According to provisions of section 44AB of the Income Tax Act, specific categories of the assessee are required to get their accounts audited. Accordingly, such specified categories of the assessee are also required to furnish the tax audit report. In case of any default, the assessee would be penalized under section 271B of the Income Tax Act.
The present article tries to cover the provisions of section 271B of the Income Tax Act; list of the assessee who is required to get their accounts audited; the amount of penalty payable under section 271B and relevant Frequently Asked Questions (FAQ).
The penalty provisions under section 271B apply under any of the following circumstances –
1. The assessee fails to get his accounts audited, as required under section 44AB, in respect of any previous year/ years; or
2. The assessee fails to furnish a tax audit report as required under section 44AB of the Income Tax Act.
However, it is essential to make a note that, the penalty under section 271B is payable by the assessee only on the direction of the Assessing Officer.
Further, it is noteworthy to mention here that section 273B of the Income Tax Act states that penalty under section 271B shall not be levied if the assessee / person provides the reasonable cause for failure of getting the accounts audited or failure in the furnishing of the tax audit report.
As seen above, the penalty under section 271B is leviable on the assessee who fails to get their accounts audited. Hence, it is important to go through the list of the assessee who is required to get their accounts audited. The list is summarized hereunder –
|Sr. No.||Category of person||Threshold limit exceeding which tax audit is mandatory|
|1||The person carrying on business||Total sales / turnover / gross receipts exceed INR 1 Crore in any previous year.|
|2||The person carrying on profession||Gross receipts exceed INR 50 Lakhs in any previous year.|
|3||The person carrying on business covered under section 44AE or section 44BB or section 44BBB||Income claimed by the person is lower than the deemed profit under respective sections in any previous year.|
|4||The person carrying on profession covered under section 44ADA||Income claimed by the person is lower than the deemed profit and income exceeds the specified threshold exemption limit in any previous year.|
|5||The person carrying on business to whom provisions of section 44AD (4) are applicable||Income exceeds the specified threshold exemption limit in any previous year.|
Please note, the assessee who is required to get their accounts audited is also required to duly furnish the tax audit report. Such tax audit report is to be submitted within 30th September of the year following the relevant the Financial Year.
The penalty payable under section 271B would be lower of the following –
Q.1 What is Section 271b of the Income Tax Act?
Ans: Section 271b of the Income Tax Act is a penalty provision, which penalizes the assessee who fails to get the accounts audited or who fails to furnish the tax audit report within the prescribed time limit.
Q.2 What is the penalty for late filing of tax audit report?
Ans: In case of late filing of the tax audit report, lower of the following amount is payable as a penalty –
Q.3 How to avoid penalty u/s 271b?
Ans: In order to avoid the penalty u/s 271b, the specified categories of person are required to get their accounts audited and are also required to furnish the tax audit report within the prescribed time limit.
|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|