I‭ NCOME TAX AUTHORITIEs‬ ‭7.

‬ ‭Assistant Director of Income Tax (ADIT) / Assistant Commissioner of Income‬ ‭ ENALTY UNDER 271‬
P ‭●‬ Q ‭ uantum of Penalty:‬
‭The Income Tax Authorities play a pivotal role in the administration and enforcement of‬ ‭Tax (ACIT):‬ ‭Section 271 of the‬‭Income Tax Act, 1961‬‭, deals with penalties imposed by the Income‬ ‭Fixed at‬‭₹10,000‬‭for each failure.‬
‭the Income Tax Act, 1961, ensuring compliance with tax laws and preventing evasion.‬ ‭ ssists the DIT/CIT in administrative and judicial functions.‬
A ‭Tax Authorities for certain defaults by taxpayers. The penalties under this section are‬ ‭●‬ ‭Exceptions:‬
‭These authorities, operating under a well-defined hierarchy, are tasked with assessing,‬ ‭May also be designated as Assessing Officers for specific cases.‬ ‭discretionary and depend on the nature and gravity of the default. Below is a detailed‬ ‭If the taxpayer can demonstrate reasonable cause for non-compliance, the penalty‬
‭collecting, and recovering taxes while addressing taxpayer grievances and maintaining‬ ‭8.‬ ‭Income Tax Officer (ITO):‬ ‭discussion of the penalties imposable under Section 271:‬ ‭may be waived.‬
‭transparency.‬ ‭The primary authority responsible for assessing income tax liability of taxpayers.‬ ‭1. Penalty for Concealment of Income or Furnishing Inaccurate Particulars (Section‬ ‭4. Penalty for Failure to Maintain or Report International Transactions (Section‬
‭Their statutory powers enable them to conduct investigations, scrutinize returns, impose‬ ‭Conducts tax audits and investigations.‬ ‭271(1)(c))‬ ‭271AA)‬
‭penalties, and adjudicate disputes, thereby upholding the integrity of the taxation system.‬ ‭9.‬ ‭Inspector of Income Tax (ITO):‬ ‭●‬ ‭Applicability:‬ ‭●‬ ‭Applicability:‬
‭Below is a detailed discussion of their hierarchy, powers, and responsibilities as‬ ‭Assists the ITO in various functions, including data entry, document verification, and field‬ ‭Penalty can be imposed if the taxpayer:‬ ‭Imposed if the taxpayer:‬
‭prescribed by the Act‬ ‭surveys.‬ ‭○‬ ‭Conceals the particulars of income.‬ ‭○‬ ‭Fails to maintain prescribed documents for‬‭international or specified‬
‭Income Tax Authorities Under the Income Tax Act, 1961‬ ‭Powers of Income Tax Authorities‬ ‭○‬ ‭Furnishes inaccurate particulars of income in the return.‬ ‭domestic transactions‬‭.‬
‭The Income Tax Act, 1961, establishes a hierarchical structure of authorities responsible‬ ‭1.‬ ‭Assessment Powers:‬ ‭●‬ ‭Quantum of Penalty:‬ ‭○‬ ‭Fails to report such transactions in the return of income.‬
‭for administering and enforcing income tax laws in India. These authorities play a crucial‬ ‭Assess the taxable income of individuals and entities under various heads of income.‬ ‭○‬ ‭Minimum:‬‭100% of the tax sought to be evaded.‬ ‭●‬ ‭Quantum of Penalty:‬
‭role in ensuring fair and equitable tax collection, as well as providing relief to taxpayers‬ ‭Conduct scrutiny of returns to verify accuracy.‬ ‭○‬ ‭Maximum:‬‭300% of the tax sought to be evaded.‬ ‭Fixed at‬‭2% of the value of each international or specified domestic‬
‭in case of disputes.‬ ‭2.‬ ‭Search and Seizure (Section 132):‬ ‭●‬ ‭Tax Sought to be Evaded:‬ ‭transaction‬‭.‬
