Section 273B of the Income Tax Act

Income-tax Act, 2025: s.470

Section 273B of the Income-tax Act, 1961 corresponds to section 470 (Penalty not to be imposed in certain cases) of the Income-tax Act, 2025.

Read section 470 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 273B is Ashok Pai v. CIT (292 ITR 11), cited in 812 of the 2,226 judgments on BharatTax that turn on this section.

Leading authorities on Section 273B

Ashok Pai v. CIT
292 ITR 11 · 2007 · Supreme Court
812
citing judgments

“Concealment of particulars of income” and “furnishing inaccurate particulars of income” are two distinct offences under Section 271(1)(c) of the Income Tax Act. A penalty cannot be levied under one limb if the show cause notice or basis for penalty specifies the other, as this constitutes a complete variance in the reasons for assuming jurisdiction.

Hindustan Steel Ltd. v. State of Orissa
83 ITR 26 · 1972 · Supreme Court
502
citing judgments

An order imposing penalty for failure to carry out a statutory obligation results from quasi-criminal proceedings. Penalty is not ordinarily imposed unless the party acted deliberately in defiance of law, was guilty of contumacious or dishonest conduct, or acted in conscious disregard of their obligation.

CIT v. Eli Lily & Co.
312 ITR 225 · 2009 · Supreme Court
221
citing judgments

Section 195 of the Income Tax Act, which mandates tax withholding on payments to non-residents, applies only to sums that are otherwise chargeable to tax under the Act. Tax withholding provisions are not charging provisions.

Commissioner of Income Tax v. Noida Toll Bridge Co. Ltd.
262 ITR 260 · 2003 · High Court
121
citing judgments

Journal entries for accepting or repaying loans and deposits, without any actual cash transaction, do not violate the provisions of Section 269SS or Section 269T of the Income Tax Act. Consequently, such transactions do not attract penalties under Section 271D or Section 271E.

Commissioner of Income Tax v. Triumph International Finance (I) Ltd.
345 ITR 270 · 2012 · High Court
114
citing judgments

Transactions involving the receipt or repayment of loans or deposits solely through journal entries, without actual cash movement, contravene Sections 269SS and 269T. However, penalties under Sections 271D or 271E for such contraventions are not imposable if the assessee demonstrates a reasonable cause under Section 273B, particularly when no cash has passed between parties.

CIT v. S.K. Gupta & Co.
322 ITR 86 · 2010 · High Court
110
citing judgments

If a penalty is levied under Section 271A for failure to maintain books of account, then a separate penalty under Section 271B for failure to get accounts audited under Section 44AB cannot also be levied.

CIT v. Jai Laxmi Rice Mills
379 ITR 521 · 2015 · Supreme Court
110
citing judgments

The assessing officer must record explicit satisfaction in the assessment order for initiating penalty proceedings under sections like 271D, 271E, 269SS, 269T, or 269ST; a mere recommendation or information to another authority is insufficient to validate the penalty.

CIT v. NHK Japan Broadcasting Corporation
305 ITR 137 · 2008 · High Court
96
citing judgments

When no specific statutory period of limitation exists, proceedings under Section 201(1) and 201(1A) of the Income-tax Act, particularly for payments to non-residents, must be initiated within a reasonable period of four years. This limitation also applies to consequential penalty proceedings under Section 271C.

Asst. Director of Inspection (Investigation) v. Kum. A.B. Shanthi
255 ITR 258 · 2002 · Supreme Court
61
citing judgments

The Supreme Court upholds the constitutional validity of Section 269SS of the Income Tax Act, 1961, which prohibits certain cash loans and deposits. This ruling is foundational for penalties under Section 271D and considering exemptions under Section 273B.

Azadi Bachao Andolan v. Union of India
252 ITR 471 · 2001 · High Court
57
citing judgments

A penalty under sections like 271D or 271E is not automatically imposed if the assessee proves there was a reasonable cause for the failure. The interpretation of 'reasonable cause' is that which would prevent a person of average intelligence and ordinary prudence from acting negligently or in bad faith.

