Amended and updated notes on section 271AAD 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 Penalty for false entry, etc., in books of account.
Chapter XXI (Sections 270A to 275) of the Income Tax Act 1961 deals with the provisions related to penalties imposable. Section 271AAD of IT Act 1961 provides for Penalty for false entry, etc., in books of account.
Recently, we have discussed in detail section 271AAC (Penalty in respect of certain income) of IT Act 1961.
Today, we learn the provisions of section 271AAD of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 271AAD 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 271AAD 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-271AAD: Penalty for false entry in books of account
Section 271AAD (1):
Without prejudice to any other provisions of this Act, if during any proceeding under this Act, it is found that in the books of account maintained by any person there is—
- (i) a false entry; or
- (ii) an omission of any entry which is relevant for computation of total income of such person, to evade tax liability,
the Assessing Officer or the Commissioner (Appeals), may direct that such person shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry.
[The long line in sub-section(1) of section 271AAD amended (inserted) w.e.f. 1-April-2022 by the Finance Act 2022]
Section 271AAD (2):
Without prejudice to the provisions of sub-section (1), the Assessing Officer or the Commissioner (Appeals) may direct that any other person, who causes the person referred to in sub-section (1) in any manner to make a false entry or omits or causes to omit any entry referred to in that sub-section, shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry.
[Sub-section(2) of section 271AAD amended (inserted) w.e.f. 1-April-2022 by the Finance Act 2022]
Explanation: For the purposes of this section, “false entry” includes use or intention to use—
- (a) forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or
- (b) invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or
- (c) invoice in respect of supply or receipt of goods or services or both to or from a person who does not exist.