Section 271AAC of the Income Tax Act imposes penalty in case the income has been determined under section 68 or section 69 / section 69A / section 69B / section 69C / section 69D. The penalty provisions of section 271AAC are thoroughly explained in the present article.

Applicability of penalty provisions of section 271AAC of Income Tax Act

The assessee is accountable to pay the penalty under section 271AAC, in case the income determined includes income referred under any of the following sections –

  • Section 68 – Cash Credits
  • Section 69 – Unexplained investments
  • Section 69A – Unexplained money etc.
  • Section 69B – Amount of investment etc. not fully disclosed in books of accounts.
  • Section 69C – Unexplained expenditure etc.
  • Section 69D – Amount borrowed / repaid on hundi

It is important to mention here that the penalty under section 271AAC is payable only in case the Assessing Officer directs the assessee to do so.

Further, penalty under section 271AAC is not leviable in case the income referred to in section 68 or section 69 / section 69A / section 69B / section 69C / section 69D has been reflected in the income tax return filed under section 139, and the relevant tax on the same has also been paid by the assessee under section 115BBE (1) (i).

It should be noted here that penalty under section 270A (i.e. penalty for under reporting and mis-reporting of income) shall not be imposed on the assessee in respect to income referred to in section 68 or section 69 / section 69A / section 69B / section 69C / section 69D.

Penality

Highlighting crucial points relevant for imposing penalty under section 271AAC

1. The penalty under section 271AAC can be imposed only after the direction of the Assessing Officer.

2. The penalty under section 271AAC can be imposed only in case the income determined includes income referred under section 68 or section 69 / section 69A / section 69B / section 69C / section 69D.

3. The penalty under section 271AAC cannot be levied in case the income referred to under section 68 or section 69 / section 69A / section 69B / section 69C / section 69D has been reflected in the income tax return, and appropriate tax has been paid thereon.

4. Order imposing penalty can be passed only after giving the assessee the reasonable opportunity of being heard.

5. It is important that provisions of section 274 and section 275 of the Income Tax Act are satisfied prior to levy of the penalty under section 271AAC.

Quantum of penalty payable under section 271AAC of the Income Tax Act

In case the provisions of section 271AAC gets attracted, the assessee would be liable to pay penalty amounting to a sum computed @ 10% of the tax payable under section 115BBE (1) (i).

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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Company: Taxguru Consultancy / Taxguru Edu
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