10. imposition of penalty ICAB, KL, Study Manual 10. imposition of penalty ICAB, KL, Study Manual 10. imposition of penalty ICAB, KL, Study Manual 10. imposition of penalty ICAB, KL, Study Manual

1. Taxation-l Study Manual
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Chapter | |
Double Taxation Reliet
Contents
lntroduction
Examination context
Topic List
t l. t DouUte Tixation - Some Basic Concept
| | 1.2 i fuilm#; io Avoid boubie Taxatlon
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| 1.3 Relief In Respect of Income Arising Outside Bangladesh
' i t.l i Methods of avoiding double taiitionl How ihe methods work
: | 1.5 : Tax Treaty
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l:5 . Some other concepts used in DTAA
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2. 'Taxation- | Study Manual
t0.9 Bar to lmposition of Penalty without Hearing: Sec 130
No order imposing a penalty under this Chapter shall be made on any person unless such person
has been heard or has been given a reasonable opponunity of being heard.
10. I0 Previous Approval of lnspecting f oint Commissioner for lmposing Penalty: Sec l3 I
The Depury Commissioner of Taxes shall not impose any penalty under rhis Chapter without the
previous approval of the InspectingJoint Commissioner except in the cases referred to in section
124.
10. I I Penalty to be without Preiudice to other Liability: Sec | 33
The imposition on any person of any penalty under Chapter XV shall be without prejudice to any
other liability which such person may incur, or may have incurred, under the Ordinance or under
any other law for the time being in force.
10. l2 Orders of Appellate Joint Commissioner, Commissioner (Appeat) or Appellate
Tribunal to be sent to Deputy Commissioner of Taxes: Sec | 32
The Appellate Joint Commissioner or the Commissioners (Appeals) or the Appellate Tribunal
making an order imposing any penalty under this chapter shall forrhwith send a copy of the order
to the Deputy Commissioner of Taxes, and thereupon all the provisions of the Ordinance
relating to the recovery of penalty shall apply as if such order were made by the Deputy
Commissioner of Taxes.
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3. Taxation-l Study Manual
furnished under section 67 any estimate of tax Payable by him which he knew, or had
reason to believe, to be untrue, he may impose upon such Person a penalty of a sum not
exceeding rhe amount by which the tax actually paid by him falls short of the amount
that should have been paid.
t0.5 Penalty for Non-Compliance with Notice: Sec 126:
Where any person has, without reasonable cause, failed to comply with any notice issued under
secrion 79,80 or under section 83(l) or (2), the Deputy Commissioner of Taxes may impose on
him a penalty not exceeding the amount of tax chargeable on the total income of such person.
Failure to Pay Tax on the Basis of Return: Sec | 27
Where, in the course of any proceeding under the Ordinance, the Deputy Commissioner of
Taxes is satisfied that any person has not paid tax as required by section 74, or the tax paid by
him under that section is less than eighty percent of the amount payable thereunder, he may
impose upon such person a penalty of a sum not exceeding 25% of the whole of the tax or as the
case may be, of such portion of the tax as has not been paid.
Penalty for Concealment of Income: Sec | 28
Where, in the course of any proceeding under the Ordinance, the Deputy Commissioner of
Taxes, the Appellate Joint Commissioner, the Commissioner (Appeals) or ihe Appellate Tribunal
is satisfied that any person has, either in the said proceeding or in any earlier proceeding relating
to an assessment in resPect of the same income year--
(a) concealed particulars of his income or furnished inaccurate Particulars of such income;
(b) understated the value of any immovable property in connection with its sale or transfer
with a view to evading tax, he or it shall impose upon such Person a penalry of ten
percent of tax which would have been avoided had the income as returned by such
person or as the case may be, the value of the immovable property as stated by him
been accepted as correct:
Provided that if the concealment referred to in clause (a) and (b) of this sub-section or sub-
secrion (2) is detected after a period of more than one year from the year in which the
concealment was {irst assessable to tax, the amount of penalty shall increase by an additional ten
percent for each preceding assessment year.
