Statutory position — s.271AA(2): a flat five hundred thousand rupees for failing to furnish the master file under s.92D(4), imposed by the PRESCRIBED AUTHORITY and not by the Assessing Officer — and how it differs from the two per cent penalty in s.271AA(1)
CBDT Circulars & InstructionsCuts both waysNo later treatment found
We did not file Form 3CEAA. Which penalty applies, who imposes it, and is it a percentage of anything?
Section 271AA(2) provides: "If any person fails to furnish the information and the document as required under sub-section (4) of section 92D, the prescribed income-tax authority referred to in the said sub-section may direct that such person shall pay, by way of penalty, a sum of five hundred thousand rupees." It is a flat figure — five lakh rupees — not a percentage, and the power is in the PRESCRIBED AUTHORITY under s.286(1), not in the Assessing Officer or the Commissioner (Appeals). That is what distinguishes it from s.271AA(1), which is the older penalty: without prejudice to s.270A, s.271 or s.271BA, where a person in respect of an international transaction or specified domestic transaction fails to keep and maintain the information and document required by s.92D(1) or (2), or fails to report such transaction which he is required to do, or maintains or furnishes an incorrect information or document, the ASSESSING OFFICER OR COMMISSIONER (APPEALS) may direct payment of "a sum equal to two per cent of the value of each international transaction or specified domestic transaction entered into by such person". Both sub-sections are named in s.273B, so no penalty is imposable under either if the person proves there was reasonable cause for the failure.
