Section 271J of Income Tax Act 1961
Section 271J provides a penalty where specified professionals furnish incorrect information in a report or certificate under the Income-tax Act, 1961 or the rules made under it. The provision is intended to promote due diligence in statutory reports and certificates.
Penalty for Incorrect Information in Reports or Certificates
Where, in the course of proceedings under the Income-tax Act, the Assessing Officer, Joint Commissioner (Appeals) or Commissioner (Appeals) finds that an accountant, merchant banker or registered valuer furnished incorrect information in a report or certificate under the Act or the Income-tax Rules, the authority may direct that the professional pay a penalty under section 271J.
| Default | Incorrect information furnished in a report or certificate under the Income-tax Act or rules |
|---|---|
| Persons covered | Accountant, merchant banker and registered valuer |
| Penalty | Rs. 10,000 for each such report or certificate |
| Authority | Assessing Officer, Joint Commissioner (Appeals) or Commissioner (Appeals) |
Meaning of Accountant
For section 271J, "accountant" means an accountant referred to in the Explanation below section 288(2). Section 288 contains the statutory framework governing authorised representatives and the meaning of accountant for purposes of the Income-tax Act.
Meaning of Merchant Banker
A "merchant banker" means a 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.
Meaning of Registered Valuer
For section 271J under the Income-tax Act, 1961, "registered valuer" means the person specified by the statutory definition referred to in the Explanation to section 271J. The applicable definition should be read with the law in force for the relevant period.
Reasonable Cause under Section 273B
Section 271J is expressly included in section 273B. Therefore, no penalty is imposable for a failure covered by section 271J if the person proves that there was reasonable cause for the failure. Whether reasonable cause exists depends on the facts, professional work performed and evidence available in the particular case.
Effective Date and Purpose
Section 271J was introduced with effect from 1 April 2017. The legislative purpose was to ensure due diligence by professionals who furnish reports or certificates under the tax law, since those certifications may be relied upon for administration of the Act.
Joint Commissioner (Appeals)
The statutory text now also recognises the Joint Commissioner (Appeals) as an authority that may impose the penalty under section 271J. This authority was added with effect from 1 April 2023.
Income-tax Act 2025
The Income-tax Act, 2025 contains the corresponding penalty provision in section 463. It continues the basic rule of Rs. 10,000 for each report or certificate containing incorrect information furnished by an accountant, merchant banker or registered valuer, subject to the operative law and commencement provisions applicable to the relevant period.
Official Resources
Income Tax Department - Section 271J
Income Tax Department - Section 273B
Income Tax Department - Transfer Pricing Guidance