Income Tax Act

Official PDF pages 551–555

SOURCE PDF PAGE 551
(2) No order imposing a penalty under this Chapter shall be made without the prior
approval of the Joint Commissioner—
( a )   where the penalty exceeds   `   10000, by the Income-tax Officer;
( b )   where the penalty exceeds   `   20000, by the Assistant Commissioner or
Deputy Commissioner.
(3) An income-tax authority on making an order under this Chapter imposing a
penalty, unless he himself is the Assessing Officer, shall send a copy of the order to
the Assessing Officer.
17
[ (4) Irrespective of anything contained in any other provision of this Act, where any
draft of the proposed order of assessment under section 275 or assessment under sec -
tion 270 or reassessment under section 279 is made on or after the 1st April, 2027,––
( a )   penalty under section 439, if any, shall constitute part of such draft assessment
or shall be imposed as a part of such order of assessment or reassessment,
as the case may be; and
( b )   the reference to the assessment order or the penalty order under section
439 in any of the provisions of this Act shall take reference to such order
of assessment or reassessment, as the case may be.
(5) Where the approval of the Joint Commissioner is taken for passing of an order of
assessment or reassessment on or after the 1st April, 2027, such approval shall also
be deemed to be the approval for the imposition of penalty under section 439, if any,
constituting part of such order of assessment or reassessment. ]
Bar of limitation for imposing penalties.
472.   (1) No order imposing a penalty under this Chapter shall be passed after the
expiry of six months from the end of the quarter in which—
( a )   the proceedings, in the course of which action for the imposition of
penalty has been initiated, are completed, if the relevant assessment or
other order is not the subject-matter of an appeal under section 356 or
357 or 362;
( b )   the order of revision is passed, if the relevant assessment or other order
is the subject-matter of revision under section 377 or 378;
( c )   the order of appeal is received by the jurisdictional Principal Commis -
sioner or Commissioner, if the relevant assessment or other order is the
subject-matter of an appeal under section 356 or 357 or 362;
( d )   notice for imposition of penalty is issued, in any other case.
(2) The order imposing or enhancing or reducing or cancelling penalty or drop -
ping the proceedings for the imposition of penalty may be revised on the basis of
assessment as revised by giving effect to the order under section 356 or 357 or 362
or 365 or 367 or revision under section 377 or 378, where the relevant assessment
or other order is the subject-matter of an appeal or revision under the said sections.
(3) No order imposing or enhancing or reducing or cancelling penalty or dropping
the proceedings for the imposition of penalty under sub-section (2) shall be passed—
17.   Sub-sections (4) and (5) inserted by the Finance Act, 2026, w.e.f.   1-4-2026 .

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SOURCE PDF PAGE 552
( 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 quarter in which the
order under section 356 or 357 or 362 or 365 or 367 is received by the
jurisdictional Principal Commissioner or Commissioner or the order of
revision under section 377 or 378 is passed.
(4) The provisions of section 471(2) shall apply to the order imposing or enhancing
or reducing penalty under this section.
(5) In computing the period of limitation for the purposes of this section, following
period shall be excluded—
( a )   the time taken in giving an opportunity to the assessee to be reheard
under section 244(2);
( b )   the period commencing on the date on which stay on proceeding for levy
of penalty was granted by an order or injunction of any court and ending
on the date on which certified copy of the order vacating the stay was
received by jurisdictional Principal Commissioner or Commissioner.
CHAPTER XXII
OFFENCES AND PROSECUTION
18
[ Contravention of order made during search action. ]
473.   Whoever contravenes any order referred to in section 247(4) shall be
punishable with  
19
[ simple imprisonment up to two years and with fine ] .
20
[ Failure   to   afford   facility   for   inspection   of   books   of   account   during
search. ]
474.   If a person, who is required to afford the authorised officer with the necessary
facility to inspect the books of account or other documents, under section
247(1)( ii )
15
, fails to do so, he shall be punishable with  
21
[ simple imprisonment for a
term up to six months, or with fine, or with both ] .
Removal, concealment, transfer or delivery of property to prevent tax recovery.
475.   Whoever, fraudulently removes, conceals, transfers or delivers to any person,
any property or any interest therein, with the intent to prevent such property
or interest therein from being taken in execution of a certificate drawn under section
413, shall be punishable with  
21
[ simple imprisonment for a term up to two years and
with fine ] .
18.   Substituted for “Contravention of order made under section 247.” by the Finance Act, 2026,
w.e.f.   1-4-2026 .
19.   Substituted for “rigorous imprisonment which may extend to two years and shall also be
liable to fine” by the Finance Act, 2026, w.e.f.   1-4-2026 .
20.   Substituted for “Failure to comply with section 247(1)( ii ).”,   ibid.
21.   Substituted for “rigorous imprisonment for a term which may extend to two years and shall
also be liable to fine” by the Finance Act, 2026, w.e.f.   1-4-2026 .

