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CS Executive · Tax Laws and Practice · Direct Tax at a Glance

Under the Income-tax Act, 2025 (applicable from the June 2027 session), the Assessing Officer proposes to levy a penalty on an assessee who is in default in payment of tax. Which of the following is a condition that must be satisfied before the penalty under section 412(1) can be levied?

A penalty for tax in default can be levied only after the assessee has been given a reasonable opportunity of being heard. The Act does not require prosecution, a one-year default period or Commissioner approval as a precondition for the Assessing Officer's penalty.

  1. AThe assessee must have been given a reasonable opportunity of being heardCorrect
  2. BThe assessee must first have been prosecuted in a criminal court
  3. CThe default must have continued for at least one full tax year
  4. DThe Commissioner must have approved the penalty in every case

Explanation

Section 412(3)(a) bars levy of penalty unless the assessee has had a reasonable opportunity of being heard. The text does not require prosecution, a minimum default period or Commissioner approval, so those options are wrong.

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