PENALTIES UNDER INCOME TAX ACT

This Article has been written by CA. SUMIT VASUDEV He can be contact at: sumitvasudev1987@gmail.com

For non-compliance with the different provisions of our Income Tax Act, Section 140A, 143(1A), 221 and 271 to 275 give the reference to levy penalty on a assessee. An assessee might be prosecuted for his comply with the provisions of the law. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of consideration of all the relevant circumstances of the case. Even if a minimum penalty will be justified in prescribed, the authority competent to impose the penalty will be justified in ignoring the penalty when there is technical or minor breach of the provisions of the Act.

QUANTUM OF PENALTY

An authority cannot levy the penalty less than the prescribed one. While imposing penalty it is very important to note that the quantum of penalty shall be as per the law on date of default and not as per the law on the date to which the assessment relates.

The Supreme Court’s decision in the case of Brij Mohan(supra) has ITRp.1(S.C)], following the Supreme Court’s decision, the Patna High Court held that the penalty imposed on account of the commission of a wrongful act is committed will be the law which is to be applied and in accordance with which the penalty is to be imposed.

Before the levy of any penalty, the assessee must have been heard or a reasonable opportunity of being heard must be given to the assessee. If penalty is imposed without such an opportunity, it will be invalid.

PENALTY IMPOSED UNDER MORE THAN ONE SECTION

Penalty may be imposed under more than one section at a time, if an assessee commits many defaults under various sections of the Act.

The various types of penalties can be summarized in the following manner:-

Section	Type of Default	Minimum Penalty	Maximum Penalty	Levied By
158BF	Determination of undisclosed income of block period.	100% of tax leviable in respect of undisclosed income.	300% of tax leviable in respect of undisclosed income.	Commissioner (Appeals) or Assessing Officer)
221(1)	Non -payment of tax and interest payable under section 220(2) within the prescribed time limit.	Such amount as the Assessing officer may impose.	Tax in arrears.	Assessing Officer.
271(1)(b)	Failure to comply with (i) a direction u/s 142(2A) or, (ii) a notice under section 115WD(2);115WE; 142(1);143(2)	Rs. 10000 for each failure.	Rs. 10000 for each failure.	Assessing officer.
271 (c)	Furnishing of inaccurate particulars of income or Concealment of the particulars of income.	100% of tax sought to be evaded.	300% of the tax sought to be evaded.	Commissioner (Appeals) or Assessing officer.
271(4)	Distribution of profit by registered firm otherwise than in accordance with the partnership deed and as a result of which partner has returned income below the real income.	Upto 150% of difference between tax on partner’s income assessed and tax on returned income in addition to tax payable.	Upto 150% of difference between tax on partner’s income assessed and tax on returned income in addition to tax payable.	-do-
271A	Failure to keep, maintain or retain books of account etc. as required under Section 44AA	Rs. 25000	Rs. 25000	Assessing Officer or Commissioner (Appeals)
271AA	Failure to keep and maintain documents and information in respect of international transaction.	A sum equal to 2% of the value of each international transaction.	A sum equal to 2% of the value of each international transaction.	-do-
271B	Failure to get accounts audited under Section 44AB or furnish audit report along with return of income.	½% of Total Sales, Turnover or gross receipts.	Rs. 100000	Assessing Officer
271BA	Failure to furnish report under Section 92E.	Rs. 100000	-	-do-
271BB	Failure to subscribe to eligible issue of capital.	20% of the amount subscribed.		Joint Commissioner.
271C	Failure to deduct tax at source or failure to pay wholly or partly the tax u/s 115-O(2) or second proviso to Section 194-B.	A sum equal to the amount of tax omitted to be deducted or paid.	-	-do-
271CA	Failure to collect tax at source.	100% of tax sought to be collected.	-	-do-
271D	Taking any loan or deposit in contravention of Section 269SS.	A sum equal to the amount of loan or deposit so taken or accepted.	-	-do-
271E	Repayment of any loan in contravention of Section 269T.	A sum equal to the amount of deposit.	-	-do-
271F	Failure to furnish returns as required by Section 139(1) and the proviso to Section 139(1) on or before due date.	Rs. 5000	Rs. 5000	Assessing Officer.
271FA	Failure to furnish Annual Information Return.	Rs. 100 for each day of default.	-	-do-
271G	Failure to furnish document or information under Section 92D.	A sum equal to 2% of the value of each international transaction.	-	Assessing Officer or Commissioner (Appeals).
272A(1)(a)	Failure to answer any question put to person legally bound to state the truth of any matter touching the subject of his assessment by an income – tax authority.	Rs. 10000 for each default.	Rs. 10000 for each default.	Joint Director or Joint Commissioner.
272A(1)(b)	Failure to sign any statement made by a person in course of income – tax proceedings.	Rs. 10000 for each default.	Rs. 10000 for each default.	-do-
272(1)(c)	Failure in compliance with summons issued under section 131(1) to attend office to give evidence and produce books of accounts or other documents.	Rs. 10000 for each default.	Rs. 10000 for each default.	Joint Director or Joint Commissioner
272A(2)	Failure to comply with a notice under section 94, to give notice of discontinuance of business/profession under Section 176(3); furnish returns/statements specified in Section 133,206,206A,206B or 285B; to allow inspection of (i) register mentioned in Section 134, or (iii) entry in such register, or (iii) allow copies thereof to be taken, furnish return of income under Section 139(4A) or, deliver declaration under Section 197A; furnish certificate under Section 203, deduct and pay tax under Section226.	Rs. 100 for every day of default	Rs. 100 for every day of default.	Joint Director or Joint Commissioner (Chief Commissioner or commissioner in case of default under Section 197A)
272AA(1)	Failure in compliance with Section 133B	Any amount subject to a maximum of Rs. 1000.	Rs1000.	Joint Commissioner/Asstt Director/Assessing Officer.
272B	Failure to comply with Section 139A (PAN).	Rs. 10000	-	Assessing Officer.
272BB	Failure to comply with Section 203A.	-	Rs. 10000	Assessing Officer.
272BBB	Failure to comply with Section 206CA (TCAN)	Rs. 10000	-	-do-

