The provisions of section 271FAA of the Income Tax Act applies in case the specified person furnishes inaccurate statement of the financial transactions / reportable account as prescribed under section 285BA of the Income Tax Act.

The provision of section 285BA mandates the specified person to furnish the statement of financial transaction in Form 61A. It should be noted that two penalty sections cover different types of default relating to section 285BA which are summarized hereunder for ready reference –

Section Type of default
Section 271FA This section levies penalty in case the specified person fails to furnish the statement of the financial transaction / reportable accounts.
Section 271FAA This section levies penalty in case of submitting an inaccurate statement of the financial transaction / reportable account.

The penalty provisions of section 271FAA of the Income Tax Act, 1961 and the amount of penalty payable thereon is explained in the current article.

penalty

Provisions of section 271FAA of the Income Tax Act

Provision of section 285BA mandates the specified categories of person to furnish the statement of the financial transaction. The penalty provisions of section 271FAA apply under the following circumstances –

1. The person fails to comply with the due diligence requirement given under section 285BA (7) or is deliberate on the part of the person.

2. The person was aware about the inaccuracy at the time of filing of the statement of the financial transactions. However, the person fails to inform the income tax authority about the said inaccuracy.

3. The person realizes the inaccuracy after filing of the statement of the financial transactions. However, the person fails to inform and furnish correct statement / information within the time specified under section 285BA (6) (i.e. within a period of 10 days).

Amount of penalty payable under section 271FAA

In case the person files an inaccurate statement of the financial transactions, as stated above, then the person would be liable to pay the penalty amounting to INR 50,000.

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