Evolving Penalty Regimes for Monetary Transaction Violations : Clause 451 of the Income Tax Bill, 2025 Vs. Section 271DA of the Income Tax Act, 1961

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....ovision is structurally and conceptually similar to the existing Section 271DA of the Income Tax Act, 1961, which penalizes contravention of section 269ST. Both provisions are designed to enforce compliance with statutory restrictions on monetary transactions, reflecting the legislature's continuing efforts to curb unaccounted money and promote transparency in financial dealings. This commentary provides a detailed analysis of Clause 451, its legislative context, objectives, practical implications, and a comparative evaluation with Section 271DA. The discussion will elucidate the nuances of both provisions, identify areas of convergence and divergence, and assess their impact on stakeholders. Objective and Purpose Legislative Intent a....

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....ial discretion. Detailed Analysis of Clause 451 of the Income Tax Bill, 2025 Textual Breakdown The Assessing Officer may impose on a person, a penalty equal to the sum received by him in contravention of the provisions of section 186 except where he proves that there were good and sufficient reasons for the said contravention. Key Elements * Authority to Impose Penalty: The Assessing Officer is vested with the power to levy the penalty. This is a significant administrative detail, as it determines the level of revenue authority involved in the penalty process. * Quantum of Penalty: The penalty is equal to the sum received in contravention. This creates a direct and substantial financial consequence for non-compliance. * Triggering....

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.... or technical breaches. Ambiguities and Potential Issues * Scope of "Good and Sufficient Reasons": The phrase is inherently subjective and could lead to inconsistent interpretations. Judicial precedents will play a crucial role in delineating its contours. * Lack of Procedural Safeguards: The provision does not specify the procedure for imposition of penalty, opportunity of being heard, or appellate remedies. These may be addressed in the general penalty framework of the Bill or through subordinate legislation. * Overlap with Other Provisions: If section 186 overlaps with other penal provisions (such as anti-money laundering statutes), issues of double jeopardy or concurrent penalties may arise. Comparative Analysis with Section 271....

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....re in cash in certain circumstances). * Statutory Context: Section 271DA is part of the existing Income Tax Act, 1961, while Clause 451 is proposed under the new Income Tax Bill, 2025, signaling a possible overhaul or consolidation of penalty provisions. * Wording: Section 271DA uses "shall be liable to pay, by way of penalty," indicating a more mandatory tone, whereas Clause 451 states "may impose," suggesting discretion. * Procedural Authority: Section 271DA originally vested penalty imposition in the Joint Commissioner, but post-2025, aligns with Clause 451 in empowering the Assessing Officer. * Procedural Detailing: Section 271DA is more explicit in its structure, with sub-sections and clear authority assignment, while Clause 45....

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....differ. Comparative Table Aspect Clause 451 of the Income Tax Bill, 2025 Section 271DA of the Income Tax Act, 1961 Triggering Event Receipt of sum in contravention of section 186 Receipt of sum in contravention of section 269ST Penalty Quantum Equal to the sum received Equal to the sum received Imposing Authority Assessing Officer Joint Commissioner (originally), Assessing Officer (from 1.4.2025) Defense Good and sufficient reasons Good and sufficient reasons Nature of Provision Punitive, deterrent Punitive, deterrent Procedural Safeguards Implicit (subject to general principles of natural justice) Implicit (subject to general principles of natural justice) Practical Implications For Businesses a....