Amended and updated notes on section 274 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Procedure.
Chapter XXI (Sections 270A to 275) of the Income Tax Act 1961 deals with the provisions related to penalties imposable. Section 274 of IT Act 1961 provides for Procedure.
Recently, we have discussed in detail section 273B (Penalty not to be imposed in certain cases) of IT Act 1961. Today, we learn the provisions of section 274 of Income-tax Act 1961. The amended provision of section 274 is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 274 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-274: Procedure
Section 274(1) of Income Tax Act
No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.
Section 274(2) of Income Tax Act
No order imposing a penalty under this Chapter shall be made—
- (a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees;
- (b) by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand rupees,
except with the prior approval of the Joint Commissioner.
Section 274(2A) of Income Tax Act
The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of imposing penalty under this Chapter so as to impart greater efficiency, transparency and accountability by—
- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;
- (b) optimising utilisation of the resources through economies of scale and functional specialisation;
- (c) introducing a mechanism for imposing of penalty with dynamic jurisdiction in which penalty shall be imposed by one or more income-tax authorities.
[Sub-section(2A) of section 274 has been substituted w.e.f. 01.04.2020 by the Finance Act 2020]
Section 274(2B) of Income Tax Act
The Central Government may, for the purposes of giving effect to the scheme made under sub-section (2A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to jurisdiction and procedure for imposing penalty shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:
Provided that no direction shall be issued after the 31st day of March, 2022.
[Sub-section(2B) of section 274 has been substituted w.e.f. 01.04.2020 by the Finance Act 2020]
Section 274(2C) of Income Tax Act
Every notification issued under sub-section (2A) and sub-section (2B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.
[Sub-section(2C) of section 274 has been substituted w.e.f. 01.04.2020 by the Finance Act 2020]
Section 274(3) of Income Tax Act
An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.