PENALTIESCentral

Section 46 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in hindi

(1)The tax authority shall, for the purposes of imposing any penalty under this Chapter, issue a notice to an assessee requiring him to show cause why the penalty should not be imposed on him.
(2)The notice referred to in sub-section (1) shall be issued—
1. (a)during the pendency of any proceedings under this Act for the relevant previous year, in respect of penalty referred to in section 41;
2. (b)within a period of three years from the end of the financial year in which the default is committed, in respect of penalties referred to in section 45.
(3)No order imposing a penalty under this Chapter shall be made unless the assessee has been given an opportunity of being heard.
(4)An order imposing a penalty under this Chapter shall be made with the approval of the Joint Commissioner, 1 [or the Joint Director] if—
1. (a)the penalty exceeds one lakh rupees and the tax authority levying the penalty is in the rank of Income-tax Officer; or
2. (b)the penalty exceeds five lakh rupees and the tax authority levying the penalty is in the rank of Assistant Commissioner or Deputy Commissioner 1 [or Assistant Director or Deputy Director].
(5)Every order of penalty issued under this Chapter shall be accompanied by a notice of demand in respect of the amount of penalty imposed and such notice of demand shall be deemed to be a notice under section 13.

Summary

The tax authority must give the person a notice before they can officially charge a penalty.
This notice must explain why the penalty is being considered and allow the person to respond.
The person being penalized must be given a fair chance to be heard.
Penalties for undisclosed foreign assets or income under Section 41 must be started while other proceedings for that year are still active.
For other general defaults under Section 45, the notice must be sent within three years from the end of the financial year when the mistake happened.
High value penalties require a senior official, called a Joint Commissioner, to approve them in writing.

Practical examples

1Mr. Sharma is being fined 2 lakh rupees by an Income-tax Officer. Because this amount is over 1 lakh rupees, the officer must get written permission from the Joint Commissioner before issuing the final order.

2The tax office finds a mistake from two years ago. They send Ms. Gupta a show cause notice, which is a formal letter asking her to explain why she should not be fined, before they actually charge her.

FAQ

1. Does the tax office have to give me a hearing under Section 46 of the Black Money Act, 2015?

Yes, Section 46 of the Black Money Act, 2015, states that no order for a penalty can be made unless the person has been given an opportunity of being heard.

2. When must a notice for a Section 41 penalty be issued under Section 46 of the Black Money Act, 2015?

According to Section 46 of the Black Money Act, 2015, the notice for a penalty under Section 41 must be issued while proceedings for that relevant year are still pending.

3. Who must approve a 6 lakh rupee penalty issued by a Deputy Commissioner under Section 46 of the Black Money Act, 2015?

Under Section 46 of the Black Money Act, 2015, any penalty exceeding 5 lakh rupees levied by a Deputy Commissioner requires the approval of the Joint Commissioner.

Test yourself

Q1.Under Section 46 of the Black Money Act, 2015, what is the time limit for issuing a notice for penalties related to other defaults under Section 45?

Q2.Under Section 46 of the Black Money Act, 2015, a penalty order issued by an Income-tax Officer requires Joint Commissioner approval if it exceeds which amount?

Q3.According to Section 46 of the Black Money Act, 2015, what must accompany every penalty order?

Q4.Under Section 46 of the Black Money Act, 2015, when must a notice for a penalty under Section 41 be issued?

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