Penalty for furnishing incorrect information in reports or certificates.

463(1)

Any accountant or merchant banker or registered valuer, shall be liable to pay a penalty of ten thousand rupees for any incorrect information in any report or certificate furnished under any provision of this Act or the rules made thereunder.

463(2)

The penalty under sub-section (1) shall be payable in respect of each incorrect report or certificate.

463(3)

The penalty under sub-section (1) shall be payable on directions of the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) where the inaccuracy mentioned in sub-section (1) is found by such authority in the course of any proceedings under this Act.

463(4)

In this section,—

• (a) “merchant banker” means Category I merchant banker registered with the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992; and
• (b) “registered valuer” means a person registered as a valuer under section 514.

Explanation

Section Summary:

Section 463 of the Income Tax Act imposes penalties on professionals like accountants, merchant bankers, and registered valuers for providing incorrect information in reports or certificates submitted under the Act. The penalty is ₹10,000 per incorrect report or certificate, and it is enforced by tax authorities during proceedings.

Key Changes:

• New Penalty Provision: This section introduces a specific penalty for professionals who furnish incorrect information in reports or certificates. Previously, such penalties were either not explicitly defined or were part of broader penalty provisions.
• Scope of Professionals: The section explicitly includes accountants, merchant bankers, and registered valuers, making them directly liable for inaccuracies in their submissions.

Practical Implications:

• Increased Accountability: Professionals must ensure the accuracy of reports or certificates they submit, as they are now directly liable for penalties for any inaccuracies.
• Financial Impact: A penalty of ₹10,000 per incorrect report or certificate can add up significantly if multiple errors are identified.
• Compliance Burden: Professionals may need to implement stricter internal review processes to avoid penalties.

Critical Concepts:

• Merchant Banker: Defined as a Category I merchant banker registered with SEBI under the Securities and Exchange Board of India Act, 1992.
• Registered Valuer: A person registered as a valuer under Section 514 of the Companies Act, 2013.
• Authority for Penalty: The penalty is imposed by the Assessing Officer, Joint Commissioner (Appeals), or Commissioner (Appeals) during tax proceedings.

Compliance Steps:

1. Accuracy Checks: Professionals must thoroughly verify the accuracy of all reports or certificates before submission.
2. Documentation: Maintain detailed records and supporting documents to substantiate the information provided.
3. Internal Audits: Implement periodic internal audits to identify and correct potential inaccuracies.

Examples:

• Scenario 1: An accountant submits a tax audit report with incorrect financial data. The Assessing Officer identifies the error during an assessment and imposes a penalty of ₹10,000 for the incorrect report.
• Scenario 2: A registered valuer provides an inaccurate valuation certificate for a property. The Commissioner (Appeals) notices the discrepancy during an appeal and levies a penalty of ₹10,000 for the incorrect certificate.

This section emphasizes the importance of accuracy and accountability for professionals involved in tax-related reporting.