If the Assessing officer or the Commissioner Appeals or the Commissioner is satisfied that any person has failed to comply with the noticeu/s 115WD(2) or 115WE(2) or 142(1) or 143(2) or fails to comply with a direction issued u/s 142(2A) or he has concealed the particulars of income or fringe benefits or furnished inaccurate particulars of such income or fringe benefits, then the officers may direct such person to pay by way of penalty:
(1) An amount of Rs. 10,000 in addition to the tax payable u/s 115WD(2), 115WE(2), 142(1), 143(2) or 142(2A) or
(2) in the case of concealment of income, in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.
What does S. 115WD(2) relate to?
S. 115WD(2) relates to Return of fringe benefits.
Any employer who is responsible for paying fringe benefits tax and has not furnished his return under sub-section (1) of this act, the Assessing officer may after the due date issue a notice to him and require him to furnish the return within thirty days from the date of service of the notice, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.
What does S. 115WE(2) relate to?
S. 115WE(2) relates to Assessment.
Where a return has been furnished u/s 115WD, the Assessing Officer if he considers it necessary to ensure that the Assessee has not understated the value of the fringe benefits or has not under paid the tax in any manner, serves a notice on the Assessee requiring him either to attend his office or produce any evidence on which the Assessee may rely in support of the return on a specified date.
Provided that no notice under this sub-section shall be served on the Assessee after the expiry of twelve months from the end of the month in which the return is furnished.
What does S. 142(1) relate to?
S. 142(1) relates to Inquiry before assessment.
For purpose of making an assessment under this Act, the Assessing officer may serve on any person who has made a return u/s 115WD or 139 or in whose case the time allowed u/s 139(1) for furnishing the return has expired, a notice requiring him on a date specified there in:
(1) Where such person has not made a return, to furnish a return of his income or the income of any other person which he is assessable under this act, in the prescribed form and verified in the prescribed manner.
(2) to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require, or
(3) 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 Assessee, whether included in the accounts or not) as the Assessing Officer may require.
What does S. 143(2) relate to?
S. 143(2) relates to Service of notice.
S. 143 of the Income-tax Act, 1961 (‘the Act’) provides for assessment by an Assessing Officer (‘AO’) of the tax payable by an Assessee for a particular A.Y. S. 143 is a purely procedural or machinery section laying down the procedures for making assessment in various contingencies. Broadly, S. 143 prescribes two types of assessment — ‘summary assessment’ u/s 143(1) and ‘scrutiny assessment’ u/s 143(2).
The proviso to S. 143(2) of the Act prescribes the service of notice on the Assessee within a particular period as a pre-requisite to enable the AO to complete an assessment other than summary assessment. The notice should specify a date and should call upon the Assessee either to attend before the officer on that date or produce or cause to be produced before the officer, on that date, any evidence which the Assessee may rely upon in support of his return and it is then up to the Assessee to satisfy the officer by producing necessary material that the return is correct and complete. At present, the provision to S. 143(2)(ii) specifies six months from the end of the F.Y. in which the return is furnished, as the time-limit within which notice needs to be served on the Assessee for valid assessment of his return of income.
What does S. 142(2A) relate to?
S. 142(2A) relates to Special Audit.
In simple words notice for special audit can be issued when the Assessing Officer during the course of proceedings is not able to understand the complexity in account then he with the previous approval of Chief Commissioner or Commissioner can issue notice for special audit by a chartered accountant.
| Section | Nature of default | Minimum penalty | Maximum penalty |
| (1) | (2) | (3) | (4) |
| 271(1)(b) | Failure to comply with a notice u/s 115WD(2), 115WE(2), 142(1), 143(2) or failure to comply with a direction issued u/s 142(2A) to get the accounts audited. | Rs. 10,000 for each such failure. | Rs. 10000 for each such failure. |
Reference:
Section 271(1)(b), 115WD(2), 115WE(2), 142(1), 143(2)142(2A), of Income tax act, 1961
Failure to furnish returns, comply with notices, concealment of income, etc., u/s 271
(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person—
(a) has failed to comply with a notice under sub-section (2) of S. 115WD or under sub-section (2) of S. 115WE or under sub-section (1) of S. 142 or sub-section (2) of S. 143 or fails to comply with a direction issued under sub-section (2A) of S. 142, or
(b) Has concealed the particulars of his income or furnished inaccurate particulars of such income,
(c) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits,
He may direct that such person shall pay by way of penalty,—
(i) In the cases referred to in clause (a), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure,
(ii) in the cases referred to in clause (b) in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.
Return of fringe benefits u/s 115WD(2)
In the case of any employer who, in the opinion of the Assessing Officer, is responsible for paying fringe benefit tax under this Act and who has not furnished a return under sub-section (1), the Assessing Officer may, after the due date, issue a notice to him and serve the same upon him, requiring him to furnish within thirty days from the date of service of the notice, the return in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.
Assessment u/s 115WE(2)
Where a return has been furnished u/s 115WD, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the value of fringe benefits or has not underpaid the tax in any manner, serve on the assessee a notice requiring him on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return.
Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.
Inquiry before assessment u/s 142(1)
For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return u/s 115WD or 139 or in whose case the time allowed under sub-section (1) of S. 139 for furnishing the return has expired a notice requiring him, on a date to be therein specified,—
(i) where such person has not made a return within the time allowed under sub-section (1) of S. 139 or before the end of the relevant A.Y., to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or
Provided that where any notice has been served under this sub-section for the purposes of this clause after the end of the relevant A.Y. commencing on or after the 1st day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of S. 139 or before the end of the relevant A.Y., any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section,
(ii) to produce, or cause to be produced, such accounts or documents as the Assessing Officer may require, or
(iii) 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 assessee, whether included in the accounts or not) as the Assessing Officer may require
Provided that—
(a) the previous approval of the Joint Commissioner shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts;
(b) the Assessing Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.
142(2A) u/s Special Audit
If, at any stage of the proceedings before him, the Assessing Officer, having regard to [the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and] the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of S. 288, nominated by the Chief Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require.
Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard.
Assessment u/s 143(2)
Where a return has been furnished u/s 139, or in response to a notice under sub-section (1) of S. 142, the Assessing Officer shall,—
(i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim.
Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003;
(ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return.
Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the F.Y. in which the return is furnished.