Income Tax Act

Official PDF pages 541–545

SOURCE PDF PAGE 541
Penalty in respect of certain income.
443.  
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Penalty for false entry, etc., in books of account.
444.   (1) The Assessing Officer or the Joint Commissioner (Appeals) or the
Commissioner (Appeals), may impose a penalty equal to the aggregate amount
of false or omitted entry, where during any proceeding under this Act, it is found
that in the books of account maintained by any person there is—
( a )   a false entry; or
( b )   an omission of any entry which is relevant for computation of total
income of such person, to evade tax liability.
(2) Without prejudice to sub-section (1), the Assessing Officer or the Joint Commis -
sioner (Appeals) or the Commissioner (Appeals) may impose a penalty equal to the
aggregated amount of false or omitted entry, on any other person, who causes the
person referred to in the said sub-section in any manner to make a false entry or
omits or causes to omit any entry referred to in that sub-section.
(3) For the purposes of this section, the expression “false entry” includes use or
intention to use—
( a )   forged or falsified documents such as a false invoice or, in general, a false
piece of documentary evidence; or
( b )   invoice in respect of supply or receipt of goods or services or both issued
by the person or any other person without actual supply or receipt of
such goods or services, or both; or
( c )   invoice in respect of supply or receipt of goods or services or both to or
from a person who does not exist.
Benefits to related persons.
445 .   If during any proceedings under this Act, it is found that a person being a
registered non-profit organisation has any specified income which is charge -
able to tax as per section 337 (Table: Sl. No. 2), the Assessing Officer may impose
on such person, a penalty of—
9.   Omitted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its omission, section 443 read as
under :
“443.   Penalty in respect of certain income.— (1) The Assessing Officer or the Joint Commis -
sioner (Appeals) or Commissioner (Appeals) may impose a penalty of 10% of the tax payable
under section 195(1)( i ), on an assessee if the income determined in his case for any tax year
includes any income referred to in section 102, 103, 104, 105 or 106.
(2) The penalty under sub-section (1) shall be payable in addition to the tax payable under
section 195.
(3) No penalty shall be levied on income referred to in section 102, 103, 104, 105 or 106 to
the extent such income has been included by the assessee in the return of income furnished
under section 263 and the tax as per section 195(1)( i )   has been paid on or before the end of
the relevant tax year.
(4) No penalty under section 439 shall be imposed upon the assessee in respect of income
referred to in sub-section (1).”

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SOURCE PDF PAGE 542
( a )   a sum equal to the aggregate amount of income applied, directly or in -
directly, by such person, for the benefit of any related person referred to
in section 355( h ) ,   if the violation is noticed for the first time during any
tax year; and
( b )   a sum equal to 200% of the aggregate amount of income of such person
applied, directly or indirectly, by that person for the benefit of any per -
son referred to in section 355( h ) ,   if the violation is noticed again in any
subsequent tax year.
10
[Penalty for failure to furnish information or for furnishing inaccurate
information on transaction of crypto-asset.
446 .   (1) If any person who is required to furnish a statement in respect of a trans-
action of a crypto-asset under section 509(1), fails to furnish such statement
within the time prescribed under the said section, the prescribed income-tax authority
under that section may impose on him, a penalty of   `   200 for every day for which such
failure continues.
(2) The prescribed income-tax authority may impose a penalty of   `   50000 on a person
referred in sub-section (1), if such person—
( a )   provides inaccurate information in the statement and fails to remove such
inaccuracy as per section 509(4); or
( b )   fails to comply with due diligence the requirement under section 509(5). ]
Penalty for failure to furnish report under section 172.
447 .  
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Penalty for failure to deduct tax at source.
448 .   If any person fails to—
( a )   deduct the whole or any part of the tax as required under Chapter XIX-B;
or
( b )   pay or ensure the payment of, the whole or any part of the tax as required
by or under—
10.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, section 446
read as under :
“446.   Failure to get accounts audited.— If any person fails to get his accounts audited for
any tax year or years or furnish the audit report as required under section 63, the Assessing
Officer may impose a penalty on such person, which shall be the lesser of—
( a )   0.5% of the total sales, turnover, or gross receipts in business, or the gross receipts
in profession for such tax year or years; or
( b )   `   150000.”
11.   Omitted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its omission, section 447 read as
under :
“447.   Penalty for failure to furnish report under section 172.— If any person fails to furnish a
report from an accountant as required by section 172, the Assessing Officer may impose a
penalty of   `   100000 on such person.”

