Penalty and Prosecution

Paper presented
by
Ranjan Kumar Bhowmik FCMA
Member
National Board of Revenue
 Presentation outline
Introduction
Grounds and amounts of
penalty with reference sections.
Grounds of prosecution with
reference section
Conclusion

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 Penalty

 Penalty is the additional amount of income tax though as per

definition of tax at section 2 (62), tax includes penalty.

 The power to impose penalty is given mainly to the DCT.

 But in case of concealment of income and submission of fake

audit report the power to impose penalty is also given to the CT
(Appeals), AJCT and Taxes Appellate Tribunal.

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 Penal Provisions
The penal provisions are tabulated below: -
Sl. Grounds of Reference Amount of Penalty
Penalty Section
1. Not maintaining 123  1.5 times of the amount of tax
accounts in the [Read with payable (Maximum)
prescribed section 35,
manner +  50% of tax on house property
rule 8 + 8A] income or Tk.5,000 whichever is
higher
in case
the owner of the house receiving
monthly rent more than Tk.25,000
but violates rules and order of NBR
relating to maintenance of register
and depositing rent to bank account.

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 Penal Provisions (Cont.)
Sl. Grounds of Penalty Section Amount of Penalty
2. Failure to file 124(1) 10% of the last assessed tax
or
return including Tk. 1,000/-
withholding tax +
return Tk. 50/- per day of default.

Total amount of such penalty will not exceed

Tk. 5,000 in case of a new individual assessee
who was not assessed previously.
50% of last assessed tax or Tk.1,000 whichever
is higher in case of existing individual assessee
failed to submit return in time.
Failure
certificate,
to furnish
statement,
124(2) Tk 500/- plus 250 per month during which
accounts, etc. required
the default continues.
u/s 58,108,109, 110 and
184C

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 Penal Provisions (Cont.)

Sl. Grounds of Penalty Section Amount of Penalty

Failure to furnish 124(2) Tk.25,000/- plus 500/- per day
information Proviso during which the default
required u/s 113 continues.
Penalty for using 124A Tk.20,000/( maximum)
fake T.I.N. or T.I.N.
of another person
Failure to verify 124AA Maximum Tk.50,000/-
TIN (NBR has given 25 authorities
to verify TIN)

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 Penal Provisions (Cont.)

Sl. Grounds of Sectio Amount of Penalty

Penalty n
3 Failure to pay 125 The amount of short fall
advance tax (maximum)
4. Non-compliance 126 The amount of tax
with notice u/s 79, subsequently assessed
80, 83(1) and (maximum)
83(2)
5 Failure to pay tax 127 25% of the short fall
u/s 74 on the basis (maximum)
of return

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 Penal Provisions (Cont.)
Sl. Grounds of Section Amount of Penalty
Penalty
6. Penalty for 128 15% of the tax evasion. If the tax
concealment of evasion is detected after one year or
income more, then the amount of penalty will
increase by additional 15% for each
earlier assessment year
7. Penalty for false 129A Not less than Tk.50,000/ and not more
audit report by than Tk. 2,00,000/
Chartered
Accountant
8. Penalty for 129B Tk.1,00,000/- (fixed)
submitting fake DCT, AJCT, CT(Appeals) and Taxes
audit report Appellate Tribunal can impose such
penalty.

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 Penal Provisions (Cont.)
Sl. Grounds of Penalty Section Amount of Penalty
9. Penalty for default in 137 The amount of arrear tax
payment of tax (maximum)
10. Failure to 57 2% per month of the
deduct/collect tax at amount of tax to be
source or having deducted, collected or
deducted/collected deposited
but fails to deposit
into national
exchequer.
11. Failure to give notice 89(3) The amount of tax
to the DCT regarding subsequently assessed
the discontinuance of (maximum)
business

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 Penal Provisions (Cont.)
Sl. Grounds of Penalty Section Amount of Penalty

12. Failure to submit 107HH Maximum 2% of the

statement of value of such
international transection international
as per section 107EE transection.

