With an aim to hold control over black money transaction and also to promote the digital transactions, the provisions of section 269ST of the Income Tax Act were introduced and made effective from 1st April 2017. The provisions of section 269ST mandate specific modes of undertaking transactions. In case the person fails to comply with the provisions of section 269ST, then such a person would be accountable to pay the penalty under section 271DA of the Income Tax Act.

The current article explains the applicability of provisions of section 271DA; provisions of section 269ST; authority eligible for imposing the penalty under section 271DA and the amount of penalty payable under section 271DA.

Penalty provision of section 271DA

  • The penalty is payable under section 271DA in case the person contravenes provisions of section 269ST of the Income Tax Act.
  • Such a penalty can be imposed only by the Joint Commissioner.
  • The penalty cannot be imposed in case the person provides good and sufficient reasons for contravention.

Understanding the provisions of section 269ST of Income Tax Act

As seen above, penalty under section 271DA is leviable only in case the person fails to comply with provisions of section 269ST. Thus, it becomes important to understand the provisions of section 269ST which is explained hereunder –

Section 269ST specifically provides that no person shall receive –

  • An amount of INR 2 Lakhs or more in total from a person in a day; or
  • An amount of INR 2 Lakhs or more in respect of a single transaction; or
  • An amount of INR 2 Lakhs or more in respect of a transaction relating to one event / occasion from a person.

However, it should be noted that the person can receive an amount of INR 2 Lakhs or more by any of the following modes –

  • An account payee cheque; or
  • An account payee bank draft; or
  • Through the use of electronic clearing system through a bank account; or
  • Through other prescribed electronic mode.

Please note, the provisions of section 269ST shall not apply to the following –

  • Receipt of the amount by the Government or any banking company or a post office savings bank or a co-operative bank.
  • The transaction referred under section 269SS of the Income Tax Act.
  • The persons or class of persons as notified in the official Gazette.

Penalty

Authority eligible for imposing a penalty under section 271DA

As per section 271DA (2), the penalty for contravening the provisions of section 269ST can be imposed only by the Joint Commissioner. Meaning thereby that only the Joint Commissioner is the eligible authority for imposing a penalty under section 271DA and no other authority can impose a penalty under section 271DA.

Amount of penalty leviable under section 271DA

In case the person fails to comply with the provisions of section 269ST, then, the defaulter would be liable to pay an amount equal to the sum so received.

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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