With an aim to hold control over black money transaction and also to promote the digital transactions, the provisions of section 269ST of the Income Tax Act were introduced and made effective from 1st April 2017. The provisions of section 269ST mandate specific modes of undertaking transactions. In case the person fails to comply with the provisions of section 269ST, then such a person would be accountable to pay the penalty under section 271DA of the Income Tax Act.
The current article explains the applicability of provisions of section 271DA; provisions of section 269ST; authority eligible for imposing the penalty under section 271DA and the amount of penalty payable under section 271DA.
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Penalty provision of section 271DA
- The penalty is payable under section 271DA in case the person contravenes provisions of section 269ST of the Income Tax Act.
- Such a penalty can be imposed only by the Joint Commissioner.
- The penalty cannot be imposed in case the person provides good and sufficient reasons for contravention.
Understanding the provisions of section 269ST of Income Tax Act
As seen above, penalty under section 271DA is leviable only in case the person fails to comply with provisions of section 269ST. Thus, it becomes important to understand the provisions of section 269ST which is explained hereunder –
Section 269ST specifically provides that no person shall receive –
- An amount of INR 2 Lakhs or more in total from a person in a day; or
- An amount of INR 2 Lakhs or more in respect of a single transaction; or
- An amount of INR 2 Lakhs or more in respect of a transaction relating to one event / occasion from a person.
However, it should be noted that the person can receive an amount of INR 2 Lakhs or more by any of the following modes –
- An account payee cheque; or
- An account payee bank draft; or
- Through the use of electronic clearing system through a bank account; or
- Through other prescribed electronic mode.
Please note, the provisions of section 269ST shall not apply to the following –
- Receipt of the amount by the Government or any banking company or a post office savings bank or a co-operative bank.
- The transaction referred under section 269SS of the Income Tax Act.
- The persons or class of persons as notified in the official Gazette.
Authority eligible for imposing a penalty under section 271DA
As per section 271DA (2), the penalty for contravening the provisions of section 269ST can be imposed only by the Joint Commissioner. Meaning thereby that only the Joint Commissioner is the eligible authority for imposing a penalty under section 271DA and no other authority can impose a penalty under section 271DA.
Amount of penalty leviable under section 271DA
In case the person fails to comply with the provisions of section 269ST, then, the defaulter would be liable to pay an amount equal to the sum so received.
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