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SOURCE PDF PAGE 543
( i )   Note 2 below the Table in section 393(3); or
( ii )   Note 6 to section 393(1) (Table: Sl. No. 8),
then, the Assessing Officer may impose on him, a penalty equal to the tax which
such person failed to deduct or pay or ensure payment of, as aforesaid.
Penalty for failure to collect tax at source.
449.   If any person fails to collect the whole or any part of the tax as required
under Chapter XIX-B, the Assessing Officer may impose on him, a penalty
equal to the tax which such person failed to collect.
Penalty for failure to comply with provisions of section 185.
450.   If a person takes or accepts any loan or deposit or specified sum in
contravention of the provisions of section 185, the Assessing Officer may im -
pose on him, a penalty equal to the amount of the loan or deposit or specified sum
so taken or accepted.
Penalty for failure to comply with provisions of section 186.
451 .   The Assessing Officer may impose on a person, a penalty equal to the sum
received by him in contravention of the provisions of section 186.
Penalty for failure to comply with provisions of section 187.
452.   The Assessing Officer may impose on a person, a penalty of   `   5000 for every
day of the duration of failure where he fails to provide a facility for accepting
payments through the prescribed electronic modes of payment, as referred to in
section 187.
Penalty for failure to comply with provisions of section 188.
453.   If a person repays any loan or deposit or specified advance referred to in
section 188 otherwise than in accordance with the provisions of that section,
the Assessing Officer may impose on him, a penalty equal to the loan or deposit or
specified advance so repaid.
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[Penalty for failure to furnish statement of financial transaction or reportable
account after a notice.
454.   Where any person, who is required to furnish a statement of financial trans-
action or reportable account under section 508(1), fails to furnish such statement
or reportable account within the period specified in the notice issued under section
12.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, section 454
read as under:
“454.   Penalty for failure to furnish statement of financial transaction or reportable account.—
(1) If a person who is required to furnish a statement of financial transaction or reportable
account under section 508(1), fails to furnish such statement within the time prescribed under
sub-section (2) thereof, the income-tax authority prescribed under the said sub-section (1)
may impose on him, a penalty of   `   500 for every day during which such failure continues.
(2) If the person referred to in sub-section (1), fails to furnish the statement within the period
specified in the notice issued under section 508(7), he shall pay penalty of   `   1000 for every
day during which the failure continues, beginning from the day immediately after the time
specified in such notice for furnishing the statement expires.”

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SOURCE PDF PAGE 544
508(7), the income-tax authority prescribed under section 508(1) may impose on him,
a penalty of   `   1000 for every day for which such failure continues, beginning from the
day immediately after the period specified in such notice for furnishing such statement
or reportable account expires and such penalty shall not exceed   `   100000. ]
Penalty   for   furnishing   inaccurate   statement   of   financial   transaction   or
reportable account.
455.   (1) The prescribed income-tax authority referred to in section 508 may direct
that a person required to furnish a statement under sub-section (1) of the said
section shall pay penalty of   `   50000, if such person—
( a )   provides inaccurate information in the statement or fails to furnish
correct information within the period specified under section 508(8); or
( b )   fails to comply with the due diligence requirement under section 508(9).
(2) The prescribed income-tax authority referred to in section 508, shall direct that
reporting financial institution referred to in section 508(1)( k ) shall, in addition to
the penalty under sub-section (1) of this section, if any, pay a sum of   `   5000 for
every inaccurate reportable account, if—
( a )   the said institution provides inaccurate information in the statement
required to be furnished under section 508(1); and
( b )   the inaccuracy in the said statement is due to false or inaccurate infor -
mation furnished by the holder or holders of the relevant reportable
account or accounts.
(3) The reporting financial institution as referred to in sub-section (2) shall be
entitled to—
( a )   recover the amount paid under sub-section (2) on behalf of the reportable
account holder; or
( b )   retain an amount equal to the sum so paid out of any moneys that may
be in its possession, or may come to it from every such account holder.
Penalty for failure to furnish statement or information or document by an
eligible investment fund.
456.   If any eligible investment fund required to furnish a statement or any
information or document under paragraph 4 of Schedule I, fails to do so within
the time prescribed under the said paragraph, the income-tax authority prescribed
under the said paragraph may direct that such fund shall pay, by way of penalty, a
sum of   `   500000.
Penalty for failure to furnish information or document under section 171.
457.   If any person who has entered into an international transaction or specified
domestic transaction fails to furnish any such information or document as
required under section 171(2), a penalty equal to 2% of the value of such transac -
tion may be imposed upon him for each such failure by the Assessing Officer or the
Transfer Pricing Officer as referred to in section 166 or the Commissioner (Appeals).

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SOURCE PDF PAGE 545
Penalty for failure to furnish information or document under section 506.
458.   If any Indian concern, which is required to furnish any information or
document under section 506, fails to do so, the prescribed income-tax author -
ity under the said section, may direct that such Indian concern shall pay by way of
penalty, a sum of—
( a )   2% of the value of the transaction in respect of which such failure has
taken place, if such transaction had the effect of directly or indirectly
transferring the right of management or control in relation to the Indian
concern;
( b )   `   500000, in any other case.
Penalty for failure to furnish report or for furnishing inaccurate report under
section 511.
459.   (1) If any reporting entity referred to in section 511, required to furnish the
report referred to in sub-section (2) of the said section, for a reporting
accounting year, fails to do so, the prescribed authority under that section may
impose on such entity, a penalty of—
( a )   `   5000 for every day for which the failure continues, if the period of
failure does not exceed one month;
( b )   `   15000 for every day for which the failure continues beyond the period
of one month.
(2) If any reporting entity referred to in section 511 fails to produce the information
and documents within the period allowed under sub-section (7) of the said section,
the prescribed authority under that section may impose on such entity, a penalty
of   `   5000 for every day during which the failure continues, beginning from the day
immediately following the day on which the period for furnishing the information
and document expires.
(3) If the failure referred to in sub-section (1) or (2) continues after an order im -
posing a penalty under the said sub-section, has been served on the entity, then,
irrespective of the provisions of the said sub-sections, the prescribed authority
may impose penalty of fifty thousand rupees for every day for which such failure
continues beginning from the date of service of such order.
(4) If a reporting entity referred to in section 511 provides inaccurate information
in the report furnished under sub-section (2) of the said section, the prescribed
authority under that section may impose on such entity, a penalty of   `   500000, if—
( a )   the entity has knowledge of the inaccuracy at the time of furnishing the
report but fails to inform the prescribed authority; or
( b )   the entity discovers the inaccuracy after the report is furnished and fails
to inform the prescribed authority and furnish correct report within
fifteen days of such discovery; or
( c )   the entity furnishes inaccurate information or document in response to
the notice issued under section 511(7).