‭1.‬ ‭Central Board of Direct Taxes (CBDT):‬ ‭Conduct raids to prevent tax evasion by searching premises and seizing unaccounted‬ ‭This is calculated as the difference between the tax assessed on the total income‬ ‭5. Penalty for Failure to Deduct or Pay Tax at Source (Section 271C)‬
‭The apex body responsible for formulating policies and issuing instructions for the‬ ‭assets.‬ ‭and the tax that would have been payable had the concealed income not been‬ ‭●‬ ‭Applicability:‬
‭administration of direct taxes in India.‬ ‭3.‬ ‭Survey (Section 133A):‬ ‭disclosed.‬ ‭○‬ ‭If a taxpayer fails to deduct tax at source (TDS) or fails to deposit TDS with‬
‭It exercises overall control and supervision over all income tax authorities.‬ ‭Enter business premises during working hours to verify books of accounts.‬ ‭●‬ ‭Exceptions:‬ ‭the government.‬
‭2.‬ ‭Director General of Income Tax (DGIT) / Chief Commissioner of Income Tax‬ ‭4.‬ ‭Requisition of Books and Documents (Section 132A):‬ ‭No penalty is imposed if the taxpayer proves that there was a‬‭bona fide mistake‬ ‭●‬ ‭Quantum of Penalty:‬
‭(CCIT):‬ ‭Demand production of records for inspection and scrutiny.‬ ‭or an inadvertent error.‬ ‭Equal to the‬‭amount of tax that was not deducted or not paid‬‭.‬
‭Heads the regional offices of the Income Tax Department.‬ ‭5.‬ ‭Rectification and Revision:‬ ‭2. Penalty for Failure to File Returns of Income (Section 271(1)(a))‬ ‭6. Penalty for Failure to Comply with Section 269SS or 269T (Section 271D and‬
‭Responsible for overall administration and supervision of income tax matters within their‬ ‭Rectify mistakes in orders and revise assessments under certain circumstances.‬ ‭●‬ ‭Applicability:‬ ‭271E)‬
‭respective regions.‬ ‭6.‬ ‭Power to Demand Information (Section 131):‬ ‭Imposed when a taxpayer fails to furnish the return of income within the‬ ‭●‬ ‭Applicability:‬
‭3.‬ ‭Director of Income Tax (DIT) / Commissioner of Income Tax (CIT):‬ ‭Summon individuals and compel them to provide evidence or documents.‬ ‭prescribed time.‬ ‭○‬ ‭Section 271D: Penalty for accepting loans or deposits of‬‭₹20,000 or more‬
‭Heads the zonal offices within a region.‬ ‭7.‬ ‭Levy of Penalty and Prosecution:‬
‭●‬ ‭Quantum of Penalty:‬ ‭in cash, violating Section 269SS.‬
‭Responsible for assessment, collection, and enforcement of income tax in their respective‬ ‭Impose penalties for non-compliance or concealment of income.‬
‭○‬ ‭5% of the tax payable‬‭for every month or part thereof during which the‬ ‭○‬ ‭Section 271E: Penalty for repayment of loans or deposits in cash, violating‬
‭zones.‬ ‭Initiate prosecution for serious offenses.‬
‭default continues.‬ ‭Section 269T.‬
‭4.‬ ‭Additional Director of Income Tax (ADIT) / Additional Commissioner of‬ ‭8.‬ ‭Recovery of Tax Arrears:‬
‭○‬ ‭The penalty is subject to a maximum of 25% of the tax payable.‬ ‭●‬ ‭Quantum of Penalty:‬
‭Income Tax (ACIT):‬ ‭Enforce recovery through attachment, auction, or other legal methods.‬
‭Assists the DIT/CIT in administrative and judicial functions.‬ ‭Significance of Income Tax Authorities‬ ‭●‬ ‭Exceptions:‬ ‭Equal to the‬‭amount of loan or deposit accepted or repaid in contravention‬‭.‬
‭If the taxpayer proves reasonable cause for the delay, the penalty may not be‬ ‭7. Penalty for False Entry in Books of Account (Section 271AAD)‬
‭May also be designated as Assessing Officers for specific cases.‬ ‭●‬ ‭Revenue Generation:‬
‭imposed.‬ ‭●‬ ‭Applicability:‬
‭5.‬ ‭Joint Director of Income Tax (JDIT) / Joint Commissioner of Income Tax‬ ‭●‬ ‭Economic Growth:‬
