Penalties under the Income-tax Act Penalties Imposable Penalties are imposed on assessees for specific defaults as enumerated under different sections of the Act. Some penalties are mandatory, while others are discretionary. Key penalties include: Section Description Penalty Amount 221 Default in payment of tax within the prescribed time Up to the tax amount in arrears… Read More »
Recovery under Agreements with Foreign Countries [Section 228A] If foreign Government certifies arrears under its law against a resident or person having property in India, CBDT may forward certificate to TRO for recovery in India. TRO recovers as per Indian law and remits net proceeds to CBDT. Recovery of Penalty, Interest and Other Sums [Section… Read More »
Recovery through State Government [Section 227] Where recovery is entrusted to State Government, arrears can be collected as municipal or local taxes.
Other Modes of Recovery [Section 226] In addition toSection 222, AO/TRO can recover tax by: o Deduction from salary (Section 226(2)) o Recovery from money in custody of Court (Section 226(4)) o Distraint and sale of movable property (Section 226(5)), if authorised by CCIT/PCIT
Stay of Recovery Proceedings [Section 225] TRO may grant time for payment; proceedings stayed till expiry of such time. If tax demand is reduced in appeal/other proceedings, recovery of reduced portion shall remain stayed during pendency of further appeals. Once order becomes final, TRO must amend or cancel the certificate accordingly.
Validity, Amendment and Cancellation [Section 224] The assessee cannot dispute the correctness of the TRO’s certificate. TRO may cancel the certificate or correct clerical/arithmetical mistakes if required.
Jurisdiction of TRO [Section 223] The certificate may be executed by TRO: o where the assessee carries on a business/profession, or o where the assessee resides/has property. If the assessee has property in multiple jurisdictions and recovery is difficult or needs to be expedited, a certificate (or part thereof) can be forwarded to another TRO… Read More »
Certificate by TRO & Recovery Procedure [Section 222, Rule 117B] If the assessee is in default/deemed in default, TRO issues a certificate inForm No. 57stating arrears. Recovery may be done through: o Attachment and sale of movable property o Attachment and sale of immovable property o Arrest and detention in prison o Appointment of receiver… Read More »
Survey under Section 133A Introduction Section 133A empowers income-tax authorities to conduct surveys for collecting information and verifying tax compliance. Surveys are less intrusive than searches and allow inspection of books, marking of documents, recording statements, and verification of cash and stock. Authorities cannot seize assets during a survey, nor can they convert a survey into… Read More »
Requisition under Section 132A – Condensed Version (No Line Spacing) Introduction Section 132A empowers income-tax authorities to requisition books of account, documents, or assets from other government authorities. Once delivered, such material is treated as seized under Section 132, and all related search provisions apply to the person to whom the requisitioned assets belong. Assessments are made… Read More »