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CS Professional · Compliance Management, Audit and Due Diligence · Non-Compliances, Penalties and Adjudications

Kaveri Foods OPC Private Limited filed its annual return 40 days late. Its sole director is the officer in default. Under section 92(5) the ordinary penalty is Rs 10,000 plus Rs 100 per day after the first, capped at Rs 50,000 for an officer. For the director, the penalty is computed as Rs 10,000 + 39 x Rs 100 = Rs 13,900. What is the maximum penalty on the director under section 446B?

The maximum penalty on the director is Rs 6,950. The ordinary penalty works out to Rs 13,900, and section 446B limits an OPC's officer in default to one-half of the specified penalty, subject to Rs 1 lakh. Half of Rs 13,900 is Rs 6,950.

  1. ARs 13,900
  2. BRs 6,950Correct
  3. CRs 5,000
  4. DRs 50,000

Explanation

The ordinary penalty is Rs 10,000 + (39 x 100) = Rs 13,900, below the Rs 50,000 cap. Section 446B allows not more than one-half, which is Rs 6,950, well under the Rs 1 lakh ceiling for an officer. Rs 13,900 ignores the concession.

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