Section 272A of Income Tax

An income tax notice is a taxpayer's opportunity to make amends for a default committed in the filing of an income tax return. The penalty under Section 272A is imposed on a taxpayer for non-compliance with income tax notice issued under Section 142(1) or Section 143(2), or failure to comply with the mandate issued under Section 142(2A). In this article, we discuss Section 272A of the Income Tax Act.

Section 272A of Income Tax

The contents of the section are reproduced below for reference:

272A. (1) If any person,—
 (a) being legally bound to state the truth of any matter touching the subject 
of his assessment, refuses to answer any question put to him by an income-tax authority 
in the exercise of its powers under this Act; or
 (b) refuses to sign any statement made by him in the course of any proceedings 
under this Act, which an income-tax authority may legally require him to sign; or
 (c) to whom a summons is issued under sub-section (1) of section 131 either to 
attend to give evidence or produce books of account or other documents at a 
certain place and time omits to attend or produce books of account or documents 
at the place or time; or
 (d) fails to comply with a notice under sub-section (1) of section 142 or 
sub-section (2) of section 143 or fails to comply with a direction issued 
under sub-section (2A) of section 142,
he shall pay, by way of penalty, a sum of ten thousand rupees for 
each such default or failure.
(2) If any person fails—
 (a) to comply with a notice issued under sub-section (6) of section 94; or
 (b) to give the notice of discontinuance of his business or profession 
as required by sub-section (3) of section 176; or
 (c) to furnish in due time any of the returns, statements or particulars mentioned 
in section 133 or section 206 or section 206C or section 285B; or
 (d) to allow inspection of any register referred to in section 134 or of any entry 
in such register or to allow copies of such register or of any entry therein to be taken; or
 (e) to furnish the return of income which he is required to furnish under sub-section (4A) 
or sub-section (4C) of section 139 or to furnish it within the time allowed and 
in the manner required under those sub-sections; or
 (f) to deliver or cause to be delivered in due time a copy of the declaration 
mentioned in section 197A; or
 (g) to furnish a certificate as required by section 203 or section 206C; or
 (h) to deduct and pay tax as required by sub-section (2) of section 226;
 (i) to furnish a statement as required by sub-section (2C) of section 192;
 (j) to deliver or cause to be delivered in due time a copy of the declaration 
referred to in sub-section (1A) of section 206C;
 (k) to deliver or cause to be delivered a copy of the statement within the time 
specified in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C;
 (l) to deliver or cause to be delivered the statements within the time specified 
in sub-section (1) of section 206A;
(m) to deliver or cause to be delivered a statement within the time as may be prescribed 
under sub-section (2A) of section 200 or sub-section (3A) of section 206C,
he shall pay, by way of penalty, a sum of one hundred rupees for every day 
during which the failure continues:
Provided that the amount of penalty for failures in relation to a declaration 
mentioned in section 197A, a certificate as required by section 203 and returns 
under sections 206 and 206C and statements under sub-section (2A) or sub-section (3) 
of section 200 or the proviso to sub-section (3) or under sub-section (3A) of section 206C 
shall not exceed the amount of tax deductible or collectible, as the case may be:
Provided further that no penalty shall be levied under this section for the failure 
referred to in clause (k), if such failure relates to a statement referred to in sub-section (3) 
of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or 
caused to be delivered for tax deducted at source or tax collected at source, as the case may be, 
on or after the 1st day of July, 2012.
(3) Any penalty imposable under sub-section (1) or sub-section (2) shall be imposed—
 (a) in a case where the contravention, failure or default in respect of which such penalty is 
imposable occurs in the course of any proceeding before an income-tax authority not lower in 
rank than a Joint Director or a Joint Commissioner, by such income-tax authority;
(aa) in a case falling under clause (d) of sub-section (1), by the income-tax authority who had 
issued the notice or direction referred to therein;
 (b) in a case falling under clause (f) of sub-section (2), by the Principal Chief Commissioner or 
Chief Commissioner or Principal Commissioner or Commissioner; and
 (c) in any other case, by the Joint Director or the Joint Commissioner.
(4) No order under this section shall be passed by any income-tax authority referred to in 
sub-section (3) unless the person on whom the penalty is proposed to be imposed is given an 
opportunity of being heard in the matter by such authority.
Explanation.—In this section, "income-tax authority" includes a Principal Director General or 
Director General, Principal Director or Director, Joint Director and an Assistant Director or 
Deputy Director while exercising the powers vested in a court under 
the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the matters 
specified in sub-section (1) of section 131.

Section 142(1)

Section 142(1) includes provisions pertaining to the issue of notice to a taxpayer. This section of income tax authorizes the Assessing Officer to issue notice directing the taxpayer to comply with any of the following requirements, as may be applicable:

• File the income tax return, if it has not been filed.
• Produce or cause to be produced required accounts or documents.
• Furnish in writing the requisite information in the prescribed manner, which includes a statement of assets and liabilities of the taxpayer.

Section 142(2A)

Section 142 (2A) contains provisions pertaining to a special audit. This section of income tax stipulates that subject to the satisfaction of conditions justifying special audit, the Assessing Officer may direct the taxpayer to get his/her accounts audited or re-audited from a Chartered Accountant nominated by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner.

Section 143(2)

Section 143(2) of the Income Tax Act includes provisions pertaining to the issue of a notice before conducting a scrutiny assessment under Section 143(3).

Penalty under Section 272A

If the taxpayer is not compliant with respect to the notice issued under Section 142(1) or Section 143(2) or fails to comply with an order issued under Section 142 (2A), he/she will be required to remit a penalty which amounts to a sum of Rs 10,000 for each failure. Taxpayers should note that from 1st April 2018 the rules for the penalty for late filing income tax return has changed. Now, taxpayers will have to pay a penalty of Rs.5000 if the income tax return is late-filed between 1st August and 31st December. If an income tax return is late-filed after 31st December, then a penalty of Rs.10,000 will be levied. The penalty for late filing income tax return has been capped at Rs.1000 for taxpayers having a taxable income of less than Rs.1000.