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PCC, IPCC and FINAL -Past Attempts Revision Test Papers

PROFESSIONAL COMPETENCE COURSE - REVISION TEST PAPER

November 2011  May 2011 November 2010 May 2010 November 2009 June 2009 November 2008 May 2008 November 2007 - GROUP - I November 2007 - GROUP – II

Integrated Professional Competence Course (IPCC) -Revision Test Papers

November 2011 May 2011 November 2010 May 2010 November 2009 Revision Test Papers - Final New Course November 2011 May 2011 November 2010 May 2010 November 2009 June 2009 November 2008

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How to Face CA Examinations ?

Download How to Face CA Examinations? Manual released by ICAI

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Integrated Professional Competence Examination [Paper 7 - Section B] and Professional Competence Examination [Paper 6 - Section B]

Strategic Management The students of Integrated Professional Competence Course [Paper 7 - Section B – Strategic Management] and Professional Competence Course [Paper 6 - Section B – Strategic Management] may note that there will be no Case Study (carrying 15 marks) in the examinations.


Instead of the Case Study a compulsory question containing five sub-divisions carrying three marks each would be included to cover maximum possible topics from the syllabus.
The new pattern of the question paper shall be applicable from November, 2011 examinations.
 Director, 
Board of Studies
http://www.icai.org/new_post.html?post_id=7685&c_id=121

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Frequently Asked Questions (FAQs) on "Exemption in a Paper/s" for CA Students

Please note that this paper is merely an attempt to provide answers to questions on the subject, posed to us, by the candidates from time to time, to the extent possible and with reference to the extant scheme of examination.  However, this compilation is neither exhaustive not does it purport to be a source of complete information on the subject. Hence, candidates are advised, in their own interest, to refer to the “Guidance Notes” supplied along with the examination application form, besides referring to the Chartered Accountants Regulations, 1988.

