Procedure.

274. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.

(2) No order imposing a penalty under this Chapter shall be made—

(a)  by the Income-tax Officer, where the penalty exceeds ten thousand rupees;

(b)  by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand rupees,

except with the prior approval of the Joint Commissioner. 

¹{“(2A) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of imposing penalty under this Chapter so as to impart greater efficiency, transparency and accountability by—

(a) eliminating the interface between the ²incometax authority and the assessee or any other person to the extent technologically feasible;

b) optimising utilisation of the resources through economies of scale and functional specialisation;

(c) introducing a mechanism for imposing of penalty with dynamic jurisdiction in which penalty shall be imposed by one or more income-tax authorities

2B) The Central Government may, for the purposes of giving effect to the scheme made under sub-section (2A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to jurisdiction and procedure for imposing penalty shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification:

Provided that no direction shall be issued after the 31st day of March, 2022

³[Provided further that the Central Government may amend any direction, issued under this sub-section on or before the 31st day of March, 2022, by notification in the Official Gazette]

(2C) Every notification issued under sub-section (2A) and sub-section (2B) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.”.}

(3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.

NOTE-

1.  Inserted by the Finance Act, 2020 

2. Substituted by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f 01.04.2020 Notification dated 29.09.2020

in sub-section (2A), in clause (a) For the words,

Assessing Officer and the assessee in the course of proceedings

Following words shall be substituted namely,

incometax authority and the assessee or any other person

3. Inserted by the Finance Act, 2023 dated 01.02.2023 w.e.f 01.04.2022.