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Penalty for failure to comply with notice issued under section 142(1) or 143(2) or direction for audit under section 142(2A): –
Penalty under section 271(1)(b) is levied if a taxpayer fails to comply with notice issued to him under section 142(1) or section 143(2) or fails to comply with a direction issued under section 142(2A). Before understanding the penalty provisions of section 271(1)(b) we shall take a brief overview of provisions of section 142(1), 142(2A) and section 143(2).
What is Section 142(1)?
Ans. Under section 142(1), the Assessing Officer can issue notice asking the taxpayer to file the return of income if he has not filed the return of income or to produce or cause to be produced such accounts or documents as he may require or to furnish in writing and verified in the prescribed manner, information in such form and on such points or matters (including a statement of all assets and liabilities of the taxpayer, whether included in the accounts or not) as he may require.
What is Section 143(2A)?
Ans. Section 142(2A) deals with special audit. As per section 142(2A), if the conditions justifying special audit as given in section 142(2A) are satisfied, then the Assessing Officer can direct the taxpayer to get his accounts audited or re-audited from a chartered accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
What is Section 143(2)?
Ans. Section 143(2) deals with the provisions relating to the issuance of notice before conducting a scrutiny assessment under section 143(3).
If the taxpayer fails to comply with notice issued to him under section 142(1) or section 143(2) or fails to comply with a direction issued under section 142(2A), then as per section 271(1)(b) he shall be liable for a penalty of Rs. 10,000 for each failure.
Penalty for failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA: –
For the purpose of Income-tax Act, a taxpayer is required to maintain the books of account as provided in section 44AA. If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under section 271A. Penalty under section 271A is Rs. 25,000.
Penalty for failure to get accounts audited or furnish a report of audit as required under section 44AB: Section 44AB prescribes when the accounts of the taxpayer are to be audited. If a taxpayer, in spite of the requirement of section 44AB, fails to get his accounts audited, then he can be held liable for penalty under section 271B. Penalty under section 271B will be levied for failure to get the accounts audited or failure to furnish a report of audit as required under section 44AB. Penalty shall be one-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less.
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