Procedure for imposing Penalty - Section 274 - Income Tax - Ready Reckoner - Income Tax

Procedure for imposing Penalty - Section 274 (1) Opportunity of being heard [Section 274(1)] No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being hear (2) Penalty to be levied with prior approval of JC in certain cases [Section 274(2)] No order imposing a penalty under this Chapter shall be made- - by the Income-tax Officer , where the penalty exceeds 10,000 rupees - by the Assistant Commissioner or Deputy Commissioner , where the penalty exceeds 20,000 rupees except with the prior approval of the Joint Commissioner. (3) The CG empowered to scheme by notification for the purpose of imposing penalty The Central Government may make a scheme , by notification in the Official Gazette, for the purposes of imposing penalty under this Chapter so as to impart greater efficiency, transparency and accountability by- - eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; - optimising utilisation of the resources through economies of scale and functional specialisation; - introducing a mechanism for imposing of penalty with dynamic jurisdiction in which penalty shall be imposed by one or more income-tax authorities. [Section 274(2A), w.e.f. AY 2020-21] The Central Government may, for the purposes of giving effect to the scheme made u/s 274(2A) , by notification in the Official Gazette, direct that any of the provisions of this Act relating to jurisdiction and procedure for imposing penalty shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. - No direction shall be issued after the 31st day of March, 2022 . - The Central Government may amend any direction , by notification in the Official Gazette, Which is issued under this section 274(2B) on or before the 31st day of March, 2022. [ Section 274(2B) ] Every notification issued u/s 274(2A) and 274A(2B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. [Section 274(2C) ] (4) Copy of penalty order to b sent to AO [Section 274(3)] An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer. (5) Penalty on the basis of law on the date of default: The quantum of penalty is to be determined in accordance with the law prevailing on the date of default and not on which the penalty is imposed. Note:- If the penalty order is passed without giving any opportunity to the assessee of being heard, then such order is void ab-initio . Central Government may amend any direction, issued under this section 274(2B) for the purpose of Faceless Penalty Scheme on or before the 31st day of March, 2022, by notification in the Official Gazette. [Amendment by FA, 2023] Faceless penalty scheme has been introduced with effect from January 12, 2021 vide Notification S.O. 118(E) dated 12th January, 2021.