Income-tax Act,1961
Act No : 43
Section :
Penalty payable when tax in default 1.
221. Penalty payable when tax in default1 2 [(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub- section (2) of section 220, be liable, by way of penalty, to pay such amount as the 3[Assessing] Officer may direct, and in the case of a continuing default, such further amount or amounts as the 4 4[Assessing] Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears: Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard: 5[Provided further that where the assessee proves to the satisfaction of the 6[Assessing] Officer that the default was for good and sufficient reasons, no penalty shall be levied under this section.] 7[Explanation.-For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax.] (2)Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded. ------------------------------------------------------------------ 2 Substituted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1- 4-1971. 3 Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 4 Ibid. 5 Substituted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 10-9-1986. Prior to the substitution, the second proviso substituted as a part of sub-section (1) by the Taxation Laws (Amendment) Act, 1970, read as under: " Provided further that where the Income-tax Officer is satisfied that the default was for good and sufficient reasons, no penalty shall be levied under this section." 6 Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 7 Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10- 1975. ---------------------------------------------------------------------
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