‭3. Penalty for Failure to Maintain or Furnish Prescribed Information (Section‬ ‭○‬ ‭Imposed for making false entries or omitting entries in books of accounts to‬
‭(JCIT):‬ ‭●‬ ‭Taxpayer Compliance:‬
‭Assists the DIT/CIT in administrative and judicial functions.‬ ‭271(1)(b))‬ ‭evade tax.‬
‭●‬ ‭Dispute Resolution:‬
‭May also be designated as Assessing Officers for specific cases.‬ ‭●‬ ‭Applicability:‬ ‭●‬ ‭Quantum of Penalty:‬
‭Conclusion‬
‭6.‬ ‭Deputy Director of Income Tax (DDIT) / Deputy Commissioner of Income‬ ‭Imposed if the taxpayer:‬ ‭Equal to the amount of the‬‭false or omitted entry‬‭.‬
‭●‬ ‭The Income Tax Act, 1961, establishes a robust framework for the administration‬
‭Tax (DCIT):‬ ‭○‬ ‭Fails to comply with a notice under‬‭Sections 142(1), 143(2), or 148‬‭.‬ ‭Key Points About Section 271 Penalties‬
‭and enforcement of income tax laws in India.‬
‭Assists the DIT/CIT in administrative and judicial functions.‬ ‭○‬ ‭Does not respond to queries or fails to provide relevant documents or‬ ‭1.‬ ‭Discretionary Nature: Reasonable Cause (Section 273B):Scope of Appeal:‬
‭●‬ ‭The various authorities under the Act play a vital role in ensuring efficient tax‬
‭May also be designated as Assessing Officers for specific cases.‬ ‭information.‬ ‭Conclusion‬
‭collection, promoting taxpayer compliance, and resolving tax disputes.‬

‭ he‬‭Income Tax Act, 1961‬‭provides a well-defined mechanism for appeals to ensure‬

T 3‭ . Appeal to the High Court – [Section 260A]‬ I‭ ncome tax officer duties‬ ‭ his ensures tax liability is determined even in cases of non-cooperation.‬
T
‭fairness and justice in case a taxpayer is aggrieved by any order passed by the Income‬ ‭Procedure:‬ ‭The duties of an‬‭Income Tax Officer (ITO)‬‭in assessing undisclosed income are crucial‬ ‭4. Collection of Evidence‬
‭Tax authorities. The procedure for appeals involves a hierarchical system of appellate‬ ‭1.‬ ‭Eligible Cases:‬ ‭for ensuring compliance with the provisions of the‬‭Income Tax Act, 1961‬‭, and‬ ‭The ITO collects evidence to substantiate the existence of undisclosed income. This‬
‭authorities, starting from the Commissioner of Income Tax (Appeals) to the Supreme‬ ‭Only substantial questions of law arising from the ITAT’s orders can be appealed‬ ‭preventing tax evasion. These duties are performed in accordance with specific powers‬ ‭includes:‬
‭Court.‬ ‭to the High Court.‬ ‭and procedures laid down in the Act to identify, assess, and recover undisclosed income.‬ ‭●‬ ‭Examination of bank accounts, cash deposits, and large transactions.‬
‭1. Appeal to Commissioner of Income Tax (Appeals) – [Section 246A]‬ ‭2.‬ ‭Time Limit:‬ ‭1. Identification of Undisclosed Income‬ ‭●‬ ‭Scrutiny of real estate purchases, jewelry, or other high-value assets.‬
‭Procedure:‬ ‭The appeal must be filed within‬‭120 days‬‭from the date of receipt of the ITAT‬ ‭The ITO is responsible for identifying income that has not been disclosed by the taxpayer.‬ ‭●‬ ‭Verification of foreign accounts and overseas investments under‬‭Black Money‬
‭1.‬ ‭Eligible Orders:‬ ‭order.‬ ‭Undisclosed income typically arises from:‬ ‭Act, 2015‬‭.‬
‭Any taxpayer aggrieved by certain orders passed by Assessing Officers (AOs) can‬ ‭3.‬ ‭Filing Process:‬ ‭●‬ ‭Concealment of taxable income.‬