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SOURCE PDF PAGE 553
Failure to pay tax to credit of Central Government under Chapter XIX-B.
476.  
22
[ (1)   If a person fails to—
( a )   pay the tax deducted at source by him to the credit of the Central Govern -
ment, as required by or under the provisions of Chapter XIX-B; or
( b )   pay tax or ensure payment of tax to the credit of the Central Government
in respect of––
( A )   any income by way of winnings from online games as referred in
section 393(3) [Table: Sl. No. 2], excluding such winnings which are
wholly in kind, as referred to in Note 2 to the said Table; or
( B )   any sum by way of consideration for transfer of a virtual digital asset
as referred in section 393(1) [Table: Sl. No. 8( vi )], excluding such
consideration which is wholly in kind, as referred to in Note 6 to the
said Table,
he shall be punishable––
( i )   with simple imprisonment for a term up to two years, or with fine, or with
both, where the amount of such tax exceeds fifty lakh rupees; or
( ii )   with simple imprisonment for a term up to six months, or with fine, or
with both, where the amount of such tax exceeds ten lakh rupees but does
not exceed fifty lakh rupees; or
( iii )   with fine, in any other case. ]
(2) The provisions of this section shall not apply if the payment referred to in
sub-section (1)( a ) has been made to the credit of the Central Government on or
before the time prescribed for filing the statement under section 397(3)( b ) in
respect of such payment.
Failure to pay tax collected at source.
477 .  
23
[ (1) If a person fails to pay the tax collected by him to the credit of the Central
Government, as required under section 397(3)( a ), he shall be punishable––
( a )   with simple imprisonment for a term up to two years, or with fine, or with
both, where the amount of such tax exceeds fifty lakh rupees; or
22.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(1) read as under :
“(1) If a person fails to—
( a )   pay the tax deducted at source by him to the credit of the Central Government, as
required by or under the provisions of Chapter XIX-B; or
( b )   pay tax or ensure payment of tax to the credit of the Central Government, as required
under—
( i )   Note 2 below the Table in section 393(3); or
( ii )   Note 6 to section 393(1) (Table: Sl. No. 8),
he shall be punishable with rigorous imprisonment for a term which shall not be less than
three months but which may extend to seven years, and with fine.”
23.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, sub-section
(1) read as under :
“(1) If a person fails to pay the tax collected by him to the credit of the Central Government,
as required under section 397(3)( a ), he shall be punishable with rigorous imprisonment for
a term which shall not be less than three months but which may extend to seven years, and
with fine.”

