Section 271AAC of Income Tax Act 1961 - Penalty in Respect of Certain Income
Section 271AAC of the Income-tax Act, 1961 provides a specific penalty where the income determined includes certain unexplained amounts covered by sections 68, 69, 69A, 69B, 69C or 69D and tax is payable under section 115BBE.
What does Section 271AAC provide?
Under section 271AAC(1), the Assessing Officer may direct an assessee to pay a penalty where the income determined includes income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D. The provision operates notwithstanding other provisions of the Act, subject to section 271AAB.
The penalty is 10 per cent of the tax payable under section 115BBE(1)(i) on the relevant income. It is imposed in addition to the tax payable under section 115BBE.
| Provision | Subject |
|---|---|
| Section 68 | Cash credits for which the statutory conditions regarding nature and source are not satisfactorily met. |
| Section 69 | Unexplained investments not recorded in the books of account, where maintained. |
| Section 69A | Unexplained money, bullion, jewellery or other valuable article. |
| Section 69B | Amount of investments or valuable articles not fully recorded in the books. |
| Section 69C | Unexplained expenditure where the source is not satisfactorily explained. |
| Section 69D | Amounts borrowed or repaid on a hundi otherwise than through the prescribed banking mode contemplated by that provision. |
Exception where income is disclosed and tax is paid
The proviso to section 271AAC(1) protects an assessee from this penalty to the extent that the relevant income under sections 68, 69, 69A, 69B, 69C or 69D has been included in the return of income furnished under section 139 and the tax required by section 115BBE(1)(i) has been paid on or before the end of the relevant previous year.
Section 115BBE and the penalty calculation
Section 115BBE is the special tax provision applicable to income referred to in sections 68 to 69D. Section 271AAC does not itself impose the underlying income tax. Instead, its penalty is calculated by reference to the tax payable under section 115BBE(1)(i). Accordingly, the statutory penalty under section 271AAC is 10 per cent of that specified tax amount, not 10 per cent of the unexplained income itself.
No simultaneous penalty under Section 270A
Section 271AAC(2) provides that no penalty under section 270A shall be imposed in respect of income covered by section 271AAC(1). Section 270A is the general penalty provision dealing with under-reporting and misreporting of income. This prevents the same income covered by section 271AAC(1) from also attracting penalty under section 270A.
Procedure and limitation under Sections 274 and 275
Section 271AAC(3) makes sections 274 and 275 applicable, as far as may be, to a penalty under section 271AAC. Section 274 governs the procedure for imposing penalties, including the opportunity of hearing required by law. Section 275 prescribes the statutory time limits within which penalty orders may be passed.
Practical scope of Section 271AAC
The provision should be read together with the particular deeming provision invoked, section 115BBE, the return filed under section 139, and the applicable penalty procedure. Whether an amount legally falls within sections 68 to 69D depends on the facts, evidence and requirements of the particular section; an addition and a penalty are therefore governed by their respective statutory conditions.
Official legal resources
For the authoritative statutory text, see the Income-tax Act, 1961 on India Code. For current filing and transition information, see the Income Tax Department e-Filing portal.