Section 286(6)

Section 286(6) — the law in short

What the courts have decided on section 286(6), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.286 with Rule 10DB: country-by-country reporting — who notifies in Form 3CEAC, who files the report in Form 3CEAD within twelve months, when the burden falls on the Indian constituent entity instead, and the alternate reporting entity route out CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  We are the Indian subsidiary of a foreign parent. Do we have to file a country-by-country report ourselves, or only tell the department who does, and by when?
  Two obligations, and they fall on different people. Under s.286(1), EVERY constituent entity resident in India whose parent entity is not resident in India must notify the prescribed authority whether it is the alternate reporting entity of the international group, or else give the details of the parent entity or alternate reporting entity and the country of which they are resident. Rule 10DB(2) requires that notification in Form No. 3CEAC, and it must be made TWO MONTHS PRIOR to the due date for furnishing the report under s.286(2). Under s.286(2), a parent entity or alternate reporting entity RESIDENT IN INDIA must furnish the report itself, "within a period of twelve months from the end of the said reporting accounting year", and Rule 10DB(3) prescribes Form No. 3CEAD for it. Under s.286(4), the burden shifts on to an Indian constituent entity that is not the reporting entity where the parent is resident in a country that does not require such a report, or with which India has no exchange agreement, or where a systemic failure has been intimated; Rule 10DB(4) gives it twelve months from the end of the reporting accounting year, or six months from the end of the month in which a systemic failure was intimated. The proviso to s.286(4) lets a group with several Indian constituent entities designate one to file, and Rule 10DB(5) requires that designation to be conveyed in Form No. 3CEAE. Section 286(5) provides a complete escape from sub-section (4) where an alternate reporting entity has filed the report with its own country's tax authority and five conditions are all satisfied, including that the said country has an exchange agreement with India and that the prescribed authority here has been informed under sub-section (1). Section 286(6) lets the prescribed authority call for information to test the accuracy of the report, by notice, within thirty days, extendable by a further period not exceeding thirty days on an application.
• Statutory position — s.271GB: the country-by-country penalties are DAILY and they escalate — Rs 5,000, then Rs 15,000, then Rs 50,000 a day after the penalty order is served — plus Rs 5 lakh for an inaccurate report, and the s.273B reasonable-cause defence that applies to all of them CBDT Circulars & InstructionsCuts both ways
  We missed the country-by-country report deadline. What is the exposure, and does it stop accruing once the department passes an order?
  It does not stop; it gets worse. Section 271GB(1) penalises a reporting entity that fails to furnish the s.286(2) report at "five thousand rupees for every day for which the failure continues, if the period of failure does not exceed one month" and "fifteen thousand rupees for every day for which the failure continues beyond the period of one month". Section 271GB(2) penalises failure to produce information and documents within the period allowed under s.286(6) at five thousand rupees a day, running from the day immediately following the day the period expires. Section 271GB(3) is the escalation: if the failure under sub-section (1) or (2) continues AFTER an order directing payment of the penalty has been served, then notwithstanding sub-sections (1) and (2) the prescribed authority may direct payment of "fifty thousand rupees for every day for which such failure continues beginning from the date of service of such order". Section 271GB(4) imposes a flat penalty of five lakh rupees for inaccurate information in the report in three situations — knowledge of the inaccuracy at the time of furnishing coupled with failure to inform the prescribed authority; discovery after furnishing coupled with failure to inform and to furnish a correct report within fifteen days of discovery; and furnishing inaccurate information or documents in response to a s.286(6) notice. Section 273B names s.271GB, so no penalty is imposable under it if the entity proves there was reasonable cause for the failure.

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.