{"id":24480,"date":"2019-09-20T09:45:01","date_gmt":"2019-09-20T04:15:01","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=24480"},"modified":"2019-09-19T17:05:47","modified_gmt":"2019-09-19T11:35:47","slug":"various-penalties-mentioned-under-section-2711c-income-tax-act-1961","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/various-penalties-mentioned-under-section-2711c-income-tax-act-1961\/","title":{"rendered":"Various Penalties Mentioned Under Section 271(1)(C), Income Tax Act, 1961"},"content":{"rendered":"<p>Income Tax Act, 1961 contains various provisions relating to penalties, fines &amp; interest besides taxation of a taxpayer. Thus, for penalizing the defaulting taxpayer for the distinct nature of defaults such as late payment of tax, late filing of the return, failure in making a tax payment, failure to maintain records, etc., the <strong>Income Tax Act<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Income_tax_in_India\">[1]<\/a><\/sup> has introduced various sections that impose different penalties for different defaults.<\/p>\n\n\n\n<p>Penalties and fines are imposed on\nthose who don&rsquo;t comply with the guidelines and provisions of the Income Tax Act\nand in some severe cases, prosecution proceedings are also conducted against\nthose who have either concealed or furnished wrong income.<\/p>\n\n\n\n<div class=\"shadow1\"><strong>Section 271(1)(C) deals with prosecution &amp; proceedings for the concealment of income, which is discussed in detail henceforth.<\/strong><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Section 271(1)(C) of the Income Tax Act, 1961<\/strong><\/h2>\n\n\n\n<p>Section 271(1)(C) authorizes the\nIncome Tax Authorities to impose a penalty or even initiate proceedings against\nany assessee who has either &ldquo;Concealed&rdquo; or &ldquo;Furnished Wrong\nIncome.&rdquo; If an Assessing Officer or Commissioner of Income Tax is\nsatisfied with the occurrence of such defraud, he can initiate proceedings\nagainst the assessee.&nbsp; In simple terms,\nthis section will be applicable if tax authority is satisfied with the\nfollowing two assumptions:<\/p>\n\n\n\n<ul><li>A taxpayer has\n&ldquo;Concealed&rdquo; his income, or<\/li><li>The taxpayer has\n&ldquo;Furnished wrong details about his income&rdquo; for defrauding tax authorities to evade payment of tax.&nbsp; <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Penalty liable under section 271(1)(C) of the\nIncome Tax Act, 1961<\/strong><\/h2>\n\n\n\n<p>Following penalty is imposed for the\nconcealment of income or non-disclosure of income details:<\/p>\n\n\n\n<p><strong>Minimum Penalty<\/strong>:\n100 percent of the amount of tax evaded plus the amount of tax payable.<\/p>\n\n\n\n<p><strong>Maximum Penalty<\/strong>:\n300 percent of the amount of tax evaded plus the amount of tax payable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Calculation of Penalty under section 271(1)(C)\nof the Income Tax Act, 1961<\/strong><\/h3>\n\n\n\n<p>While calculating the penalty, a\ncritical part is regarding the tax amount which was sought or intended to be\nevaded. The tax amount which is sought to be evaded is the aggregate of tax\nintended to be evaded in general and the tax evaded under MAT or AMT. In case\nthe provisions of MAT or AMT are not applicable, the amount of tax sought to be\nevaded under MAT or AMT shall be ignored. <\/p>\n\n\n\n<div class=\"read\"><p><b>Recommended Article:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/types-income-tax-return-filing-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">All Types of Income Tax Return Filing In India\n<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Interpretation of &ldquo;Concealment&rdquo; &amp;\n&ldquo;Furnishing Wrong Income&rdquo;<\/strong><\/h3>\n\n\n\n<p>The intention of the provision of\nthis section is absolute transparency while paying tax. It prohibits an\nassessee from evading payment of tax by hiding facts about his income or\nmisrepresenting the income.<\/p>\n\n\n\n<p>Concealment is an intention to hide\nand not disclosing the correct information about the income with an intention\nto evade tax payment and eventually pay a lesser amount of tax.<\/p>\n\n\n\n<p>Furnishing Wrong Income takes place\nwhen particulars of full information are disclosed, but they are inappropriate,\nfalse, or misleading &mdash; for instance, portraying a lesser taxable amount.<\/p>\n\n\n\n<p><strong>I<em>n the case of Trisha\nKrishnan<\/em><\/strong>, it was held that the burden of\nproof lies with the assessee during the concealment proceedings to submit the\nnecessary supporting documents &amp; information for the disclosed income and\nthe burden of proof shift to Income Tax Officers (ITO) if the tax authority\nraises any doubt that the taxpayer has concealed his income.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Concealment proceedings (In Written)<\/strong><\/h3>\n\n\n\n<p>For initiating any concealment or\npenalty proceedings against the assessee, the income tax authority is required\nto prove the concealment of income by the assessee. Such proceedings can be\ninitiated only when the same is communicated to the assessee in written through\nassessment order.&nbsp; The assessing officer\nmust mention the following in the order:<\/p>\n\n\n\n<ul><li>Reason for such\nprosecution<\/li><li>Proof of occurrence of\nsuch concealment<\/li><\/ul>\n\n\n\n<p>As in the popular case of <strong><em>Shyamlal\nBoran Mandal<\/em><\/strong>, the assessing officer was not able to justify his charges\nagainst assesses as there was concealment of Income or non-disclosure of\nIncome. So, the case was dismissed by the court on the grounds of deficient\nshow-cause notice.