Section 271J Penalty challenged in Madras High Court, Writ accepted and listed for next hearing in July 2017

Section 271J Penalty challenged in Madras High Court. The Court has accepted the writ petition and the matter is listed for next hearing in July 2017

ABCAUS Case Law Citation:
ABCAUS 1232 (2017) (05) HC

Finance Act, 2017 has inserted a new penal provision wef 01/04/2017 namely, section 271J relating to penalty for furnishing incorrect information in reports or certificates by professionals including chartered accountants.

Under the provisions of the Income Tax Act, 1961 (‘the Act’) assessees in order to get certain deductions/benefits or to avoid penalty are required to furnish several reports and certificates particularly from chartered accountants (CAs). 

As per the provisions of section 271J, a penalty of Rs. 10000/- can be imposed by the Assessing Officer or Commissioner (Appeals) if they find any incorrect information in any report or certificate furnished. However, since the introduction of the said penal provisions, lots of hue and cry has been made and even ICAI in its post budget memorandum has sought the withdrawal of the penal provisions. While whether the penalty will set right the mal-practices/casual approach  adopted by professionals (if any) in issuing the reports/certificates or subject them to harassment might be a highly debatable issue. 

However, the section 271J has been challenged before the Hon’ble Madras High Court. The Hon’ble Court has accepted the writ petition filed by CA Venkatasiva.  

Accepting the Petition, the Hon’ble Chief Justice directed issuance of notice to the Government through Attorney General of India.

The case is due for next hearing in July, 2017 after summer vacation.