Section 271:
Failure to furnish returns, comply with notices, concealment of income, etc.
1(1) If the
2
Assessing Officer or the 3
*** 4
Commissioner (Appeals) 5
or the 6
Principal Commissioner or
Commissioner in the course of any proceedings under this Act, is satisfied that any person
7
* * * * *
(b) has 8
*** failed to comply with a notice 9
under sub-section (2) of section 115WD or under
sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of
section 143 10or fails to comply with a direction issued under sub-section (2A) of section 142, or
(c) has concealed the particulars of his income or 11*** furnished inaccurate particulars of 12such
income, or
13(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of
such fringe benefits,
he may direct that such person shall pay by way of penalty,
14* * * * *
15(ii) in the cases referred to in clause (b), 16in addition to tax, if any, payable by him, 17a sum
of ten thousand rupees for each such failure;
18(iii) in the cases referred to in 19clause (c) or clause (d), 16in addition to tax, if any, payable
by him, a sum which shall not be less than, but which shall not exceed 20three times, the amount of
tax sought to be evaded by reason of the concealment of particulars of his 21income or fringe
benefits or the furnishing of inaccurate particulars of such 21income or fringe benefits.
22* * * * *
Explanation 1.Where in respect of any facts material to the computation of the total income of any
person under this Act,
(A) such person fails to offer an explanation or offers an explanation which is found by the
2
Assessing Officer or the 3
*** 4
Commissioner (Appeals) 5
or the 6
Principal Commissioner or
Commissioner to be false, or
(B) such person offers an explanation which he is 23
not able to substantiate and fails to prove that
such explanation is bona fide and that all the facts relating to the same and material to the
computation of his total income have been disclosed by him,
then, the amount added or disallowed in computing the total income of such person as a result thereof
shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of
which particulars have been concealed.
24
* * * * *
Explanation 2.Where the source of any receipt, deposit, outgoing or investment in any assessment
year is claimed by any person to be an amount which had been added in computing the income or
deducted in computing the loss in the assessment of such person for any earlier assessment year or years
but in respect of which no penalty under clause (iii) of this sub-section had been levied, that part of the
amount so added or deducted in such earlier assessment year immediately preceding the year in which the
receipt, deposit, outgoing or investment appears (such earlier assessment year hereafter in
this Explanation referred to as the first preceding year) which is sufficient to cover the amount
represented by such receipt, deposit or outgoing or value of such investment (such amount or value
hereafter in this Explanation referred to as the utilised amount) shall be treated as the income of the
assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished
for the first preceding year; and where the amount so added or deducted in the first preceding year is not
sufficient to cover the utilised amount, that part of the amount so added or deducted in the year
immediately preceding the first preceding year which is sufficient to cover such part of the utilised
amount as is not so covered shall be treated to be the income of the assessee, particulars of which had
been concealed or inaccurate particulars of which had been furnished for the year immediately preceding
the first preceding year and so on, until the entire utilised amount is covered by the amounts so added or
deducted in such earlier assessment years.
25
Explanation 3.Where any person 26
*** fails, without reasonable cause, to furnish within the period
specified in sub-section (1) of section 153 a return of his income which he is required to furnish
under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989,
and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of subsection (1) of section 142 or section 148 and the Assessing Officer or the 27
*** Commissioner (Appeals) is
satisfied that in respect of such assessment year such person has taxable income, then, such person shall,
for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his
income in respect of such assessment year, notwithstanding that such person furnishes a return of his
income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148.
