Penalty for failure to comply with notice issued under section 142(1) or 143(2) or direction for audit under section 142(2A)

Penalty for failure to comply with notice  under section 142(1) or 143(2)

Penalty under section 272A is levied if a taxpayer fails to comply with notice issued above section. fails to comply with a direction issued under section 142(2A). 

we shall take a brief overview of provisions of section 142(1), 142(2A) and section 143(2).

Section 142(1)

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. 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 as he may require.

• Note:-including a statement of all assets and liabilities of the taxpayer, whether included in the accounts or not.

Section 142(2A)-special audit

Section 142(2A) deals with special audit. 

• 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
• re-audited from a chartered accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

Section 143(2)

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 272A he shall be liable for a penalty of Rs. 10,000 for each failure.

Penalty for underreporting and misreporting of income

Many times a taxpayer may try to reduce his tax liability by underreporting or misreporting of income. In such a case, by virtue of Section 270A, the taxpayer will be held liable for penalty. The rate of penalty shall be 50% of the tax payable on under-reported income.

However, in a case where under-reporting of income results from misreporting of income. the taxpayer shall be liable for penalty at the rate of 200% of the tax payable on such misreported income.