Professionals(i.e. Accountant, Marchant Banker, Registered Valuer) Accountability under Indian Income Tax Law: Clause 463 of the Income Tax Bill, 2025 Vs. Section 271J of the Income-tax Act, 1961

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.... registered valuers for furnishing incorrect information in reports or certificates, is a direct successor to Section 271J of the Income-tax Act, 1961. The legislative intent behind both provisions is rooted in ensuring the sanctity and reliability of information furnished to tax authorities, thereby upholding the integrity of the tax administration system. This commentary undertakes a detailed analysis of Clause 463, its objectives, operative mechanisms, and practical implications, followed by a thorough comparative analysis with Section 271J. The commentary also explores the nuances, potential ambiguities, and areas meriting further consideration or reform. Objective and Purpose The primary objective of Clause 463 is to deter and penali....

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.... reports or certificates are frequently mandated under various provisions of the Act and the rules. The scope is wide, covering any report or certificate furnished under the Act or rules, regardless of the specific context or the quantum involved. * Accountant: The term is not defined in Clause 463 itself, but it is reasonable to infer that it refers to chartered accountants as recognized under the Income Tax Act. The absence of a specific definition in Clause 463 (unlike Section 271J, which cross-refers to section 288(2)) could potentially lead to interpretational issues unless clarified elsewhere in the Bill. * Merchant Banker: Defined as a Category I merchant banker registered with SEBI, thus ensuring only regulated entities fall wit....

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....a show-cause or hearing opportunity, but principles of natural justice would necessitate such procedural safeguards, as recognized in general penalty provisions in tax statutes. 4. Definitions and Explanations Clause 463 provides specific definitions for "merchant banker" and "registered valuer," ensuring clarity and alignment with current regulatory frameworks. The definition of "registered valuer" refers to registration u/s 514 of the new Bill, indicating a shift from the erstwhile reference to the Wealth-tax Act and reflecting the evolving regime for valuers in India. The absence of an explicit definition for "accountant" in Clause 463, as contrasted with Section 271J, may create ambiguity unless addressed elsewhere in the Bill. 5. R....

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....rent regulatory regime for valuers. * Procedural Authority: Both provisions empower the Assessing Officer, Joint Commissioner (Appeals), or Commissioner (Appeals) to impose penalties. Section 271J was amended in 2023 to include the Joint Commissioner (Appeals), which is retained in Clause 463. * Legislative Context: Clause 463 is situated within a new legislative framework (the Income Tax Bill, 2025), which may entail changes in other definitions, procedures, or cross-references that impact its operation. * Explanation and Clarity: Section 271J contains an explicit "Explanation" defining the terms used, whereas Clause 463 includes definitions only for merchant banker and registered valuer, omitting "accountant." * Reference to Rules....

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.... defences (e.g., bona fide error, reliance on client information) or procedural safeguards. In practice, principles of natural justice would apply, but explicit codification could enhance legal certainty. Practical Implications of the Comparative Regime 1. For Professionals * The continuity in the penalty regime ensures that professionals do not face abrupt changes in compliance expectations. However, the updated definitions and procedural nuances in Clause 463 necessitate a review of internal compliance protocols, particularly for valuers now governed by the new registration framework. * Professional bodies may need to update their guidance and training materials to reflect the new statutory references and definitions. 2. For Taxpay....