28
Explanation 4.For the purposes of clause (iii) of this sub-section,
(a) the amount of tax sought to be evaded shall be determined in accordance with the following
formula
(A - B) + (C - D)
where,
A = amount of tax on the total income assessed as per the provisions other than the provisions
contained in section 115Jb or section 115JC (herein called general provisions);
B = amount of tax that would have been chargeable had the total income assessed as per the
general provisions been reduced by the amount of income in respect of which particulars have been
concealed or inaccurate particulars have been furnished;
C = amount of tax on the total income assessed as per the provisions contained in section
115JB or section 115JC;
D = amount of tax that would have been chargeable had the total income assessed as per the
provisions contained in section 115JB or section 115JC been reduced by the amount of income in
respect of which particulars have been concealed or inaccurate particulars have been furnished:
Provided that where the amount of income in respect of which particulars have been concealed or
inaccurate particulars have been furnished on any issue is considered both under the provisions
contained in section 115JB or section 115JC and under general provisions, such amount shall not be
reduced from total income assessed while determining the amount under item D:
Provided further that in a case where the provisions contained in section 115JB or section
115JC are not applicable, the item (C - D) in the formula shall be ignored;
(b) where in any case the amount of income in respect of which particulars have been concealed
or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return
or converting that loss into income, the amount of tax sought to be evaded shall be determined in
accordance with the formula specified in clause (a) with the modification that the amount to be
determined for item (A - B) in that formula shall be the amount of tax that would have been
chargeable on the income in respect of which particulars have been concealed or inaccurate
particulars have been furnished had such income been the total income;
(c) where in any case to which Explanation 3 applies, the amount of tax sought to be evaded shall
be the tax on the total income assessed as reduced by the amount of advance tax, tax deducted at
source, tax collected at source and self-assessment tax paid before the issue of notice under section
148.
29
Explanation 5.Where in the course of a 30
search initiated under section 132 before the 1st day of
June, 2007, the assessee is found to be the owner of any money, bullion, jewellery or other valuable
article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets
have been acquired by him by utilising (wholly or in part) his income,
(a) for any previous year which has ended before the date of the search, but the return of income
for such year has not been furnished before the said date or, where such return has been furnished
before the said date, such income has not been declared therein ; or
(b) for any previous year which is to end on or after the date of the search,
then, notwithstanding that such income is declared by him in any return of income furnished on or after
the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section
(1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate
particulars of such income, 31
unless,
(1) such income is, or the transactions resulting in such income are recorded,
(i) in a case falling under clause (a), before the date of the search; and
(ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is
otherwise disclosed to the 3233
Principal Chief Commissioner or Chief Commissioner or 34
Principal
Commissioner or Commissioner before the said date ; or
(2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any
money, bullion, jewellery or other valuable article or thing found in his possession or under his control,
has been acquired out of his income which has not been disclosed so far in his return of income to be
furnished before the expiry of time specified in 35
*** sub-section (1) of section 139, and also specifies in
the statement the manner in which such income has been derived and pays the tax, together with interest,
if any, in respect of such income.
36
Explanation 5A.—Where, in the course of a search initiated under section 132 on or after the 1st day
of June, 2007, the assessee is found to be the owner of—
(i) any money, bullion, jewellery or other valuable article or thing (hereafter in
this Explanation referred to as assets) and the assessee claims that such assets have been acquired by
him by utilising (wholly or in part) his income for any previous year; or
(ii) any income based on any entry in any books of account or other documents or transactions
and he claims that such entry in the books of account or other documents or transactions represents
his income (wholly or in part) for any previous year,
which has ended before the date of search and,—
(a) where the return of income for such previous year has been furnished before the said date but
such income has not been declared therein; or
(b) the due date for filing the return of income for such previous year has expired but the assessee
has not filed the return,
then, notwithstanding that such income is declared by him in any return of income furnished on or after
the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1)
of this section, be deemed to have concealed the particulars of his income or furnished inaccurate
particulars of such income.
37
Explanation 6.—Where any adjustment is made in the income or loss declared in the return under
the proviso to clause (a) of sub-section (1) of section 143 and additional tax charged under that section,
the provisions of this sub-section shall not apply in relation to the adjustment so made.
38
Explanation 7.—Where in the case of an assessee who has entered into an 39
international transaction
or specified domestic transaction defined in section 92B, any amount is added or disallowed in
computing the total income under sub-section (4) of section 92C, then, the amount so added or disallowed
shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of
which particulars have been concealed or inaccurate particulars have been furnished, unless the assessee
proves to the satisfaction of the Assessing Officer or the Commissioner (Appeals) 40
or the
Principal
Commissioner or Commissioner that the price charged or paid in such transaction was computed in
accordance with the provisions contained in section 92C and in the manner prescribed under that section,
in good faith and with due diligence.
