Rationalization of the provisions of sections 271AAB, 271AAC and 271AAD of the Act
Sections 271AAB, 271AAC and 271AAD of the Act under Chapter XXI contain provisions which give powers to the Assessing Officer to levy penalty in cases involving undisclosed income in cases where search has been initiated u/s 132 or otherwise, or for false entry etc. in books of account.
2. Under Chapter XXI of the Act which deals with penalties, Commissioner (Appeals) has concomitant powers with Assessing Officer to levy penalty in eligible cases under section 270A, section 271, section 271A, section 271AA, section 271G, section 271J which deal with deliberate concealment, non-disclosure and omission by an assessee to evade tax.
3. Similarly, sections 271AAB, 271AAC, 271AAD penalise actions pertaining to undisclosed income, unexplained credits or expenditures, or deliberate falsification or omission in books of accounts. Therefore, in order to improve deterrence against noncompliance among tax payers, it is proposed to amend the sections 271AAB, 271AAC and 271AAD by enabling the Commissioner (Appeals) to levy penalty under these sections to the along with Assessing Officer.
4. These amendments will take effect from 1stApril, 2022.
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Note on Clause 73, 74 and 75 of Finance Bill 2022
Clause 73 seeks to amend the section 271AAB of the Income-tax Act relating to penalty where search has been initiated. Sub-sections (1) and (1A) of the said section, inter alia, enables the Assessing Officer to levy penalty in cases where search has been initiated under section 132.
It is proposed to amend sub-sections (1) and (1A) of the said section to extend the powers to levy penalty to Commissioner (Appeals) also.
These amendments will take effect from 1st April, 2022.
The Explanation to the said section defines certain expressions for the purposes of the said section.
It is proposed to amend clause (a) of the said Explanation to make applicable a notice issued under section 148 also, in case where search is initiated on or after 1st April, 2021.
This amendment will take effect retrospectively from lst April, 2021.
Clause 74 seeks to amend the section 271AAC of the Income-tax Act relating to penalty in respect of certain income. Sub-section (1) of the said section, inter alia, enables Assessing Officer to levy penalty in cases where the income determined includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year.
It is proposed to amend sub-section (1) of the said section, to extend the powers to levy penalty to the Commissioner (Appeals) also.
This amendment will take effect from 1st April, 2022.
Clause 75 seeks to amend the section 271AAD of the Income-tax Act relating to penalty for false entry, etc. in books of account.
The said section, inter alia, enables the Assessing Officer to levy penalty in cases where, during any proceeding, it is found that in the books of account maintained by any person there is a false entry or an omission of any entry which is relevant for computation of total income of such person, to evade tax liability.
It is proposed to amend sub-sections (1) and (2) of the said section to extend the powers to levy penalty to the Commissioner (Appeals) also.
This amendment will take effect from 1st April, 2022.
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Extract of Clause 73, 74 and 75 of Finance Bill 2022
73. Amendment of section 271AAB.
In section 271AAB of the Income-tax Act,––
(a) in sub-section (1), in the opening portion, after the words “The Assessing Officer”, the words and brackets “or the Commissioner (Appeals)” shall be inserted;
(b) in sub-section (1A), in the opening portion, after the words “The Assessing Officer”, the words and brackets “or the Commissioner (Appeals)” shall be inserted;
(c) in the Explanation, in clause (a), for the words figures and letter “under section 153A”, the words, figures and letter “under section 148 or under section 153A, as the case may be,” shall be substituted and shall be deemed to have been substituted with effect from 1st April, 2021.
74. Amendment of section 271AAC.
In section 271AAC of the Income-tax Act, in sub-section (1), after the words “The Assessing Officer”, the words and brackets “or the Commissioner (Appeals)” shall be inserted.
75. Amendment of section 271AAD.
In section 271AAD of the Income-tax Act,––
(i) in sub-section (1), in the long line, after the words “the Assessing Officer”, the words and brackets “or the Commissioner (Appeals),” shall be inserted;
(ii) in sub-section (2), after the words “the Assessing Officer”, the words and brackets “or the Commissioner (Appeals)” shall be inserted.
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