Failure to comply with section 247(1)(b)(ii).

474

If a person, who is required to afford the authorised officer with the necessary facility to inspect the books of account or other documents under section 247(1)(b)(ii) fails to do so, he shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine.

Explanation

Section Summary:

Section 474 addresses the consequences of failing to comply with Section 247(1)(b)(ii) of the Income Tax Act. Specifically, it imposes penalties on individuals or entities who do not provide the necessary facilities for an authorized officer to inspect books of account or other documents as required under the law. This section emphasizes the importance of cooperation during tax inspections and audits.

Key Changes:

This section introduces a stricter penalty for non-compliance compared to previous provisions. Under the new law, failure to provide access to books of account or documents can result in rigorous imprisonment for up to two years, along with a fine. Earlier provisions may have had less severe penalties or different enforcement mechanisms.

Practical Implications:

• For Taxpayers and Businesses: This section underscores the importance of maintaining proper records and ensuring they are readily accessible for inspection by tax authorities. Non-compliance can lead to severe legal consequences, including imprisonment.
• For Compliance Processes: Taxpayers must ensure that their accounting systems and document storage practices are organized and compliant with tax laws to avoid penalties.

Critical Concepts:

• Rigorous Imprisonment: This is a stricter form of imprisonment where the convicted person is required to perform hard labor. It is more severe than simple imprisonment.
• Section 247(1)(b)(ii): This section mandates that taxpayers provide authorized officers with the necessary facilities to inspect books of account or other documents during an audit or investigation.

Compliance Steps:

1. Maintain Proper Records: Ensure all books of account and relevant documents are accurately maintained and stored in an accessible manner.
2. Facilitate Inspections: Be prepared to provide authorized officers with the necessary facilities (e.g., access to records, workspace) during inspections.
3. Train Staff: Educate employees or team members about the importance of compliance with tax inspection requirements.

Example:

Suppose a business owner is required to provide access to their financial records during a tax audit. If the owner refuses to cooperate or delays providing the necessary documents, they could face rigorous imprisonment for up to two years and a fine under Section 474. This highlights the need for prompt and complete cooperation with tax authorities.