41
(1A) Where any penalty is imposable by virtue of Explanation 2 to sub-section (1), proceedings for
the imposition of such penalty may be initiated notwithstanding that any proceedings under this Act in the
course of which such penalty proceedings could have been initiated under sub-section (1) have been
completed.
42
(1B) Where any amount is added or disallowed in computing the total income or loss of an assessee
in any order of assessment or reassessment and the said order contains a direction for initiation of penalty
proceedings under clause (c) of sub-section (1), such an order of assessment or reassessment shall be
deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under
the said clause (c).
(2) When the person liable to penalty is a registered firm or an unregistered firm which has been
assessed under 43
clause (b) of section 183, then notwithstanding anything contained in the other
provisions of this Act, the penalty imposable under sub-section (1) shall be the same amount as would be
imposable on that firm if that firm were an unregistered firm.
44
* * * * *
(4) If the 45
Assessing Officer or the 46
*** Commissioner (Appeals) in the course of any proceedings
under this Act, is satisfied that the profits of a registered firm have been distributed otherwise than in
accordance with the shares of the partners as shown in the instrument of partnership on the basis of which
the firm has been registered under this Act, and that any partner has thereby returned his income below its
real amount, he may direct that such partner shall, in addition to the tax, if any, payable by him, pay by
way of penalty a sum not exceeding one and a half times the amount of tax which has been avoided, or
would have been avoided if the income returned by such partner had been accepted as his correct income;
and no refund or other adjustment shall be claimable by any other partner by reason of such direction.
47
* * * * *
48
(5) The provisions of this section as they stood immediately before their amendment by the Direct
Tax Laws (Amendment) Act, 1989 (3 of 1989) shall apply to and in relation to any assessment for the
assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references
in this section to the other provisions of this Act shall be construed as references to those provisions as for
the time being in force and applicable to the relevant assessment year.
49
(6) Any reference in this section to the income shall be construed as a reference to the income or
fringe benefits, as the case may be, and the provisions of this section shall, as far as may be, apply in
relation to any assessment in respect of fringe benefits also.
50(7) The provisions of this section shall not apply to and in relation to any assessment for the
assessment year commencing on or after the 1st day of April, 2017.
Notes:
1. Restored by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989).
2. Subs. by Act 4 of 1988, s. 2, for Income-tax Officer (w.e.f. 1-4-1988).
3. The words Deputy Commissioner (Appeals) or the omitted by Act 21 of 1998, s. 65 (w.e.f. 1-10-1998).
4. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).
5. Ins. by Act 20 of 2002, s. 101 (w.e.f. 1-6-2002).
6.Subs. by Act 25 of 2014, s. 4, for Commissioner (w.r.e.f. 1-6-2013).
7. Clause (a) omitted by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989).
8. The words without reasonable cause omitted by Act 46 of 1986, s. 19 (w.e.f. 10-9-1986).
9. Subs. by Act 18 of 2005, s. 58, for under sub-section (1) of section 142 (w.e.f. 1-4-2006).
10. Ins. by Act 41 of 1975, s. 61 (w.e.f 1-4-1976).
11. The word deliberately omitted by Act 5 of 1964, s. 40 (w.e.f. 1-4-1964).
12. Subs. by Act 18 of 2005, s. 58, for such income (w.e.f. 1-4-2006).
13. Ins. by s. 58, ibid. (w.e.f. 1-4-2006).
14. Clause (i) omitted by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989).
15. Subs. by s. 50, ibid., for clause (ii) (w.e.f. 1-4-1989).
16. Subs. by Act 20 of 2002, s. 101, for in addition to any tax payable (w.e.f. 1-4-2003).
17. Subs. by Act 14 of 2001. s. 86, for a sum which shall not be less than one thousand rupees but which may extend to
twenty-five thousand rupee (w.e.f 1-6-2001).
