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

M/S. Snowtex Investment Ltd., Kolkata vs. Income Tax Officer, Kolkata

In the result the appeal of the assessee, is allowed

ITA 1347/KOL/2016[2008-09]Status: DisposedITAT Kolkata17 Jan 2018AY 2008-09

Bench: Hon’Ble Sri N.V. Vasudevan, Jm & Dr. Arjun Lal Saini, Am] I.T.A No.1347/Kol/2016 Assessment Year : 2008-09 M/S. Snowtex Investment Ltd. -Vs.- Ito, Wd-12(3), Kolkata Kolkata [Pan : Aaecs 0334 C ] (Appellant) (Respondent) : Shri S. K. Tulsiyan, Advocate For The Appellant For The Respondent : Shri S. Dasgupta, Addl.Cit Date Of Hearing : 04.12.2017. Date Of Pronouncement : 17/01/2018 Order Per Dr. A.L. Saini, Am This Is An Appeal By The Assessee Against The Order Dated 19.04.2016 Of Cit(A)-4, Kolkata Relating To A.Y.2008-09. 2. In This Appeal, The Assessee Has Challenged The Order Of Cit(A) Whereby The Cit(A) Confirmed The Order Of Ao Imposing Penalty On The Assessee U/S 271(1)(C) Of The Income Tax Act, 1961 (Act). 3. The Facts & Circumstances Under Which Penalty U/S 271(1)(C) Of The Act Was Imposed On The Assessee Was That During The Assessment Year 2008-09, The Assessee Has Advanced Interest Free Loans To The Extent Of Rs.9,58,95,000/- & As There Had Been No Significant Repayment, The Closing Balance As On 31.03.2008 Was At Rs. 9,62,95,000/-. It Was Also Seen From The Details For A.Y. 2009-10, That There Had Been No Business Transactions Apart From Interest Free Loan Transactions. The Unsecured Loans On Which Interest Was Paid, Was Rs. 5,92,05,572/-, Which Was Much Below The Amount, Which Was Advanced By The Assessee Free Of Any Interest. Therefore, There Had Been No Justification Of Unsecured Loan Taken During The Year. Therefore, Whole Sum Of Interest Paid Of Rs. 62,84,112/- Was Disallowed. The Cit(A) Restricted The M/S. Snowtex Investment Ltd.

For Respondent: Shri S. Dasgupta, Addl.CIT
Section 271(1)Section 271(1)(c)Section 274Section 41(1)

DCIT, Cir-4(1), Kolkata vs. M/S Bandhan Financial Services Pvt. Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 1348/KOL/2015[2010-2011]Status: DisposedITAT Kolkata17 Jan 2018AY 2010-2011

Bench: Shri N.V.Vasudevan & Dr.A.L. Sainiassessment Year :2010-11 Dcit, Central Circle- V/S. M/S Bandhan Financial 4(1), Services Pvt. Ltd., 17/30, Aayakarbhavanpoorva, Dakshindari Road, Lake 110, Shanti Palli, E.M. Town, Kolkat-48 By Pass, 4Th Floor, [Pan No.Aabcg 0611 R] Kolkata-107 अपीलाथ" /Appellant ""थ"/Respondent .. अपीलाथ"की ओर से/By Appellant Shri S. Dasgupta, Addl. Cit-Dr ""थ" की ओर से/By Respondent Shri Shikha Agarwal, Aca सुनवाई की तारीख/Date Of Hearing 11-12-2017 घोषणा की तारीख/Date Of Pronouncement 17/01/2018 आदेश/O R D E R Per Dr. A.L. Saini:- This Caption Appeal Filed By The Revenue, Pertaining To Assessment Year 2010-11, Is Directed Against The Order Passed By The Commissioner Of Income Tax (Appeals)-4, Dated 07.08.2015, Which In Turn Arises Out Of A Penalty Order Passed By The Assessing Officer Under Section 271(1) (C ) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’), Vide His Order Dated 26.09.2013. 2. In This Appeal, The Revenue Has Challenged The Order Of Ld.Cit(A) Whereby The Ld.Cit(A) Deleted The Order Of Ao Imposing Penalty On The Assessee U/S 271(1)(C) Of The Income Tax Act, 1961 (Act).

Section 271(1)Section 271(1)(c)Section 274