Section 274 of Income Tax Act "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.
27[(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 27a[income-tax
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.
(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.
275. (1) No order imposing a penalty under this Chapter
shall be passed-
(a) in a case where the relevant assessment or other order
is the subject-matter of an appeal to the Commissioner
(Appeals) under section 246 or section 246A or an appeal to
the Appellate Tribunal under section 253, after the expiry
of the financial year in which the proceedings, in the
course of which action for the imposition of penalty has
been initiated, are completed, or six months from the end of
the month in which the order of the Commissioner (Appeals)
or, as the case may be, the Appellate Tribunal is received
by the Principal Chief Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner, whichever period
expires later :
Provided that in a case where the relevant assessment or
other order is the subject-matter of an appeal to the
Commissioner (Appeals) under section 246 or section 246A,
and the Commissioner (Appeals) passes the order on or after
the 1st day of June, 2003 disposing of such appeal, an order
imposing penalty shall be passed before the expiry of the
financial year in which the proceedings, in the course of
which action for imposition of penalty has been initiated,
are completed, or within one year from the end of the
financial year in which the order of the Commissioner
(Appeals) is received by the Principal Chief Commissioner or
Chief Commissioner or Principal Commissioner or
Commissioner, whichever is later;
(b) in a case where the relevant assessment or other order
is the subject-matter of revision under section 263 or
section 264, after the expiry of six months from the end of
the month in which such order of revision is passed;
(c) in any other case, after the expiry of the financial
year in which the proceedings, in the course of which action
for the imposition of penalty has been initiated, are
completed, or six months from the end of the month in which
action for imposition of penalty is initiated, whichever
period expires later.
(1A) In a case where the relevant assessment or other order
is the subject matter of an appeal to the Commissioner
(Appeals) under section 246 or section 246A or an appeal to
the Appellate Tribunal under section 253 or an appeal to the
High Court under section 260A or an appeal to the Supreme
Court under section 261 or revision under section 263 or
section 264 and an order imposing or enhancing or reducing
or cancelling penalty or dropping the proceedings for the
imposition of penalty is passed before the order of the
Commissioner (Appeals) or the Appellate Tribunal or the High
Court or the Supreme Court is received by the Principal
Chief Commissioner or Chief Commissioner or the Principal
Commissioner or Commissioner or the order of revision under
section 263 or section 264 is passed, an order imposing or
enhancing or reducing or cancelling penalty or dropping the
proceedings for the imposition of penalty may be passed on
the basis of assessment as revised by giving effect to such
order of the Commissioner (Appeals) or, the Appellate
Tribunal or the High Court, or the Supreme Court or order of
revision under section 263 or section 264:
Provided that no order of imposing or enhancing or reducing
or cancelling penalty or dropping the proceedings for the
imposition of penalty shall be passed-
(a) unless the assessee has been heard, or has been given a
reasonable opportunity of being heard;
(b) after the expiry of six months from the end of the month
in which the order of the Commissioner (Appeals) or the
Appellate Tribunal or the High Court or the Supreme Court is
received by the Principal Chief Commissioner or Chief
Commissioner or the Principal Commissioner or Commissioner
or the order of revision under section 263 or section 264 is
passed:
Provided further that the provisions of sub-section (2) of
section 274 shall apply in respect of the order imposing or
enhancing or reducing penalty under this sub-section.
(2) The provisions of this section as they stood immediately
before their amendment by the Direct Tax Laws (Amendment)
Act, 1987 (4 of 1988), shall apply to and in relation to any
action initiated for the imposition of penalty on or before
the 31st day of March, 1989.
Explanation.-In computing the period of limitation for the
purposes of this section,-
(i) the time taken in giving an opportunity to the assessee
to be reheard under the proviso to section 129;
(ii) any period during which the immunity granted under
section 245H remained in force; and
(iii) any period during which a proceeding under this
Chapter for the levy of penalty is stayed by an order or
injunction of any court, shall be excluded.