For the purpose of section 128(l), concealment of particulars of income or furnishing of
inaccurate particulars of income shall include-
(a) the suppression of any item of receipt liable to tax in whole or in part' or
(b) showing any expenditure not actually incurred or claiming any deduction therefor.
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(t)
(2)
10.8 Penalty for Default in Payment of Tax: Sec | 37
(l) Where an assessee is in default or is deemed to be in default in making payment of tax, the
Deputy Commissioner of Taxes may direct thag in addition to the amount of tax in arrears. a
sum not exceeding thar amount shall be recovered from the assessee by way of penalty.
(2) Where, as a result of any final order, the amount of tax, with resPect to the default in the
paymenr 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.
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Taxrtion- | Study Manual
IO.O IMPOSITTON OF PENALTY
Section Overview
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) Penalties can be imposed on any person for non-compliance of certain tax taw.
) The amounr and rate of penalties can be varied in case to case.
) Unless hearing or a reasonable opportunity of being heard, no penalties shall be made.
Penalty for not Maintaining Accounts in the Prescribed Manner: Sec 123
Where any person has, without reasonable cause, failed to comply with the provisions of any
order or rule made in pursuance of, or for rhe purposes of section 35(2), the Deputy
Commissioner of Taxes may impose on him a penalty-
(a) of a sum not exceeding one and a half times rhe amount of tax payable by him; and
(b) where the cotal income of such person does not exceed the maximum amount on which
tax is not chargeable, of a sum not exceeding Tk | 00.
10.2 Penalty for Failure to fite Return, Certificate, Statement, Accounts or
Sec | 24
Where any person has, without reasonable cause, failed to file a return of income required by or
under sections 75,77,89(2),9l(3) or 93(l), the Deputy commissioner of raxes may impose
upon such Person a penalty amounting to ten per cent of tax imposed on last assessed income
subject to a minimum of Tk 1,000, and in the case of a conrinuins default a furcher oenilty of Tk
50 for every day during which the default continues.
Where any person has, without reasonable cause, failed to file or furnish or, as rhe case may be,
obtain and display within the time laid down therefor,-
(a) any certificate, statement, accounts or information required by or under sections 58, l08,
l09,ll0orll3;or
(b) the tax-payer's identification number (TlN) certificate under secrion l84C the Deputy
Commissioner of Taxes shall impose upon such person a penalty of Tk 500 and in the case
ofa continuing default a further penalty ofTk 250 for every month or fraction thereof during
which the default continues.
Provided that where any person has, without any reasonable cause, failed to furnish information
as required under section I | 3 , the Deputy Commissioner of Taxes may impose a penalty of taka
twenty five thousand and in case of a continuing default a further penalty of taka five hundred for
each day.
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ratlaatrtarratrrtrriartrrtraataiaarrtairratat!aatttrrra
Penalty for using fake Tax-payer's ldentification Numbei -S-ec
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Where a person has without reasonable cause, used Tax-payer's ldentification Number (TlN) of
another Person or used fake TIN on a return of income or any other documents where TIN is
required under the Ordinance, the Deputy Commissioner of Taxes may impose a penalty not
exceeding taka twenty thousand on that person.
10.4 Failure to Pay Advance Tax: Sec 125
Where, in the course of any proceeding in connection with the assessment of tax under Chapter
lX, the Deputy Commissioner of Taxes is satisfied that any person has-
(a) without reasonable cause, failed to pay advance tax as required by section 64; or
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Examination context
Exam requirements
In the examination, candidates may be required to:
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ldentify the penalty for not maintaining accounc in the prescribed manner.
ldentify the penalty for failure to file return, cenificate, statement" accounts or information.
Recognise the penalty for failure to pay advance tax and failure to pay tax on the basis of
return.
ldentify the penalty for non-compliance with notice, concealment of income and default in
payment of ax.
Mention the bar to imposition of penalty without hearing.
Demonstrate the authority and procedures for imposition of penalty..
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Question practice
For question practice on these topics go to the suggested answers covering this chapter.
