Section 271DA of ITA, 1961 : Section 271Da: Penalty For Failiure To Comply With Provisions Of Section 269St

Explanation using Example

Imagine a local business owner, Mr. Sharma, sells a piece of machinery for ₹3,00,000. The buyer, in violation of section 269ST, pays the entire amount in cash in a single transaction. Mr. Sharma, aware of the cash transaction limit, still accepts the payment. The tax authorities discover this transaction during an audit.

Under Section 271DA of the Income-tax Act, 1961, Mr. Sharma would be liable for a penalty equal to the amount of the cash received, which is ₹3,00,000. However, if Mr. Sharma can provide a valid justification for accepting the cash, showing there were good and sufficient reasons for this contravention, he may not have to pay the penalty. In the absence of such justification, the Joint Commissioner of Income-tax has the authority to impose the penalty on Mr. Sharma.