<\/p>\n\n\n\n<div class=\"shadow1\">If an assessee fails to disclose his correct Income on Income Tax Return filed, it is deemed to be concealment of income. An assessing officer can consider such a defective return filed as the proof for concealment of income.<\/div><br>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Applicability of section 271(1)(C) of the\nIncome Tax Act, 1961<\/strong><\/h3>\n\n\n\n<p>Various cases of the High Court\n&amp; Supreme Court have made various judgments on the applicability of the\nprovision of this section. Section applies when:<\/p>\n\n\n\n<ul><li>Assessing officer during\nthe assessment shall be convinced and satisfied with the fraud by an assessee\nfor concealment of his income.<\/li><li>Assessing order will not\nbe sustainable if assessing an officer doesn&rsquo;t justify or prove his findings and the reason for such\nan order.<\/li><li>Bonafide mistakes of the\nassessee cannot be penalized under this section.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key-Points of section 271(1)(C) of the Income Tax\nAct, 1961<\/strong><\/h2>\n\n\n\n<p>Following are the general key-points\nfor an in-depth understanding of the provisions of this section:<\/p>\n\n\n\n<ul><li>Penalty or prosecution\nunder this section can be levied only by Assessing Officer or Commissioner of\nIncome Tax. No higher authorities such as High Court, Supreme Court, or Income\nTax Appellate\nTribunal have any authority to impose a penalty under this section.<\/li><li>The provision of this\nsection applies to the fraud found during Assessment Proceedings under the\nIncome Tax Act.<\/li><li>The penalty is imposed\n&amp; payable over and above the amount of tax paid.<\/li><li>The penalty is not\nlevied on the negative income of the assessee.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Case Laws<\/strong><\/h2>\n\n\n\n<p><strong>Case 1:<\/strong> If an\nassessee himself surrenders his extra income, then there is no imposition of\nconcealment case. In the case of <strong><em>Jayaraj Talkies<\/em><\/strong>, the assessee\nsurrendered a certain amount of extra income for which he did not have any\nsupporting documents or vouchers. The court did not impose any case of\nconcealment on him.&nbsp; <\/p>\n\n\n\n<p><strong>Case 2:&nbsp; <\/strong>Supreme Court in <strong><em>Reliance Petroproducts<\/em><\/strong> case held\nthat claiming anything that is not sustainable in law doesn&rsquo;t furnish\ninaccurate claims or furnishing incorrect details about the taxable income of\nthe assessee. The assessing officer can levy penalty up to that part of the\nincome where the assessee is unable to provide clear details of the total\nincome.<\/p>\n\n\n\n<p><strong>Case 3: <\/strong>Penalty\nproceedings are different for different cases. Penalty proceedings are\ndifferent from normal concealment or giving inaccurate details. Madras high\ncourt in the case of <strong><em>N. Ranjit<\/em><\/strong> held that the application\nof penal provisions is not automatic and the levy of penalty depends upon the\nfacts of each case. As per the section, the penalty can be imposed up to three\ntimes for every concealment or incorrect information.&nbsp; <\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/read-the-amazing-history-of-income-tax-of-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">The Amazing History of Income Tax in India- Read Now<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Income Tax Act, 1961 contains various provisions relating to penalties, fines &amp; interest besides taxation of a taxpayer. Thus, for penalizing the defaulting taxpayer for the distinct nature of defaults such as late payment of tax, late filing of the return, failure in making a tax payment, failure to maintain records, etc., the Income Tax [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":24499,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473],"tags":[2740,2741,2739],"acf":{"service_id":"50"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Various Penalties Mentioned Under Section 271(1)(C)<\/title>\n<meta name=\"description\" content=\"Section 271(1)(C) of the Income Tax Act 1961 addresses the provisions of penalty for Concealment\u201d &amp; \u201cFurnishing Wrong Income\u201d.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/various-penalties-mentioned-under-section-2711c-income-tax-act-1961\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Various Penalties Mentioned Under Section 271(1)(C)\" \/>\n<meta property=\"og:description\" content=\"Section 271(1)(C) of the Income Tax Act 1961 addresses the provisions of penalty for Concealment\u201d &amp; \u201cFurnishing Wrong Income\u201d.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/various-penalties-mentioned-under-section-2711c-income-tax-act-1961\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-20T04:15:01+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-19T11:35:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/Penalties-under-Section-2711c.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Savvy Midha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/Savvy-Midha.jpg","authorDescription":"\"Savvy Midha holds the degrees of Bachelor of Commerce(honors), LL.B and Company Secretary. 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