Section 271A – Penalty for failure to keep / maintain or retain books of accounts, documents etc.

Section 44AA of the Income Tax Act read with rule 6F of the Income Tax Rules requires certain specified persons, carrying on business or profession, to mandatorily keep / maintain books of accounts or other documents.

In case such person fails to keep / maintain or retain the required books of accounts or other documents, then, the person would be liable to pay the penalty under section 271A of the Income Tax Act, the same is taken up and explained under the present article.

Applicability of provisions of section 271A of Income Tax Act

The provisions of section 271A apply under the following situations –

  • The person fails to keep or maintain any books of accounts or other documents of any previous year, as required under section 44AA of the Income Tax Act; or
  • The person fails to retain books of accounts / documents for the specified period as mentioned under section 44AA of the Income Tax Act.

It should be noted that, in case of failure, only the Assessing Officer or the Commissioner (Appeals) can direct the defaulter to pay the penalty under section 271A of the Income Tax Act.

Requirement of maintenance of books of accounts / documents –

Section 44AA of the Income Tax Act mandates following professions to maintain books of accounts –

  • Medical;
  • Engineering;
  • Legal;
  • Accountancy;
  • Architectural;
  • Technical Consultancy;
  • Interior Decoration; or
  • Film Artist (like a cameramen, an actor, a singer, a director, a music director, a lyricist etc.) ; or
  • An authorized representative; or
  • Any other profession notified by the Board.

Other than the above profession, following persons, carrying on business or profession, are also required to maintain books of accounts –

  • The persons whose income from business / profession exceeds INR 1,20,000 or the total turnover / sales / gross receipts exceeds INR 10 Lakhs in any of the preceding three years. However, in the case of individual and HUF, the limit is INR 2,50,000 and INR 25 Lakhs, respectively.
  • In case of newly started business / profession, if the income of business / profession is likely to exceed INR 1,20,000 or the total turnover / sales / gross receipts exceeds INR 10 Lakhs. However, in the case of individual and HUF, the limit is INR 2,50,000 and INR 25 Lakhs, respectively.
  • The taxpayer is covered under section 44AE or section 44BB or section 44BBB and the income claimed in the income tax return is lower than the profit or gains deemed under section 44AE or section 44BB or section 44BBB.
  • The taxpayer to whom the provisions of section 44AD(4) are applicable and the income exceeds the maximum amount not chargeable to tax in any previous year.

Requirement to retain books of accounts / documents

Rule 6F of the Income Tax Rules states that the books of accounts / other documents needs to be retained for a period of six years from the end of the relevant Assessment Year.

Amount of penalty payable under section 271A of Income Tax Act, 1961

If the person fails to keep / maintain the books of accounts / documents or fails to retain the required books of accounts / documents, then, such person shall be liable to pay the penalty under section 271A to the extent of INR 25,000.

Read Also:-

S. No. Title
1 Section 272BB Penalty for failure to comply section 203A provisions
2 Section 272B Penalty for failure to comply with provisions of PAN
3 Section 272AA Penalty for failure in complying with provisions of section 133B
4 Section 272A Penalty for failure to answer questions or furnish information / returns/ statements or allow inspections etc
5 Section 271J Penalty on professionals for furnishing incorrect information in reports / certificates
6 Section 271I Penalty for failure in furnishing Form 15CA & Form 15CB
7 Section 271H Penalty for late filing/non-filing of TDS or TCS return
8 Penalty for failure in furnishing report or furnishing inaccurate report under section 286 – Section 271GB
9 Section 271GA Penalty for failure in furnishing the information / document in Form 49D as required under section 285A
10 Section 271G Penalty for failure to furnish information / document as per provisions of section 92D
11 Section 271FB Penalty for default in furnishing return of fringe benefits
12 Section 271FAB Penalty for failure to furnish statement / information / document by an eligible investment fund
13 Penalty for providing inaccurate statement of financial transaction or reportable account- Section 271FAA
14 Section 271FA Penalty for failure in furnishing statement of financial transactions or reportable account
15 Section 271E Penalty for contravening provisions of section 269T
16 Section 271DB | Penalty for contravening provisions of section 269SU
17 Section 271DA Penalty for contravening provisions of section 269ST
18 Section 271CA Penalty for failure to collect tax at source (TCS)
19 Section 271D Penalty for contravening provisions of section 269SS
20 Section 271C Penalty for failure / non-deduction / non-payment of TDS
21 TDS Rate Chart for AY 2020-21 and AY 2021-22
22 Section 271BA Penalty for failure to furnish section 92E report
23 Section 271B Penalty for failure to get accounts audited
24 Section 271AAC Penalty in respect of certain specified income
25 Section 271AA Penalty for failure to maintain Transfer Pricing documents
26 Section 271A Penalty for failure to keep / maintain or retain books of accounts, documents
27 Section 270A(1) Penalty for under-reporting & misreporting of income
28 Section 269SU Acceptance of payment through electronic modes
29 Section 234F Late fees for default in filing of income tax return
30 Section 234E Late Fee for default in filing of TDS / TCS returns
31 Section 158BFA(2) – Penalty on undisclosed income for block period
32 Section 140A(3) Penalty for non-payment of self-assessment tax

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