Section 274 of the Income Tax Act

Income-tax Act, 2025: s.471

Section 274 of the Income-tax Act, 1961 corresponds to section 471 (Procedure) of the Income-tax Act, 2025.

Read section 471 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 274 is CIT v. Manjunatha Cotton & Ginning Factory (359 ITR 565), cited in 2,590 of the 4,894 judgments on BharatTax that turn on this section.

Leading authorities on Section 274

CIT v. Manjunatha Cotton & Ginning Factory
359 ITR 565 · 2013 · High Court
2,590
citing judgments

A penalty notice issued under section 274 read with section 271(1)(c) is invalid if it fails to specify whether the penalty proceedings are initiated for concealment of income or for furnishing inaccurate particulars of income. This non-specification vitiates the penalty proceedings.

CIT v. Reliance Petroproducts Pvt. Ltd.
322 ITR 158 · 2010 · Supreme Court
2,228
citing judgments

Penalty under Section 271(1)(c) for furnishing inaccurate particulars or concealment of income is not automatically leviable if the assessee has made a full disclosure of all particulars and the addition or disallowance arises from a difference of opinion.

CIT v. SSA’s Emerald Meadows
73 Taxmann.com 248 · 2016 · Supreme Court
953
citing judgments

A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.

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.

CIT v. SSA’s Emerald Meadows
73 Taxmann.com 241 · 2016 · High Court
791
citing judgments

A penalty notice under section 271(1)(c) read with section 274 of the Income Tax Act is invalid if it fails to specify whether the penalty is for concealment of income or for furnishing incorrect particulars of income.

Mr. Mohd. Farhan A. Shaikh v. ACIT
434 ITR 1 · 2021 · High Court
672
citing judgments

A penalty notice issued under section 274 read with section 271(1)(c) is invalid if it fails to specify the exact charge by not striking off the irrelevant limb (concealment of income or furnishing inaccurate particulars of income). Such an omnibus or vague notice renders the penalty proceedings bad in law, and any penalty imposed on its basis is liable to be quashed.

Dilip N. Shroff v. JCIT
291 ITR 519 · 2007 · Supreme Court
565
citing judgments

A penalty notice issued under Section 271(1)(c) is invalid if the Assessing Officer fails to strike out the inapplicable limb (concealment or furnishing inaccurate particulars) from the standard proforma, indicating non-application of mind. The initial burden of proving concealment or inaccurate particulars rests on the Revenue.

CIT v. Kaushalya
216 ITR 660 · 1995 · High Court
511
citing judgments

A penalty levied under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income is not invalidated by the Assessing Officer's failure to strike off irrelevant portions in the show cause notice, provided the assessee understood the exact charge and suffered no prejudice, indicating an application of mind by the AO.

CIT v. Manu Engg
122 ITR 306 · 1980 · High Court
505
citing judgments

When levying a penalty under Section 271(1)(c), the Assessing Officer must clearly specify whether it is for concealment of income or furnishing inaccurate particulars. An ambiguous notice or order using "and/or" for these limbs, or a standard proforma without striking irrelevant clauses, indicates non-application of mind and renders the penalty unsustainable.

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.

Judgments on Section 274

Pegasus Event and Convention Services, Pune vs. ACIT Cir-7, Pune

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 186/PUN/2026[2020-21]Status: DisposedITAT Pune25 May 2026AY 2020-21

Bench: Shri R.K. Panda & Ms. Astha Chandraआयकर अपील सं. / Ita No.186/Pun/2026 धििाारण वर्ा / Assessment Year : 2020-21 Pegasus Event & Convention Services, Assistant Commissioner Services E 1/5 Phase Ii, Cibercity, Of Income Tax, Circle – 7, Haveli, Pune H.O., Pune-411001 Vs. Pune Pan : Aaifp8920C अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee By : Shri Nikhil S Pathak Department By : Smt. Saumya Pandey Jain Date Of Hearing : 18-05-2026 Date Of 25-05-2026 Pronouncement : आदेश / Order Per Astha Chandra, Jm : The Appeal Filed By The Assessee Is Directed Against The Order Dated 07.11.2025 Of The Ld. Commissioner Of Income Tax (Appeals)/Nfac, Delhi [“Cit(A)/Nfac”] Pertaining To Assessment Year (“Ay”) 2020-21. 2. Although A Number Of Grounds Have Been Raised By The Assessee, However, These All Relate To The Order Of The Ld. Cit(A)/Nfac In Confirming The Penalty Of Rs.22,93,281/- Levied By The Ld. Assessing Officer (“Ao”) U/S 270A Of The Income Tax Act, 1961 (The “Act”) For Under-Reporting Of Income Vide His Order Dated 19.08.2025. 3. Briefly Stated, The Facts Of The Case Are That The Assessee Firm Did Not Furnish Its Return Of Income U/S 139 Of The Act For Ay 2020-21. Based On The Information Flagged On Insight Portal By The Directorate Of Income Tax (Systems), Cbdt, It Was Found That The Substantial Income Of The Assessee Chargeable To Tax Had Escaped Assessment For The Ay 2020-21. The Case Of The Assessee Was Reopened U/S 147 Of The Act By Following The Mandated Procedure In Law. Accordingly, Notice U/S 148 Of The Act Was Issued To The Assessee With The Prior Approval Of The Specified Authority. In Response To 2

For Appellant: Shri Nikhil S PathakFor Respondent: Smt. Saumya Pandey Jain
Section 139Section 147Section 148Section 270ASection 270A(7)Section 274