Examiner's comments on how students tackle questions
Candidates have to remember the requirements of tax law in relation to imposition of penalty in
case of non-compliance with the amount or rate of penalties.

6. Taxation-l Study Manual
Introduction
Learning objectives
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Mention the different non-compliances of tax law for which penalties are imposed.
ldentify and calculate the interest and penalties due to non-compliance of tax law in cercain
cases.
Define the measures against any order of penalty.
Practical significance
lf any person without any reasonable cause failed to comply tax law in certain cases the tax
authorities may impose penalty on that person. There are requirements by tax law such as
maintaining of accounts in the prescribed manner, filing of return, certificate, statements,
accounts or information, payment of advance tax, compliance with notice, payment of tax on the
basis of return etc. Non-compliance of these requirements may cause to penalties payable by the
persons made such non-compliances. Concealment of income and default in making paymenr of
tax are also caused to penalties.
No penalties mentioned here shall be made on any person unless such person has been heard or
has been given a reasonable opportunity of being heard. The imposition on any person of any
penalty shall be without prejudice to any other liability. :
Stop and think
Did you realize how important is to ensure the compliance of the requirements of tax law
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in this chapter for avoiding penaltiesl The penalties can be quite extensive in some
Working context
You need to know what are the consequences for non-compliance of the requirements of tax
law in this chapter. You must keep it mind that the penalties may be massive and imposition of
penalties for such non-compliance can also harm the reputation of the assessee and his financial
sustainabiliry:
The accountants can help the clients to comply with all the requirements of tax law in this
regards so that the clients can avoid any such penalties and retain rhe esteem from tax
authorities and stakeholders.
Syllabus links
The topics covered in this chapter are very important as it is dealt with the legal requirement of
tax law.
You will be using this knowledge again when you tackle the Taxation paper later on in the
Professional Stage and it will also support the technical aspects at the Advanced Stage.
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7. Taxation-l Study Manual
next following. However, where an order of assessment has been set aside by any authority in
that case the assessment shall be made within forty five days from the date on which the order
was communicated to him.
EXPLANATIONA l: Where, by an order under sections 120, l2lA, 156, t59, 16l or 162, any income
is excluded from the toal income of the assessee for an assessment year, and another assessment of
such income for another assessment year shall, for the purposes of this section, be deemed to be one
made in conseguence of, or to give effect to, any finding or direction contained in the said order.
EXPHNATION ll: Where, by an order under sections | 20, | 2 lA" I 56, 159, 16 | or | 62, any income is
excluded from the total income of one person and held to be the income of another person, an
assessment of such income of such other person, shall, for the purposes of this section, be deemed to
be one made in consequence of or to give effect to, any finding or direction contained in the said
order.
Where the Deputy Commissioner of Taxes fails to give effect to any finding or direction
contained in an order referred to in section 94(3) within the period stipulated therein, such
hilure of the Deputy Commissioner of Taxes shall be construed as miscondgct.
(4)
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8. Taxation- | Study M:nual
Chapter l0
lmposition of Penalty
Contents
lntroduction
Examination context
Topic List
l0l Penaity for noi miintaining accounts in rhe prescribed manhlr
lO.2- eenatt/ ioiTarturl tJft|ereturn,'certificati, JiitJment, iCcounts oi in-formltion
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__ pe"iiit forniing fake Tartayer'iiaentincaton N-umber
l o.4 - FaiUie to tat-tavanaeGi
, 10.5 Penalty for non-compliance with notice
10.6 - -Ftilure to p1y taxGn tfie Uasis of ieturn
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10.7 Penalty for concealment of income
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P;nalt/f;iaafult in payrnent of aax - -
I A9--=Bar to imp-osition of p-en'attffitrout hearing - i
- |O.TO previous approvat of inspeiting joini Commissioner for imposing pe"tt-_-
i to. i t een-tty to be with-preludic-eto other tiauitiry - - I
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10. l2 Orders of Appellate Joint Commissioner, Commissioner or Appellate Tribunal to
be sent to Depury Commissioner of Taxes
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