1. What are the passing requirements for PCE/IPCE/Final exam?

a) A candidate shall ordinarily be declared to have passed in both the groups simultaneously, if he-

(i) secures at one sitting a minimum of 40% marks in each paper of each of the groups and minimum of 50% marks in the aggregate of all the papers of each of the groups; or

(ii) secures at one sitting a minimum of 40% marks in each paper of both the groups and a minimum of 50% marks in the aggregate of all the papers of both the groups taken together.

b) A candidate shall be declared to have passed in a Group, if he secures at one sitting a minimum of 40% marks in each paper of the Group and minimum of 50% marks in the aggregate of all the papers of that Group.

2. What are the rules regarding “exemption” and validity period?

a) A candidate who has appeared in all the papers comprised in a group/unit and fails in one or more papers comprised in that group/unit but secures a minimum of 60% of the marks in any paper or papers of that group/unit shall be eligible for exemption in that paper or papers in the next three following examinations.

b) He shall be declared to have passed in that group/unit if he secures at one sitting a minimum of 40% marks in each of the papers of that group/unit and a minimum of 50% of the total marks of all the papers of that group/unit including the paper/s in which he had secured a minimum of 60% marks in the earlier examination.

c) He/she shall not be eligible for any further exemption in the remaining paper(s) of that group/unit until he/she has exhausted the exemption already granted to him in that group/unit.

d) The implications of the above paragraph are clarified below:i. You must have appeared in all the papers of the group/unit.

ii. You must have failed in the group/unit and should have secured a minimum of 60 marks in any paper/s of the group/unit.

iii. The exemption is automatic and will be found indicated in the statement of marks issued by the Institute.

iv. An exemption is valid for three immediate succeeding exams and will be carried forward automatically for the next three examinations.

v. A candidate shall be declared to have passed in a Group/unit, if he secures at one sitting a minimum of 40 percent marks  in each paper of the Group/unit and a minimum of 50 percent marks in the aggregate of all the papers of that group/unit. For the purpose of arriving at the aggregate marks, 60 percent or more marks secured earlier will also be taken into account.

vi. As long as exemption in one or more paper(s) of a group/unit, brought forward from an earlier attempt is subsisting, no further exemption in any paper in that group/unit will be given, even if one secures 60% or more marks in any paper in that group/unit.

e) The above rules relating to “Exemption” are common to all the exams, i.e., PCE, IPCE, IPCE Units, ATE and Final, conducted by the Institute.

3. I secured exemption in Paper I of PCE/IPCE/Final exam in November 2009 exam.   I did not appear in the exams held in May 2010, November 2010 and also in May 2011.  I have submitted my exam application form for appearing in November 2011 exam.  Can I get the exemption in the said paper in November 2011 exam?

No.  The exemption obtained by you in November 2009 exam would last only for the next three exams, i.e. for May 2010, November 2010 and May 2011 exam, irrespective of the fact whether you appeared in those exams or not.  The exemption you obtained in November 2009 examination stands exhausted now and will not be valid for November 2011 exam onwards.  You will have to appear in the said paper once again in November 2011 exam.

4. I appeared, say, in Papers 1 and 2 of Group I and remained absent in the remaining paper(s) of Group I of PCE / IPCE / Final and secured more than 60% of the marks in both the papers. However my mark sheet does not show any exemption in those two papers.

To be eligible for exemption in any paper of a group in any of the exams (PCE/IPCE/Final), you should have appeared in all the papers comprised in that group.  In your case, though you obtained more than 60% marks in two papers, you will not be eligible for exemption in those two papers since you did not appear in all the papers of that group

5. How do I know that I am eligible for exemption in a paper?

The fact that you are eligible for exemption in a paper, will be found indicated in the statement of marks, issued by the Institute, by way of a symbol “#” against the marks of the paper(s) in which you had secured a minimum of 60% marks.

In your statement of marks, you will find the alphabet “E” marked against the marks of already exempted paper(s) carried forward from an earlier examination, provided the exemption is still valid.

6. I secured exemption in Paper V( Group II) of PCE/IPCE/Final in May 2011 exam.  I have submitted my exam application form for appearing in Group II of November 2011 exam. Is the exemption automatic or do I have to specifically mention in my exam application form that I got exemption in Paper V in May 2011 exam?

