Procedure to Impose Penalty
Opportunity of Being Heard
Before imposing any penalty, the assessee must be given a reasonable opportunity of being heard.
Approval Requirement for Imposing Penalty
- Income-tax Officer requires prior approval of the Joint Commissioner if the proposed penalty exceeds ₹10,000.
- Assistant Commissioner or Deputy Commissioner requires prior approval of the Joint Commissioner if the penalty exceeds ₹20,000.
Service of Penalty Order
Upon passing the penalty order, a copy must be sent to the Assessing Officer unless the order is passed by the Assessing Officer himself.
Quantum of Penalty
The penalty amount is determined based on the law in force at the time the default was committed. Provisions applicable in the relevant assessment year do not apply unless made retrospective.
Faceless Proceedings
The Central Government is empowered to implement a scheme for faceless imposition of penalty to ensure transparency, accountability and efficiency. The scheme may include:
- Elimination of direct interface between the assessee and tax authority;
- Resource optimisation and functional specialisation;
- Dynamic jurisdiction for penalty imposition.
The Faceless Penalty Scheme was notified via Notification No. S.O. 117(E), dated 12-01-2021.
The Central Government may issue directions modifying procedural or jurisdictional provisions for imposing a penalty. No such direction can be issued after 31-03-2022; however, amendments to existing directions may be made by notification in the Official Gazette.