Department, but whether High Courts ascribe to the same remains to be seen.

Relevant

Limitation for penalty proceedings under sections 271D and 271E MANU/DTCR/0013/2016

Tags : income tax penalty notice limitation

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