‭appeal to the Commissioner (Appeals). These include orders related to assessment,‬ ‭File a memorandum of appeal stating the substantial question of law.‬ ‭●‬ ‭Non-reporting of transactions in tax returns.‬ ‭Relevant Provisions:‬
‭penalty, TDS, or TCS disputes.‬ ‭Pay the required court fees.‬ ‭●‬ ‭Inaccurate particulars furnished in returns.‬ ‭●‬ ‭Section 133(6):‬‭The ITO can demand information from banks, financial‬
‭2.‬ ‭Time Limit:‬ ‭4.‬ ‭Hearing:‬‭The High Court considers only questions of law and does not examine‬ ‭●‬ ‭Unaccounted money, property, or assets.‬ ‭institutions, or third parties.‬
‭The appeal must be filed within‬‭30 days‬‭from the date of receipt of the order.‬ ‭facts again.‬ ‭Statutory Provisions Used:‬ ‭●‬ ‭Section 142A:‬‭The ITO may refer property valuation to a valuation officer to‬
‭3.‬ ‭Filing Process:‬ ‭5.‬ ‭Decision:‬ ‭The High Court’s decision is binding unless further appealed to the‬ ‭●‬ ‭Section 142(1):‬‭The ITO can issue a notice requiring the taxpayer to furnish a‬ ‭assess fair market value.‬
‭○‬ ‭Submit Form 35 online through the Income Tax E-filing portal.‬ ‭Supreme Court.‬ ‭return of income or specific details regarding assets and liabilities.‬ ‭5. Imposition of Penalties and Prosecution‬
‭○‬ ‭Pay the prescribed fees based on the type and quantum of income involved.‬ ‭4. Appeal to the Supreme Court – [Section 261]‬ ‭●‬ ‭Section 131:‬‭The ITO has the power to summon persons, examine them under‬ ‭The ITO is authorized to impose penalties and initiate prosecution for non-disclosure of‬
‭4.‬ ‭Submission of Documents:‬ ‭Procedure:‬ ‭oath, and compel the production of books of accounts or other evidence.‬ ‭income:‬
‭○‬ ‭Attach the grounds of appeal and a copy of the assessment order.‬ ‭1.‬ ‭Eligible Cases:‬ ‭2. Conducting Surveys and Searches‬ ‭1.‬ ‭Penalties:‬
‭○‬ ‭Submit necessary evidence supporting the case.‬ ‭Appeals can be made against High Court orders, but only if the case involves a substantial‬ ‭The ITO can undertake surveys and searches to detect undisclosed income. These actions‬ ‭Section 270A:‬‭Penalty for under-reporting or misreporting income.‬
‭5.‬ ‭Hearing:‬ ‭question of law of general importance.‬ ‭are governed by specific sections of the Income Tax Act:‬ ‭Section 271AAC:‬‭Penalty for undisclosed income found during search operations (60%‬
‭The Commissioner (Appeals) hears the taxpayer, examines evidence, and provides‬ ‭The Supreme Court must grant special leave under Article 136 of the Constitution.‬ ‭1.‬ ‭Surveys (Section 133A):‬ ‭of such income).‬
‭a decision.‬ ‭2.‬ ‭Time Limit:‬ ‭Appeals must be filed within the time specified under the Supreme‬ ‭Conduct surveys on business premises to verify books of accounts, stock, cash, or other‬ ‭2.‬ ‭Prosecution:‬
‭6.‬ ‭Order:‬ ‭Court rules.‬ ‭assets.‬ ‭Section 276C:‬‭Initiates prosecution for willful evasion of tax, leading to imprisonment‬
‭The order must be passed within a reasonable time and is binding on both the‬ ‭3.‬ ‭Filing Process:‬ ‭Submit a special leave petition (SLP) explaining the legal‬ ‭Ensure proper recording of transactions.‬ ‭and fines.‬
‭taxpayer and the AO unless further appealed.‬ ‭questions involved.‬ ‭2.‬ ‭Search and Seizure (Section 132):‬ ‭Section 277:‬‭Prosecution for making false statements or delivering false accounts.‬
