payment of penalty
This query is : Resolved
11 January 2017
who liable for pay penalty if authorised person change ? any circular issue by IT Dept.
CA Suresh Jain
(Expert)
11 January 2017
The assesse is liable to pay penalty and not the authorized person. Please let me know the penal section for which you want to know.
12 January 2017
query regarding for bank , manager commit default for short deduction if tds , now new Manger in his place .
12 January 2017
query regarding for bank , manager commit default of short deduction of tds , now new Manger comes in his place .
09 August 2024
When there is a change in the authorized person of a company or firm, especially concerning the payment of penalties or compliance issues, the responsibility for paying the penalty can depend on several factors. Here’s a detailed explanation:
### **Liability for Payment of Penalty**
1. **Change in Authorized Person:**
- **Authorized Person**: The authorized person is typically responsible for compliance matters, including payment of penalties related to statutory obligations.
- **Liability Transfer**: If there is a change in the authorized person (e.g., from one director to another, or from one authorized signatory to another), the new authorized person generally assumes responsibility for ongoing compliance and any related penalties unless otherwise specified.
2. **Penalty Payment Responsibility:**
- **Company’s Liability**: Generally, the company or firm remains liable for penalties irrespective of changes in the authorized person. The entity itself is responsible for ensuring that penalties are paid and compliance is maintained.
- **Authorized Person's Role**: The authorized person at the time the penalty was incurred is typically responsible for ensuring the payment is made. However, if there is a new authorized person, they may need to address or rectify outstanding penalties and compliance issues.
3. **Circulars and Guidelines:**
- **Circulars**: The Income Tax Department or other relevant authorities may issue circulars or guidelines related to the responsibility of paying penalties, especially in the context of changes in authorized persons or representatives.
- **Responsibility Transfer**: Circulars generally clarify the responsibility of the entity versus the authorized person, but the overarching principle is that the entity remains liable for statutory compliance and associated penalties.
### **Relevant Circulars and Procedures**
1. **Income Tax Department Circulars:**
- **Compliance**: Circulars issued by the Income Tax Department usually address general compliance issues, including the responsibility for penalties. These circulars may not specifically address changes in authorized persons but provide guidance on compliance responsibilities.
- **Check Circulars**: To find specific circulars, you can refer to the official Income Tax Department website or consult the relevant departmental notifications and circulars.
2. **Steps to Address Penalties:**
- **Review Records**: Review the records to identify when and why the penalty was incurred and whether it was incurred before or after the change in the authorized person.
- **Rectify Compliance Issues**: Ensure that any outstanding penalties are paid promptly and that compliance issues are rectified to avoid further penalties.
- **Update Authorized Person**: Notify the relevant authorities of the change in the authorized person as per legal and regulatory requirements.
### **Summary:**
- **Entity’s Liability**: The company or firm remains liable for the payment of penalties even if there is a change in the authorized person.
- **Authorized Person’s Role**: The authorized person at the time of the penalty is generally responsible, but the new authorized person must ensure that all outstanding issues are resolved.
- **Circulars**: Consult official circulars from the Income Tax Department or relevant authorities for guidance on compliance and penalty payments.
**Recommended Actions:**
1. **Contact the Authority**: Reach out to the Income Tax Department or relevant authority for clarification if needed.
2. **Review Circulars**: Check the official website of the Income Tax Department for relevant circulars and guidelines.
3. **Update Records**: Ensure all records are updated to reflect any changes in the authorized person and address any outstanding penalties promptly.
By following these guidelines, you can ensure compliance with regulatory requirements and address any issues related to penalties effectively.
### **Liability for Payment of Penalty**
1. **Change in Authorized Person:**
- **Authorized Person**: The authorized person is typically responsible for compliance matters, including payment of penalties related to statutory obligations.
- **Liability Transfer**: If there is a change in the authorized person (e.g., from one director to another, or from one authorized signatory to another), the new authorized person generally assumes responsibility for ongoing compliance and any related penalties unless otherwise specified.
2. **Penalty Payment Responsibility:**
- **Company’s Liability**: Generally, the company or firm remains liable for penalties irrespective of changes in the authorized person. The entity itself is responsible for ensuring that penalties are paid and compliance is maintained.
- **Authorized Person's Role**: The authorized person at the time the penalty was incurred is typically responsible for ensuring the payment is made. However, if there is a new authorized person, they may need to address or rectify outstanding penalties and compliance issues.
3. **Circulars and Guidelines:**
- **Circulars**: The Income Tax Department or other relevant authorities may issue circulars or guidelines related to the responsibility of paying penalties, especially in the context of changes in authorized persons or representatives.
- **Responsibility Transfer**: Circulars generally clarify the responsibility of the entity versus the authorized person, but the overarching principle is that the entity remains liable for statutory compliance and associated penalties.
### **Relevant Circulars and Procedures**
1. **Income Tax Department Circulars:**
- **Compliance**: Circulars issued by the Income Tax Department usually address general compliance issues, including the responsibility for penalties. These circulars may not specifically address changes in authorized persons but provide guidance on compliance responsibilities.
- **Check Circulars**: To find specific circulars, you can refer to the official Income Tax Department website or consult the relevant departmental notifications and circulars.
2. **Steps to Address Penalties:**
- **Review Records**: Review the records to identify when and why the penalty was incurred and whether it was incurred before or after the change in the authorized person.
- **Rectify Compliance Issues**: Ensure that any outstanding penalties are paid promptly and that compliance issues are rectified to avoid further penalties.
- **Update Authorized Person**: Notify the relevant authorities of the change in the authorized person as per legal and regulatory requirements.
### **Summary:**
- **Entity’s Liability**: The company or firm remains liable for the payment of penalties even if there is a change in the authorized person.
- **Authorized Person’s Role**: The authorized person at the time of the penalty is generally responsible, but the new authorized person must ensure that all outstanding issues are resolved.
- **Circulars**: Consult official circulars from the Income Tax Department or relevant authorities for guidance on compliance and penalty payments.
**Recommended Actions:**
1. **Contact the Authority**: Reach out to the Income Tax Department or relevant authority for clarification if needed.
2. **Review Circulars**: Check the official website of the Income Tax Department for relevant circulars and guidelines.
3. **Update Records**: Ensure all records are updated to reflect any changes in the authorized person and address any outstanding penalties promptly.
By following these guidelines, you can ensure compliance with regulatory requirements and address any issues related to penalties effectively.
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