Sections 271E and 271F of Income Tax Act 1961
Section 271E deals with penalty for repayment of a loan, deposit or specified advance in contravention of section 269T. Section 271F dealt with penalty for failure to furnish a return of income, but it does not apply to returns required for assessment year 2018-19 or any later assessment year.
Section 271E - Penalty for Failure to Comply with Section 269T
Section 271E(1): If a person repays a loan, deposit or specified advance referred to in section 269T otherwise than in accordance with that section, the person is liable to a penalty equal to the amount of the loan, deposit or specified advance so repaid.
What is Section 269T?
Section 269T regulates the mode of repayment of specified loans, deposits and specified advances. Subject to the statutory conditions and exceptions, repayment cannot be made otherwise than through the permitted banking or prescribed electronic modes where the amount of the loan or deposit together with interest, or the aggregate amount covered by the provision, is Rs. 20,000 or more.
The provision covers repayment of a loan or deposit and also a specified advance. For this purpose, a specified advance means a sum of money in the nature of an advance, by whatever name called, in relation to transfer of immovable property, whether or not the transfer ultimately takes place.
Permitted Modes of Repayment
Section 269T permits repayment through specified traceable modes, including an account payee cheque, an account payee bank draft, use of an electronic clearing system through a bank account and other prescribed electronic modes, subject to the exact statutory wording applicable to the relevant period.
Penalty Amount under Section 271E
| Default | Repayment contrary to section 269T |
|---|---|
| Penalty | An amount equal to the loan, deposit or specified advance so repaid |
| Relevant threshold | Section 269T generally operates at Rs. 20,000 or more under its statutory tests |
| Penalty authority from 1 April 2025 | Assessing Officer |
| Current corresponding provision under Income-tax Act, 2025 | Section 453 corresponds to section 271E; sections 188 and 189 correspond to section 269T according to the official mapping material |
Who Imposes Penalty under Section 271E?
Section 271E(2) originally provided that the penalty was imposed by the Joint Commissioner. The Finance Act, 2025 inserted a proviso with effect from 1 April 2025 under which a penalty under section 271E(1), on or after that date, is imposed by the Assessing Officer.
Where the proposed penalty exceeds the monetary limit specified in section 274(2), the Assessing Officer must comply with the applicable requirement for prior approval of the Joint Commissioner. The penalty procedure and opportunity of hearing under section 274 should also be considered.
Reasonable Cause and Section 273B
Section 273B provides statutory protection for specified penalties, including section 271E, where the person proves that there was reasonable cause for the failure. Accordingly, the existence and proof of reasonable cause may be material before a penalty under section 271E is imposed.
Section 271F - Historical Penalty for Failure to Furnish Return of Income
Section 271F: Where a person required to furnish a return under section 139(1), or the provisos to that sub-section, failed to furnish it before the end of the relevant assessment year, the Assessing Officer could direct payment of a penalty of Rs. 5,000.
However, the proviso to section 271F expressly states that the section does not apply to a return required to be furnished for any assessment year commencing on or after 1 April 2018. Therefore, section 271F does not apply from assessment year 2018-19 onwards.
Late Filing from Assessment Year 2018-19
For assessment year 2018-19 onwards, section 271F ceased to apply. The Finance Act, 2017 introduced section 234F dealing with a fee for default in furnishing return of income within the time prescribed under section 139(1). The applicable fee, filing deadline and other consequences should be checked for the relevant assessment year because the statutory rules have changed over time.
Official Resources
Income Tax Department - Section 271E
Income Tax Department - Section 271F
Income Tax Department - Official Portal