An exemption is valid for three immediate succeeding exams and will be carried forward automatically for the next three examinations. However, you are required to give details of the exemption(s) secured by you in the immediate three preceding exams, in your exam form, which will help us to cross check with our data base.

7. I secured exemption in Paper 3 (Group I) of PCE/IPCE/Final in November 2009 exam.   I appeared in Group I in May 2011 exam once again and secured more than 60% marks in Paper 2 of (Group I) of PCE/IPCE/Final. However, I did not get exemption in Paper 2 even though I secured more than 60% marks in that paper?  Why is it so?

As long as exemption in one or more paper(s) of a group/unit, brought forward from an earlier attempt is subsisting, no further exemption in any other paper in that group/unit will be given, even if you secure 60% or more marks in any other paper in that group/unit.  You will not be eligible for any further exemption in the remaining paper(s) of that group until you have exhausted the exemption already granted to you in that group.

The exemption that you secured in a paper in November 2009 exam lasted till May 2011 exam. Hence, you did not get any exemption in Paper 2 in May 2011 exam even though you secured more than 60% marks in that paper.

8. I secured exemption in Paper 3 (Group I) of PCE/IPCE/Final in November 2010 exam.   I intend to appear in Group II in November 2011 exam and applied for the same.  Can I get exemption in any paper in Group II in November 2011 exam if I secure more than 60% marks in any of the papers of Group II?

Yes.  You can get exemption in any of the papers of Group II in November 2011 exam.  The exemption that you secured in Paper 3 of Group I does not come in the way of your getting exemption in any paper of Group II. Please note that the rules relating to exemptions are applied group-wise.

However, you will not be eligible for any further exemption in the remaining paper(s) of Group I until you have exhausted the exemption already granted to you in that group.

9. I have already passed one group in PCE and converted to IPCE.  I am now a Unit candidate under IPCE.  Will I get the benefit of the exemption secured by me in PCE, in the corresponding papers of IPCE?

Yes.  The exemption in a paper or papers in a particular group granted earlier to a candidate of PCE shall continue to be valid, in the corresponding paper or papers under the IPCE/ATE,  for the unexpired chance(s).

10. What about exemption from appearing in any paper/s available to IPCE Unit candidates?

Unit scheme is meant for those candidates who have passed one of the groups in any of the following exams:

a) CA Intermediate under Para 2A of Schedule B of CA Regulations 1988( i.e Nov 1994 or later) or

b) PE II or

c) PCE who have converted to IPCE

Such a candidate is eligible for conversion to IPCE and may apply for conversion as a student of IPCE. For details, please visit the Board of Studies Announcements within the students section of the website www.icai.org

Group-wise exemption in IPCE by virtue of having passed one group in CA Intermediate examination under the syllabus as specified in paragraph 2A of Schedule B of Chartered Accountants Regulations 1988 ( i.e. Nov. 1994 or later) or PE II or PCE is not available in IPCE because the composition of papers in each group of IPCE is  different from that of Intermediate/ PE II / PCE. But paper wise exemption secured on the basis of 60% or more marks in a paper(s) of PCE is available for the corresponding paper(s) for the unexpired chance(s), as per details given below:

Papers of PE II passed	Papers of PCE passed	Paper-wise exemption in IPCE/ATE
Group I Paper 1 Accounting Paper 2:  Auditing Paper 3:  Business and Corporate Laws	Group II Paper 1:  Advanced Accounting Paper 2:  Auditing and Assurance Paper 3:  Law, Ethics and Communication	Group I Paper 1:  Accounting and Group II Paper 5:  Advanced Accounting Group II Paper 6:  Auditing and Assurance Group I Paper 2:  Business Law, Communication and Ethics
Group II Paper 4:  Cost Accounting and Financial Management Paper 5:  Income tax and Central Sales Tax Paper 6:  Information Technology	Group II Paper 4:  Cost Accounting and Financial Management Paper 5:  Taxation Paper 6:  Information Technology and Strategic Management	Group I Paper 3:  Cost Accounting and Financial Management Group 1 Paper 4:  Taxation Group II Paper 7: Information Technology and Strategic Management

http://220.227.161.86/24309announ14197.pdf

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