The penalty provisions of section 272BB of the Income Tax Act penalizes the person in case of default in complying with the provisions of section 203A. It should be noted here that section 203A covers provisions relating to the ‘tax deduction and collecting account number’.
The present article briefly provides understanding on applicability of the penalty provisions of section 272BB. The article also explains the connecting provisions of section 203A and the amount payable as a penalty under section 272BB.
Understanding the applicability of the penalty provisions of section 272BB of the Income Tax Act –
The penalty provisions of section 272BB penalize the defaulter under the following circumstances –
- In case the person fails to comply with the provisions of section 203A of the Income Tax Act; or
- In case the person quotes false ‘tax deduction account number’ or the ‘tax collection account number’ or the ‘tax deduction and collection account number’ in the challans / certificates / statements / other documents as prescribed under section 203A.
In any of the above default, the defaulter would be penalized under section 272BB of the Income Tax Act. However, provisions of section 272BB (2) clearly state that no order imposing a penalty under section 272BB would be levied unless an appropriate opportunity of being heard is given to the defaulter in the matter.
Understanding connecting provisions of section 203A –
Section 203A of the Income Tax Act deals with the provisions relating to the ‘tax deduction and collection account number’. The basic provisions of section 203A state as under –
- The person responsible for deducting tax (i.e. TDS) or collecting tax (i.e. TCS) is required to apply for the ‘tax deduction account number’ or ‘tax collection account number’ within the prescribed time limit.
- The person is required to quote the ‘tax deduction account number’ or the ‘tax collection account number’ or the ‘tax deduction and collection account number’ on the following documents –
- In all the challans for the payment of TDS / TCS.
- In all the certificates furnished for tax deducted (i.e. TDS certificate) or certificate furnished for collection of tax (i.e. TCS certificate).
- In all the TDS return or TCS returns.
- In any other documents pertaining to such transactions as may be prescribed in the interest of revenue.
Amount of penalty payable under section 272BB
In case of default in complying with the provisions of section 203A, the Assessing Officer may direct the defaulter to pay the penalty under section 272BB. The defaulter is liable to pay a sum of INR 10,000 as a penalty.
However, as per provisions of section 273B, the penalty cannot be imposed under section 272BB in case the defaulter proves the reasonable cause for the said failure.
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