The penalty provision of section 271G of the Income Tax Act applies to the person (who has entered into an international transaction / specified domestic transaction) fails to furnish information / document within the prescribed time limit as specified under provisions of section 92D (3) of the Income Tax Act.
The current article tries to explain the provisions of section 271G, explaining together the connecting provisions of section 92D (3). The article also lists down the authority who is authorized to impose a penalty under section 271G and amount of a penalty payable under section 271G.
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Applicability of provisions of section 271G
The provisions of section 271G of the Income Tax Act gets applicable in case the following conditions are satisfied –
1. The person has entered into an international transaction / specified domestic transaction.
[Please note meaning of the term ‘international transaction’ is explained under section 92B and meaning of the term ‘specified domestic transaction’ is explained under section 92BA of the Income Tax Act.]
2. The Assistant Commissioner or Commissioner (Appeals) has prescribed such person to provide information / document within a period of 30 days of the receipt of the notice [as per provisions of section 92D (3) of the Income Tax Act].
3. Such person fails to furnish the required information / documents within the prescribed time limit.
In case all the above conditions are satisfied, the defaulter would be liable to pay penalty under section 271G of the Income Tax Act.
It is important to note here that only the following list of authorities are authorized to direct the defaulter to pay the penalty under section 271G of the Income Tax Act –
- The Assessing Officer; or
- The Transfer Pricing Officer as referred under section 92CA; or
- The Commissioner (Appeals).
Penalty not to be imposed under section 271G in specified case
As seen penalty under section 271G is levied in case the person fails to furnish information / documents specified under section 92D (3) within the prescribed time limit. However, as per section 273B of the Income Tax Act, in case the defaulter proves the reasonable cause for such failure, then, no penalty can be imposed under section 271G.
Amount of penalty payable under section 271G
In case of failure in furnishing of information / documents as required under section 92D (3), the defaulter would be liable to pay penalty amount equal to 2% of the value of the international transaction / specified domestic transaction.
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