Clarification regarding penalty under section 271B for failure to comply with provisions of section 44AB for assessment year 1985-86
Circular No. 582 was issued by the Central Board of Direct Taxes on 23 October 1990. Its subject is Clarification regarding penalty under section 271B for failure to comply with provisions of section 44AB for assessment year 1985-86.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Cuts the self-assessment tax condition out of the section 271B relief for assessment year 1985-86. Circular No. 422 dated 19 June 1985 had directed that penalty under section 271B not be initiated for that year where the audit report under section 44AB read with rule 6G was obtained by 30 September 1985 and the self-assessment tax under section 140A was paid within the normal section 139(1) period. The Board now says penalty under section 271B is leviable only for non-compliance with section 44AB, not for delay in paying self-assessment tax, so linking the two was an anomaly. No penalty under section 271B is to be imposed for assessment year 1985-86 where the audit report was obtained by 30 September 1985, whatever the position on self-assessment tax.
Representations asked whether the two conditions in Circular No. 422 were cumulative or independent, and Revenue Audit objected that penalty should have been levied where self-assessment tax was paid only within the extended period to 30 September 1985 rather than within the normal section 139(1) period.
Clarification regarding penalty under section 271B for failure to comply with provisions of section 44AB for assessment year 1985-86
1. Vide Circular No. 422, dated 19th June, 1985 (Clarification 2), the Board had directed that the penalty proceedings under section 271B of the Income-tax Act, leviable for non-compliance of the provisions of section 44AB of the Act, should not be initiated for the assessment year 1985-86 in cases where :
(i) the audit report prescribed under section 44AB, read with rule 6G has been obtained by 30th September, 1985; and—
(ii) the self-assessment tax under section 140A of the Act has been paid within the normal period prescribed under section 139(1) of the Act for filing return of income.
2. Representations were subsequently received requesting the Board to clarify whether the conditions mentioned at (i) & (ii ) above were cumulative or independent. The Revenue Audit has also raised objections that penalty under section 271B should have been levied in cases where self-assessment tax was not paid within the normal period prescribed under section 139(1) of the Act, but was paid within the extended period, i.e., 30th September, 1985.
3. Penalty under section 271 B of the Act is leviable only for non-compliance with the provisions of section 44AB of the Act and not for delay in payment of self-assessment tax. Therefore, there seems to be an obvious anomaly in the said Circular No. 422 insofar as it linked imposition of penalty under section 271B with the payment of self-assessment tax.
4. It is, therefore, clarified that no penalty will be imposed for the assessment year 1985-86 under section 271B in cases where the audit report prescribed under section 44AB, read with rule 6G, has been obtained by 30th September, 1985. This clarification applies only to assessment year 1985-86, being the first year of operation of section 44AB of the Act.
Circular : No. 582, dated 23-10-1990.
In answering a section 271B penalty notice for assessment year 1985-86, or in appeal against a penalty imposed on the self-assessment tax ground.
Rules it names. Rule 6G of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
Source: the Income Tax Department’s own published text — its page for this instrument.