Judgments on Section 273B

Asst. Commissioner of Income Tax 5(1)(2), Mumbai vs. Dharmanandan Diamonds P.Ltd, Mumbai

The appeal stand dismissed

ITA 649/MUM/2018[2012-13]Status: DisposedITAT Mumbai01 Oct 2021AY 2012-13

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am (Hearing Through Video Conferencing Mode) आयकरअपील िं./ I.T.A. No.649/Mum/2018 (धििाारण वर्ा / Assessment Year: 2012-13) Acit–Circle-5(1)(2) M/S. Dharmanandan Diamonds (P) Ltd. Room No.568, 5Th Floor Fc-7081-7082, Bharat Diamond Bourse Vs. Aaykar Bhavan, M.K. Road G-Block, Bandra Kurla Bomplex Mumbai-400 020 Bandra (E), Mumbai-400 051 स्थायीलेखा िं./ जीआइआर िं./ Pan/Gir No. Aaccd-6676-J (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : Assessee By : Shri Rashmikant Modi – Ld. Ar Revenue By : Shri Sunil Deshpande – Ld. Cit-Dr ुनवाई की तारीख/ : 22/07/2021 Date Of Hearing घोषणा की तारीख / : 01/10/2021 Date Of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Revenue For Assessment Year (Ay) 2012-13 Arises Out Of The Order Of Ld. Commissioner Of Income Tax (Appeals)-55 Mumbai [Cit(A)] Dated 15/11/2017 Which Has Deleted Penalty Of Rs.2818.16 Lacs As Levied By Learned Assessing Officer (Ao) U/S. 271G Vide Order Dated 29/07/2016. 2. The Ld. Cit-Dr, Drawing Attention To The Factual Matrix, Justified The Penalty Levied By Ld. Ao Whereas The Ld. Ar Submitted That Keeping In View The Nature Of Business, The Details As Sought By Lower Authorities

For Appellant: Shri Rashmikant Modi – Ld. ARFor Respondent: Shri Sunil Deshpande – Ld. CIT-DR
Section 271G

Mukesh Dahyabhai Patel, Surat vs. Joint Commissioner of Income Tax, Range -3(2), Surat

In the result, the appeal filed by the assessee is allowed

ITA 150/SRT/2018[2010-11]Status: DisposedITAT Surat20 Sept 2021AY 2010-11

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकरअपीलसं./Ita No.150/Srt/2018 ("नधा"रणवष" / Assessment Year: (2010-11) (Virtual Court Hearing) Mukesh Dahyabhai Patel, Vs. The Jcit, Rang-3(2), Prop. Of Mukesh Textiles, P-414-417, Surat. New Gidc, Katargam, Surat-395004. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Abbpp2226M (Assessee) (Respondent) Assessee By : Ms Himali Mistry, Ca Revenue By : Ms Anupama Singhla, Sr. Dr सुनवाईक"तार"ख/ Date Of Hearing : 27/08/2021 घोषणाक"तार"ख/Date Of Pronouncement : 20/09/2021 आदेश / O R D E R Per Dr. A. L. Saini: Captioned Appeal Filed By The Assessee Pertaining To Assessment Year (Ay) 2010-11, Is Directed Against The Order Passed By The Learned Commissioner Of Income Tax(Appeals)-3, Surat [In Short “The Ld. Cit(A)”] In Appeal No. Cas/3/453/2015-16 Dated 24.08.2017, Which In Turn Arises Out Of An Assessment Order Passed By The Assessing Officer Under Section 143(3) Of The Income Tax Act 1961, (Hereinafter Referred To As “The Act”). 2. Grounds Of Appeal Raised By The Assessee Are As Follows: “(1) On The Facts & Circumstances Of The Case & As Per Law, The Learned Cit(A) Erred In Levying Penalty Of Rs.3,22,018/- U/S.271D Of The Act. (2) The Assessee Submits That The Learned Cit(A) Did Not Properly Appreciate The Real Nature Of Transactions & Therefore, Was Not Justified In Confirming The Above Penalty. (3)The Assessee Craves Leave To Add, Alter Or Vary Any Of The Grounds Of Appeal.”

For Appellant: Ms Himali Mistry, CAFor Respondent: Ms Anupama Singhla, Sr. DR
Section 143(3)Section 269SSection 271D