Last updated: March 6th, 2020 12:42 PM

Section 271J of Income Tax Act

A penalty under Section 271J is imposed on a chartered accountant, merchant banker or registered valuer for furnishing false information in any reports or certificates. In this article, we discuss the provisions of Section 271J of Income Tax Act.

Section 271J of Income Tax

Section 271J of the Income Tax Act is reproduced below for reference:

271J. Penalty for furnishing incorrect information in reports or certificates.—Without prejudice to the provisions of this Act, 
where the Assessing Officer or the Commissioner (Appeals), in the course of any proceedings under this Act, finds that 
an accountant or a merchant banker or a registered valuer has furnished incorrect information in any report or certificate 
furnished under any provision of this Act or the rules made thereunder, the Assessing Officer or the Commissioner (Appeals) 
may direct that such accountant or merchant banker or registered valuer, as the case may be, shall pay, by way of penalty, 
a sum of ten thousand rupees for each such report or certificate.

Tax Audit Report

Income tax laws require a taxpayer to get the accounts audited from a qualified chartered accountant. The Chartered Account who undertakes the audit is required to prepare an audit report based on the findings, observation, and so on. Audit report of companies and other assessees in respect of audit conducted under Section 44AB must be prepared in Form No. 3CB and the particulars of the audit must be reported in Form 3CD. Tax audit reports for those persons who are necessitated to get their accounts audited by or under any other law must be prepared in Form 3CA/3CB and the particulars for the same must be reported in Form 3CD. Tax audits must be furnished within the 30^th of September of the relevant assessment year. Tax audit report in Forms 3CA/3CB and 3CD is one of the major reports filed by a Chartered Accountant.

Penalty under Section 271J

Under this section, the person in default, who can be a chartered accountant, merchant banker or registered valuer will be levied with a penalty that amounts to ten thousand rupees for each such report or certificate. A tax audit report refers to a report submitted by a Chartered Accountant to the Income Tax Department.

Exemptions from Penalty

A professional would be reprieved of any penal consequences if the concerned person proves that there was a reasonable cause for the failure. Hence, the penalty under this section would not be levied for minor or negligible mistakes made in the course of report preparation.