Penalty for failure to furnish report under section 172

447

If any person fails to furnish a report from an accountant as required by section 172, the Assessing Officer may impose a penalty of one lakh rupees on such person.

Explanation

Section Summary:

Section 447 of the new income tax law imposes a penalty on individuals or entities who fail to furnish a report from an accountant as required under Section 172. The penalty is set at ₹1 lakh and can be imposed by the Assessing Officer.

Key Changes:

• New Penalty Provision: This section introduces a specific penalty for non-compliance with the reporting requirement under Section 172. Previously, there may not have been a clear or explicit penalty for failing to submit such a report.
• Fixed Penalty Amount: The penalty is fixed at ₹1 lakh, providing clarity on the financial consequence of non-compliance.

Practical Implications:

• Taxpayers and Businesses: Entities or individuals required to submit a report under Section 172 must ensure timely compliance to avoid the penalty. This is particularly relevant for businesses or individuals involved in transactions or activities that mandate such reports.
• Assessing Officers: The provision empowers Assessing Officers to impose penalties directly, streamlining enforcement.

Critical Concepts:

• Section 172: This section likely pertains to specific reporting requirements, such as furnishing a report from an accountant for certain transactions or activities. The exact nature of the report would depend on the context of Section 172.
• Assessing Officer: The tax authority responsible for assessing and enforcing compliance with tax laws.

Compliance Steps:

1. Identify Reporting Obligations: Determine if your activities or transactions fall under Section 172, requiring a report from an accountant.
2. Engage an Accountant: Ensure the report is prepared by a qualified accountant as per the law.
3. Submit the Report: File the report within the prescribed timeline to avoid penalties.
4. Maintain Records: Keep documentation of the report and submission for future reference.

Example:

Suppose a business engages in a transaction that requires a report from an accountant under Section 172. If the business fails to submit this report, the Assessing Officer can impose a penalty of ₹1 lakh. For instance, if the transaction involves a significant financial restructuring, and the accountant’s report is not filed, the penalty would apply regardless of the transaction's outcome.

This section emphasizes the importance of adhering to reporting requirements to avoid financial penalties.