Section 457 — Penalty for failure to furnish information or document under section 171. Successor to s.271G of the 1961 Act.
Section 457 is in Chapter XXI — Penalties, which runs from section 439 to section 472.
Where a person who has entered into an international transaction or a specified domestic transaction fails to furnish information or a document required under section 171(2), a penalty equal to 2% of the value of that transaction may be imposed for each such failure. Three authorities can impose it: the Assessing Officer, the Transfer Pricing Officer as referred to in section 166, and the Commissioner (Appeals). The section is a single sentence with no exceptions, defences or thresholds of its own.
Section 171(2) information is what the officer relies on to test a price, and its non-production would otherwise cost nothing; the section attaches a proportionate cost to each refusal or failure.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Penalty for failure to furnish section 171(2) information or document | 2% of the value of the transaction | For each such failure; imposable by the Assessing Officer, the Transfer Pricing Officer under section 166, or the Commissioner (Appeals) | 457 |
The exposure is per failure and measured against the value of the transaction concerned, so repeated non-compliance on a large transaction compounds quickly. The Transfer Pricing Officer can levy it directly during the section 166 proceedings — you do not have to wait for the Assessing Officer to take it up. Responding to a section 171(2) requisition, even partially and on time, is what keeps the section out of play; the section provides no reasonable cause defence on its own terms.
The Transfer Pricing Officer requisitions documents under section 171(2) about a Rs. 60 crore international transaction and the company does not produce them; a second requisition on the same transaction goes unanswered as well. The penalty is 2% of the value of that transaction for each such failure — Rs. 1.20 crore apiece — so repeated non-compliance on a large transaction compounds instead of being absorbed into one charge. It need not wait for the Assessing Officer: the Transfer Pricing Officer referred to in section 166 may impose it during his own proceedings, as may the Commissioner (Appeals), and the section carries no threshold and no defence of its own.
As a penalty order following non-compliance with a requisition under section 171(2), most often issued in the course of the Transfer Pricing Officer's proceedings under section 166. Any reasonable cause answer has to be built on section 470, which lists this section, rather than on anything in the section itself.
a penalty equal to 2% of the value of such transaction may be imposed upon him for each such failure
See the full 1961 to 2025 concordance.