Finance Bill, 2023 Amends Income Tax Penalty Provisions [Read Finance Bill]

The Government by the Union Budget has proposed to amend the Penal Provisions of the Income Tax Act, of 1961 through the Finance Bill 2023.

The Finance Minister proposed certain significant Changes to the penal provision.Under the Income-tax Act, penalties are levied for various defaults committed by the taxpayer. Some of the penalties are mandatory and a few are at the discretion of the tax authorities.

• Amending section 270A of the Income-tax Act relating to penalties for under-reporting and misreporting of income.
• Amending section 270AA of the Income-tax Act relating to immunity from imposition of penalty by giving reference to the appeal filed under section 246 before the Joint Commissioner (Appeals) to make it applicable under the provisions of the said sub-section.
• Amending section 271 of the Income-tax Act relating to failure to furnish returns, comply with notices, concealment of income, etc substitute the expression “the Commissioner (Appeals)” with “the Joint Commissioner (Appeals) or the Commissioner (Appeals)”.
• Amending section 271A of the Income-tax Act relating to failure to keep, maintain or retain books of account, documents, etc.
• Section 271AAC of the Income-tax Act relating to the penalty in respect of certain income was proposed to amend.
• Amending section 271AAD of the Income-tax Act relating to penalty for false entry, etc., in books of account.
• A very significant amendment is proposed to Section 271C of the Income-tax Act relating to penalty for failure to deduct tax at source to make a person liable to pay a penalty under that section for failure to ensure payment, in addition to the failure of payment, of whole or any part of the tax as required under the provisions.
• Amending the section 271FAA of the Income-tax Act relating to penalty for furnishing an inaccurate statement of financial transaction or reportable accountt here by imposition of penalty of fifty thousand rupees on a person for furnishing inaccurate information in the statement of financial transaction or reportable account. It was proposed that the income-tax authority imposing penalty under the said section shall be the same as the income tax authority prescribed under sub-section (1) of section 285BA.
• Amending section 274 of the Income-tax Act relating to procedure and thereby inserting a second proviso in sub-section (2B) of the said section to provide that the Central Government may amend any direction issued under sub-section (2B) of that section on or before 31st March 2022, by notification in the Official Gazette.
• Amending section 275 of the Income-tax Act relating to the bar of limitation for imposing penalties.

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