‭2. Appeal to the Income Tax Appellate Tribunal (ITAT) – [Section 252]‬ ‭4.‬ ‭Decision:‬‭The Supreme Court’s judgment is final and binding on all parties.‬ ‭The ITO can execute search and seizure operations to recover unaccounted money or‬ ‭6. Ensuring Compliance‬
‭Procedure:‬ ‭5. Revision by CBDT or Settlement Commission‬ ‭property.‬ ‭To prevent future instances of tax evasion, the ITO has additional responsibilities:‬
‭1.‬ ‭Eligible Orders:‬ ‭Apart from appeals, taxpayers can approach:‬ ‭During a search, the ITO is empowered to seize books of accounts, valuables, or any‬ ‭●‬ ‭Educating taxpayers on compliance requirements.‬
‭Decisions of the Commissioner (Appeals).‬ ‭1.‬ ‭Revision under Section 264:‬ ‭evidence indicating concealed income.‬ ‭●‬ ‭Ensuring proper filing of returns and reporting of income in subsequent years.‬
‭○‬ ‭Specific cases related to Transfer Pricing or international taxation.‬ ‭Taxpayers can request the Commissioner to revise any order (not subject to‬ ‭3. Assessment of Undisclosed Income‬ ‭●‬ ‭Monitoring high-risk taxpayers or businesses.‬
‭2.‬ ‭Time Limit:‬ ‭The appeal must be filed within‬‭60 days‬‭from the date of receipt of‬ ‭appeal) for relief.‬ ‭The ITO is tasked with making a proper assessment of undisclosed income using the‬ ‭7. Issuing Assessment Orders‬
‭the order from the Commissioner (Appeals).‬ ‭2.‬ ‭Settlement Commission:‬ ‭following mechanisms:‬ ‭After examining the case, the ITO must issue an‬‭assessment order‬‭that includes:‬
‭3.‬ ‭Filing Process:‬ ‭Taxpayers with complex cases can apply for a one-time settlement to avoid‬ ‭1.‬ ‭Scrutiny Assessment (Section 143(3)):‬ ‭●‬ ‭The total income assessed.‬
‭○‬ ‭Submit Form 36 with relevant documents and fees.‬ ‭prolonged litigation.‬ ‭The ITO scrutinizes the taxpayer's return of income along with supporting documents.‬ ‭●‬ ‭Tax payable or refund due.‬
‭○‬ ‭Include a memorandum of appeal and grounds for dispute.‬ ‭Conclusion‬ ‭Discrepancies, if any, are examined and necessary additions to income are made.‬ ‭●‬ ‭Penalty, if any, for concealment of income.‬
‭4.‬ ‭Hearing:‬ ‭The appellate mechanism under the Income Tax Act, 1961 ensures that taxpayers have‬ ‭2.‬ ‭Reassessment (Section 147):‬ ‭Conclusion‬
‭○‬ ‭The Tribunal may allow both oral and written submissions.‬ ‭multiple avenues for redressal of grievances. It balances administrative efficiency with‬ ‭If the ITO believes that income has escaped assessment, a reassessment notice is issued.‬ ‭The duties of the Income Tax Officer in assessing undisclosed income are vital for‬
‭○‬ ‭Cases involving substantial tax disputes are heard by a bench of members.‬ ‭judicial oversight, providing taxpayers with a fair opportunity to contest unjust or‬ ‭This can be based on new evidence or omitted income from previous assessments.‬ ‭maintaining the integrity of the tax system. By utilizing statutory provisions and‬
‭5.‬ ‭Order:‬ ‭erroneous orders.‬ ‭3.‬ ‭Best Judgment Assessment (Section 144):‬ ‭investigative tools, the ITO ensures that concealed income is brought to light and‬
‭The ITAT issues a reasoned order, which can be appealed to the High Court if‬ ‭If the taxpayer fails to furnish necessary information, the ITO can assess the income‬ ‭appropriate tax is collected. This not only enhances revenue collection but also deters‬
‭substantial legal questions arise.‬ ‭based on available data.‬ ‭future tax evasion, contributing to economic transparency and growth.‬