Section 271AAC

Case law › Section 271AAC

Section 271AAC — the law in short

What the courts have decided on section 271AAC, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

Krishnakumar Manda v DCIT, Circle-12(1), Hyderabad ITATHelps departmentValidity unconfirmed
The addition under the s.68 group has been confirmed and I never showed the income in my return. Is there any discretion left to the AO not to levy the s.271AAC penalty?

On this decision, none. The Hyderabad Bench held that once income of the s.68 to s.69D kind is brought to tax and sustained, and the conditions of the proviso are not satisfied, the levy of the s.271AAC penalty is automatic and mandatory, and the language of the section leaves the AO no discretion.
Shankar Lal Ludhani v DCIT, Central Circle, Ajmer ITATHelps taxpayerValidity unconfirmed
I left the surrendered cash out of my original return and brought it in only by a revised return under s.139(5). Does the proviso to s.271AAC(1) still protect me?

On this decision, yes. The Jaipur Bench held that once a revised return is filed the original stands withdrawn and is substituted by the revised return, so where the revised return has been accepted as a return under s.139 the proviso to s.271AAC(1) is answered and the penalty cannot stand.
Rohit Khandelwal v AC/DCIT, Central Circle, Muzaffarpur ITATHelps taxpayerValidity unconfirmed
I disclosed the seized cash and paid the s.115BBE tax, but my return was a belated one under s.139(4). The AO says the proviso to s.271AAC(1) only saves a return under s.139(1). Is he right?

No. The proviso says "return of income furnished under section 139" and does not confine itself to s.139(1); the Tribunal held that where the legislature meant a particular sub-section it said so, and deleted the penalty on a belated return filed under s.139(4).

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.

Section 271AAC — 3 entries

Worked examples

Notice situations in which section 271AAC does the work, taken from the first line to the last. Each step carries the authority that licenses it.

The purchases are called accommodation entries, the whole invoice value is proposed, and a penalty of the same amount alongside The notice wants to add my entire Rs 3.42 crore of purchases, not the profit in them, and there is a separate penalty show-cause for the same figure. The supplier's statement has not been given to me and the goods are in my stock register. Where do I start? 7 steps · 19 authorities · s.69C, s.37(1), s.115BBE, s.271AAD

Explained in this library

What section 271aac does, in plain English, before you read what the courts made of it.

s.271AAD: a penalty equal to the entry itself

The show-cause says I may be penalised under s.271AAD for a false entry. What is that, and is it really 100 per cent?

s.68 and the s.69 family, and the 115BBE rate

The officer says my cash deposits and loans are unexplained. What section applies and how badly am I taxed?

The false-entry penalty is measured by the invoice, so cutting the addition does not cut it

The addition has been reduced to a profit element on appeal. Does the s.271AAD penalty come down with it?

The penalty that rides on a s.115BBE addition

The officer has taxed the cash at the special rate under s.115BBE. What penalty comes with it?

Which deeming section the officer picked, and why it decides the case

The addition has been made under s.69A. Should it have been s.68, or s.37(1), and does it make any difference now?

Which orders you can actually appeal to the CIT(A)

Is the order I have received an appealable order under section 246A, and what if I have already accepted it?