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SOURCE PDF PAGE 554
( b )   with simple imprisonment for a term up to six months or with fine, or with
both, where the amount of such tax exceeds ten lakh rupees but does not
exceed fifty lakh rupees; or
( c )   with fine, in any other case. ]
(2) The provisions of this section shall not apply if the payment of the tax collected
at source has been made to the credit of the Central Government on or before the
time prescribed for filing the statement under section 397(3)( b ) in respect of such
payment.
Wilful attempt to evade tax, etc.
478.  
24
[ (1) If a person wilfully attempts in any manner to evade any tax, penalty or
interest chargeable or imposable, or under-reports his income, under this Act,
he shall be punishable—
( a )   with simple imprisonment for a term up to two years, or with fine, or with
both, where the amount sought to be evaded or tax on under-reported
income exceeds fifty lakh rupees; or
( b )   with simple imprisonment for a term up to six months, or with fine, or
with both, where the amount sought to be evaded or tax on under-reported
income exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
( c )   with fine, in any other case.
(2) If a person wilfully attempts in any manner to evade payment of any tax, penalty
or interest under this Act, he shall be punishable —
( a )   with simple imprisonment for a term up to two years, or with fine, or with
both, where the amount sought to be evaded exceeds fifty lakh rupees; or
( b )   with simple imprisonment for a term up to six months, or with fine, or
with both, where the amount sought to be evaded exceeds ten lakh rupees
but does not exceed fifty lakh rupees; or
( c )   with fine, in any other case. ]
(3) The punishment referred to in this section, shall be without prejudice to any
penalty that may be imposable under any other provision of this Act.
24.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to their substitution, sub-sections
(1) and (2) read as under :
“(1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or
interest chargeable or imposable, or under-reports his income, under this Act, he shall be
punishable,—
( a )   in a case, where the amount sought to be evaded or tax on under-reported income
exceeds twenty-five lakh rupees, with rigorous imprisonment for a term which shall
not be less than six months but which may extend to seven years, and with fine;
( b )   in any other case, with rigorous imprisonment for a term which shall not be less
than three months but which may extend to two years, and with fine.
(2) If a person wilfully attempts in any manner to evade the payment of any tax, penalty
or interest under this Act, he shall be punishable with rigorous imprisonment for a term
which shall not be less than three months but which may extend to two years and shall, in
the discretion of the court, also be liable to fine.”

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SOURCE PDF PAGE 555
(4) For the purposes of this section, a wilful attempt to evade any tax, penalty or
interest chargeable or imposable under this Act, or the payment thereof, shall include
a case where any person—
( a )   has in his possession or control any books of account or other documents
(being books of account or other documents relevant to any proceeding
under this Act) containing a false entry or statement; or
( b )   makes or causes to be made any false entry or statement in such books
of account or other documents; or
( c )   wilfully omits or causes to be omitted any relevant entry or statement in
such books of account or other documents; or
( d )   causes any other circumstance to exist which will have the effect of
enabling such person to evade any tax, penalty or interest chargeable or
imposable under this Act or the payment thereof.
Failure to furnish returns of income.
479.   (1) If a person wilfully fails to furnish in due time the return of income, which
is required to be furnished under section 263(1), or by notice given under
section 268(1) or 280, he shall be punishable,—
25
[ ( a )   with simple imprisonment for a term up to two years, or with fine, or with
both, where the amount of tax, which would have been evaded if the failure
had not been discovered, exceeds fifty lakh rupees; or
( b )   with simple imprisonment for a term up to six months, or with fine, or
with both, where the amount of tax, which would have been evaded if the
failure had not been discovered, exceeds ten lakh rupees but does not exceed
fifty lakh rupees; or
( c )   with fine, in any other case. ]
(2)   A person shall not be proceeded against under sub-section (1) for failure to
furnish in due time the return of income under section 263(1) for any tax year, if—
( a )   a return is furnished by him under section 263(4)   or 263(6); or
( b )   the tax payable by such person, not being a company, on the total in -
come determined on regular assessment, as reduced by the advance tax
or self-assessment tax, if any, paid before the expiry of period specified
under section 263(4) ,   and any tax deducted or collected at source, does
not exceed   `   10000.
25.   Clauses ( a ), ( b ) and ( c ) substituted for clauses ( a ) and ( b ) by the Finance Act, 2026, w.e.f.
1-4-2026 . Prior to their substitution, clauses ( a ) and ( b ) read as under :
“( a )   in a case, where the amount of tax, which would have been evaded if the failure had
not been discovered, exceeds twenty-five lakh rupees, with rigorous imprisonment
for a term which shall not be less than six months but which may extend to seven
years, and with fine;
( b )   in any other case, with imprisonment for a term which shall not be less than three
months but which may extend to two years and with fine.”