18. Subs. by Act 41 of 1975, s. 61, for clause (iii) and the Explanation (w.e.f. 1-4-1976).
19. Subs. by Act 18 of 2005, s. 58, for clause (c) (w.e.f. 1-4-2006).
20. Subs. by Act 3 of 1989, s. 50, for twice (w.e.f. 1-4-1989).
21. Subs. by Act 18 of 2005, s. 58, for income (w.e.f. 1-4-2006).
22. The proviso omitted by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989).
23. Subs. by Act 46 of 1986, s. 19, for not able to substantiate, (w.e.f. 10-9-1986).
24. The proviso omitted by s. 19, ibid. (w.e.f. 10-9-1986).
25. Subs. by Act 3 of 1989, s. 50, for the Explanation (w.e.f. 1-4-1989). Earlier Explanation 3 amended by Act 29 of 1977,
s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).
26. The words who has not previously been assessed under this Act, omitted by Act 20 of 2002, s. 101 (w.e.f. 1-4-2003).
27. The words Deputy Commissioner (Appeals) or the omitted by Act 21 of 1998, s. 65 (w.e.f. 1-10-1998).
28. Subs. by Act 20 of 2015, s. 70, for Explanation 4 (w.e.f. 1-4-2016).
29. Ins. by Act 67 of 1984, s. 48 (w.e.f. 1-10-1984).
30. Subs. by Act 22 of 2007, s.76, for search under section 132 (w.e.f. 1-6-2007).
31. Subs. by Act 46 of 1986, s. 19, for certain words (w.e.f. 10-9-1986).
32. Subs. by Act 4 of 1988, s. 2, for “Commissioner” (w.e.f. 1-4-1988).
33. Subs. by Act 25 of 2014, s. 4, for “Chief Commissioner” (w.r.e.f. 1-6-2013).
34. Subs. by s. 4, ibid., for “Commissioner” (w.r.e.f. 1-6-2013).
35. The words, brackets and letters “clause (a) or clause (b) of” omitted by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989).
36. Subs. by Act 33 of 2009, s. 74, for “Explanation 5A” (w.r.e.f. 1-6-2007). Earlier it was inserted by Act 22 of 2007, s. 76
(w.e.f. 1-6-2007 ).
37. Ins. by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989).
38. Ins. by Act 14 of 2001, s. 86 (w.e.f. 1-4-2002).
39. Subs. by Act 23 of 2012, s. 97, for the words “International transaction” (w.e.f. 1-4-2013).
40. Ins. by Act 20 of 2002, s. 101 (w.e.f. 1-6-2002).
41. Ins. by Act 41 of 1975, s. 61 (w.e.f. 1-4-1976).
42. Ins. by Act 18 of 2008, s. 52 (w.e.f. 1-4-1989).
43. Now Section 183 omitted by Act 18 of 1992, s. 65 (1-4-1993).
44. Sub-section (3) omitted by Act 3 of 1989, s. 50 (w.e.f. 1-4-1989). Earlier it was amended by Act 41 of 1975,
s. 61 (w.e.f. 1-4-1976).
45. Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 1-4-1988).
46. The words and brackets “Deputy Commissioner (Appeals) or, as the case may be, the” omitted by Act 21 of 1998, s. 65
(w.e.f. 1-10-1998). Earlier “Deputy Commissioner (Appeals)” was substituted for “Appellate Assistant Commissioner”
by Act 4 of 1988, s. 2 (w.e.f. 1-4-1988) and the words and brackets “or, as the case may be, the Commissioner (Appeals)”
were inserted by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).
47. Sub-sections (4A) and (4B) omitted by Act 41 of 1975, s. 61 (w.e.f. 1-10-1975). Earlier the said sub-sections was
inserted by Act 1 of 1965, s. 3 (w.e.f. 12-3-1965) and later on sub-section (4A) was substituted by Act 42 of 1970, s. 48
(w.e.f. 1-4-1971).
48. Ins. by Act 3 of 1989, s. 50 (w.e.f.1-4-1989).
49. Ins. by Act 18 of 2005, s. 58 (w.e.f. 1-4-2006).
50. Ins. by Act 28 of 2016, s. 100 (w.e.f. 1-4-2017).