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CMA Intermediate · Direct and Indirect Taxation · PAN

Under the Income-tax Act, 2025, when can a penalty under section 412 be levied on a person who failed to deduct or collect and pay tax?

A penalty under section 412 may be levied only when the Assessing Officer is satisfied that the person failed to deduct or collect and pay the tax without good and sufficient reasons. The mere fact of default does not attract penalty automatically.

  1. AAutomatically in every case of default
  2. BOnly if the Assessing Officer is satisfied that the failure was without good and sufficient reasonsCorrect
  3. COnly if the payee has not filed a return
  4. DOnly if the amount exceeds a prescribed limit

Explanation

Section 398(7) provides that no penalty under section 412 is levied unless the Assessing Officer is satisfied that the person, without good and sufficient reasons, failed to deduct or collect and pay the tax. The default alone is not enough.

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