TaxTMI 
TaxTMI 
TaxTMI 
Penalty Provision for PAN/Aadhaar Non-Compliance in Indian Tax Law : Clause 467 of the Income Tax Bill, 2025 Vs. Section 272B of the Income-tax Act, 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Income-tax Act, 1961, which currently governs penalties for similar defaults u/s 139A. Both provisions aim to ensure the integrity of financial transactions by mandating accurate disclosure and authentication of taxpayer identification numbers, thereby supporting the broader objectives of tax compliance, transparency, and anti-evasion measures within India's direct tax framework. This commentary provides an in-depth legal analysis of Clause 467, examining its structure, objectives, practical implications, and interpretative nuances. It also undertakes a meticulous comparative analysis with Section 272B, highlighting continuities, departures, and potential areas for judicial or legislative clarification. Objective and Purpose ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns. * Interpretation: The language "fails to comply" is broad, capturing any omission or contravention of section 262, whether by individuals or entities. The AO's discretion to impose penalty is subject to the satisfaction that a default has occurred. * Ambiguities: The provision does not specify whether the penalty is per instance of default or a lump sum for overall non-compliance. However, subsequent sub-clauses clarify per-default penalties for specific breaches. * Potential Issues: The lack of explicit requirement for a show cause notice or opportunity of hearing in this sub-clause may raise concerns regarding principles of natural justice, unless such procedures are provided elsewhere in the Bill. Sub-clause (2): Penalty f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (4): Penalty for Failure of Responsible Persons to Ensure Correct Quoting/Authentication This sub-clause addresses the liability of persons (typically entities or their officers) responsible for ensuring the correct quoting or authentication of PAN/Aadhaar in documents relating to transactions prescribed u/s 262(9)(a). Failure attracts a penalty of ten thousand rupees per default. * Vicarious Liability: The provision imposes responsibility on those in charge of compliance, not merely the transacting individual, reflecting the law's recognition of institutional obligations. * Scope of Application: This is particularly relevant for banks, financial institutions, companies, or intermediaries handling bulk transactions on behalf of cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alty imposition Mens Rea Element Explicitly required in sub-clause (2) for intentional false quoting Explicitly required in sub-section (2) for intentional false quoting Responsible Person Liability Clause 467(4) for those responsible under 262(9)(b) Section 272B(2B) for those responsible under 139A(5), 139A(6A) Notable Observations * Substantive Continuity: The penalty quantum, the differentiation between willful and inadvertent defaults, and the per-default penalty approach are maintained in the new regime. * Procedural Divergence: Section 272B(3) explicitly mandates that no penalty order shall be passed without affording the person an opportunity of being heard, embodying the audi alteram partem principle of natural just....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he strict liability and per-default penalty regime. * Tax Authorities: Should ensure that penalty proceedings are conducted fairly, with adequate opportunity for representation, even if not expressly mandated in Clause 467. * Advisors and Consultants: Must sensitize clients to the expanded compliance risks and the importance of robust documentation and verification mechanisms. Conclusion Clause 467 of the Income Tax Bill, 2025, represents a substantive continuation and modernization of the penalty regime established by Section 272B of the Income-tax Act, 1961. While the core objectives-ensuring compliance with PAN/Aadhaar quoting and authentication requirements-remain unchanged, the new provision reflects the evolving landscape of tax....