The ceiling of penalty does not mean that penalty must

necessarily be imposed in every case. The discretion of
the DCT to levy or not to levy a penalty is still preserved
by the penalty sections.

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Prosecution [Imprisonment for punishable offence]
The prosecution provisions are tabulated below: -
Sl. Nature of Offence Reference Imprisonment
Section
1. Failure to deduct/collect 164(a) 1 year (Maximum) with
tax at source or having or without fine.
deducted/collected but fails
to deposit into national
exchequer.
2. Non-compliance of notices 164(b) 1 year (Maximum) with
u/s 77,79, 80 and 83 or without fine.
3. Failure to file return u/s 75 164(c) 1 year (Maximum) with
or in compliance with or without fine.
notice u/s 77 and 93

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Prosecution (Imprisonment for punishable offence)cont.:

Sl. Nature of Offence Reference Imprisonment

Section
4. Refuses to furnish 164(cc) 1 year (Maximum)
information required with or without fine.
u/s 113
5. Refuses to permit 164(d) 1 year (Maximum)
inspection or to allow with or without fine.
copies to be taken in
accordance with the
provisions of section
114.
6. Fails to furnish 164(e) 1 year (Maximum)
information required with or without fine.
u/s 115

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Prosecution (Imprisonment for punishable offence)cont.:

Sl. Nature of Offence Reference Imprisonment

Section
7 Fails to comply with the 164(ee) 1 year (Maximum) with
requirement u/s 116 or without fine.
8 Fails to comply with the 164(eee) 1 year (Maximum) with
requirement u/s 116A or without fine.
9. Refuses to permit or 164(f) 1 year (Maximum) with
obstructs the income tax or without fine.
authority to exercise
power u/s 117.
10. Makes false statement at 165(a) Minimum 3 months but
the verification of the maximum up to 3 years
return or other with or without fine.
documents.

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Prosecution (Imprisonment for punishable offence)cont.:
Sl. Nature of Offence
11. Willfully aids, abets,
assists, incites or induces
other person to deliver a
false return, accounts,
statements etc.
12. Refuses to furnish
information as may be
necessary for the purpose
of survey u/s 115
Reference Imprisonment
Section
165(b) Minimum 3 months but
maximum up to 3 years
with or without fine.
165(d) Minimum 3 months but
maximum up to 3 years
with or without fine.
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Prosecution (Imprisonment for punishable offence)cont.:

Sl. Nature of Offence Reference Imprisonment

Section
13. Deliberately using 165(A) 3 years (Maximum)
fake T.I.N. or T.I.N. with or without fine up
of another person to Tk. 50,000/.
14. Submitting fake audit 165AA Minimum 3 months
report but maximum up to 3
years with or without
fine up to Tk. 1,00,000
15. Obstructs income tax 165(B) 1 year (Maximum)
authority to discharge with or without fine.
their function.

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Prosecution (Imprisonment for punishable offence) cont.:
Sl. Nature of Offence Reference Imprisonment
Section
16. Giving employment of 165C Minimum 3 months but
foreign national without maximum up to 3 years with
valid work permit or without fine up to Tk.
5,00,000
17. Conceals income or 166 Minimum 3 months but
deliberately furnishes maximum up to 5 years with
inaccurate particulars. or without fine.
18. Disposal of property after 167 3 years (Maximum) with or
the receipt of notice from without fine.
TRO to prevent
attachment.
19. Disclosure of information 168 6 months (Maximum) with
in contravention of the or without fine.
provisions of section 163

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 Conclusion
 The power to impose penalty is subject to the prior approval of the IJCT
except in the case of imposing penalty for failure to file return u/s 124.

 Penal proceedings can be initiated by the DCT only in connection with the
regular assessment and no such proceedings can be started after completion of
the assessment order.

 If the penalty proceedings are not finalized but the assessment is completed
there is nothing to bar the DCT to impose penalty.

 There is another restriction that assessee has been heard or has been given
a reasonable opportunity of being heard before imposing penalty.

 No prosecution can be instituted without prior sanction of the Board and

Board has power to compound such offences.

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END OF THE PRESENTATION!!