Section 465 Income Tax Act 2025: What Is the Penalty for Non-Compliance with Tax Notices?

What penalty does Section 465 prescribe?

Section 465 divides defaults into two groups. Sub-section (1) provides a fixed penalty of Rs. 10,000 for each specified default. Sub-section (2) provides a penalty of Rs. 500 for every day a specified failure continues. Sub-section (3) limits the penalty for certain withholding-tax-related failures.

When is the Rs. 10,000 penalty imposed under Section 465(1)?

Each of the following failures can attract a penalty of Rs. 10,000 per default:

1. Section 465(1)(a): A person legally bound to state the truth about a matter relating to assessment refuses to answer a question put by an income-tax authority exercising statutory powers.
2. Section 465(1)(b): A person refuses to sign a statement made during proceedings when an income-tax authority may legally require the signature.
3. Section 465(1)(c): A person summoned under Section 246(1) to give evidence or produce books or documents fails to attend or produce them at the specified place and time.
4. Section 465(1)(d): A person fails to comply with a notice under Section 268(1) or Section 270(8), or with a direction under Section 268(5).

Whether there are multiple defaults requires examination of the notices, statutory obligations and circumstances; the figure is not necessarily a one-time overall maximum.

Which failures attract Rs. 500 per day under Section 465(2)?

Section 465(2) lists the following continuing defaults:

1. (a) Failure to comply with a notice under Section 175(7).
2. (b) Failure to give notice of discontinuance of business or profession under Section 320(3).
3. (c) Failure to furnish within time the returns, statements or particulars specified in Sections 252, 397(3) or 507.
4. (d) Failure to permit inspection or copying of a register or entry referred to in Section 255.
5. (e) Failure to furnish the return required under Section 263(1)(a)(iii) or (iv), within the time and manner required by Section 263(1) and (2).
6. (f) Failure to deliver a copy of the declaration required under Section 393(7) on time.
7. (g) Failure to furnish a certificate under Section 395(4).
8. (h) Failure to deduct and pay tax under Section 416(3).
9. (i) Failure to furnish a statement under Section 392(5)(a).
10. (j) Failure to deliver a copy of the declaration required under Section 394(3) on time.
11. (k) Failure to deliver the statement within the time specified in Section 397(3)(b).
12. (l) Failure to deliver a statement within the prescribed time under Section 397(3)(e).
13. (m) Failure to deliver a statement within the prescribed time under Section 397(3)(g)(i).

The penalty is linked to the period during which the relevant default continues. Identify the correct statutory obligation before calculating any amount.

Is there a maximum penalty under Section 465(3)?

Yes, but only for specified failures. For the declaration under Section 393(7), the certificate under Section 395(4), and statements under Section 397(3)(b) or (e), the penalty cannot exceed the amount of tax deductible or collectible. This cap should not be applied indiscriminately to all Section 465 defaults.

Who can impose a Section 465 penalty?

Section 465(4) allocates jurisdiction according to the circumstances:

• Where the default occurs in proceedings before an income-tax authority not below Joint Director or Joint Commissioner, that authority may impose the penalty.
• For Section 465(1)(d), the authority issuing the relevant notice or direction imposes the penalty.
• For Section 465(2)(f), the specified Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner is competent.
• In other cases, the Joint Director or Joint Commissioner imposes the penalty.

Relevant statutory definitions and provisions

Section 465 broadly carries forward the subject matter of Section 272A of the Income-tax Act, 1961. Numbering and the scope of related obligations must be checked under the 2025 Act rather than assumed from the earlier law.

Can a penalty be avoided where there was reasonable cause?

Section 470 provides reasonable-cause protection for defaults under Section 465(1)(c), Section 465(1)(d) and Section 465(2). It does not expressly extend that protection to Section 465(1)(a) or (b). The taxpayer should retain documentary proof, such as correspondence, delivery records, medical records where relevant, and evidence of subsequent compliance.

Penalty proceedings must also be examined under Section 471 (procedure) and Section 472 (limitation). An opportunity of hearing and jurisdictional requirements should be checked against the applicable statutory provisions.

Practical examples of Section 465 penalties

Example 1: Failure to comply with a summons

A person fails without adequate justification to attend in response to a valid summons under Section 246(1). If the statutory requirements are met, the penalty under Section 465(1)(c) is Rs. 10,000 for that default, subject to any applicable relief under Section 470.

Example 2: A continuing reporting default

A listed statement remains overdue for 12 days. At Rs. 500 per day, the indicative penalty is Rs. 6,000, subject to the correct starting date, any applicable statutory cap and reasonable-cause relief.

Example 3: A capped default

A specified Section 397(3)(b) statement is overdue for 30 days. The daily calculation is Rs. 15,000. If the applicable tax deductible or collectible is Rs. 9,000, Section 465(3) limits the penalty to Rs. 9,000, subject to the other statutory conditions.

Frequently asked questions

Is the penalty for ignoring every income-tax notice Rs. 10,000?

No. Section 465(1) covers specifically identified failures. The correct provision depends on the type of notice, direction or summons.

Does Section 465 impose Rs. 500 for every day of late filing?

Only for the continuing failures listed in Section 465(2). Other late-filing provisions may prescribe different consequences.

Is there a universal maximum for the daily penalty?

No. Section 465(3) sets a tax-linked ceiling only for specified declarations, certificates and statements.

Can genuine hardship prevent a penalty?

Section 470 provides protection where reasonable cause is proved for the specified Section 465 defaults. The facts and evidence matter.

Official statutory reference

Read the Income-tax Act, 2025 as amended by the Finance Act, 2026 for the authoritative legislative wording and related provisions.

Last reviewed: 12 November 2026. This article provides general legal information and is not a substitute for advice on a specific notice or penalty proceeding.