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CMA Final · Direct Tax Laws and International Taxation · Penalties and Prosecutions

Under the Income-tax Act, 2025, penalty imposed on an assessee under the Act (but not a default in respect of which the Act says otherwise) is recoverable in which manner?

Penalty, fine, interest and other sums payable under the Act are recoverable in the same manner as arrears of tax, using the recovery machinery in the recovery Part of the Act. The Act does not restrict recovery to civil suits, refund adjustment or prosecution.

  1. AOnly by filing a civil suit in the jurisdictional court
  2. BIn the manner provided in the recovery Part of the Act for arrears of taxCorrect
  3. COnly by adjusting it against future refunds, with no other mode
  4. DBy a separate prosecution proceeding, with no recovery action

Explanation

Section 419 states that any sum imposed by way of interest, fine, penalty or any other sum payable under the Act is recoverable in the manner provided in that Part for recovery of arrears of tax. The other options invent exclusive modes that the section does not prescribe.

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