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. Jai Salasar Balaji Pvt. Ltd., Kolkata vs. DCIT, CC-Xiii, Kolkata

In the result the appeal of the assessee is allowed

ITA 2142/KOL/2014[2009-2010]Status: DisposedITAT Kolkata03 May 2017AY 2009-2010

Bench: Hon’Ble Sri N.V.Vasudevan, Jm & Dr.Arjun Lal Saini, Am] I.T.A No. 2142/Kol/2014 Assessment Year : 2009-10 M/S. Jai Salasar Balaji Pvt. Ltd. -Vs.- D.C.I.T., Central Circle-Xiii, Kolkata Kolkata [Pan : Aaacj 6970 D] (Respondent) (Appellant) For The Appellant : Shri A.K.Tulsiyan, Fca For The Respondent : Shri Bani Brata Dutta, Addl. Cit(Dr) Date Of Hearing : 12.04.2017. Date Of Pronouncement : 03.05.2017. Order Per N.V.Vasudevan, Jm This Is An Appeal By The Assessee Against The Order Dated 23.09.2014 Of C.I.T.(A)-Central-Ii, Kolkata Relating To A.Y.2009-10. 2. In This Appeal The Assessee Has Challenged The Order Of Cit(A) Whereby The Cit(A) Confirmed The Order Of Ap Imposing Penalty On The Assessee U/S 271(1)(C) Of The Income Tax 1961 (Act). 3. The Facts & Circumstances Under The Penalty Was Imposed On The Assessee By The Ao Are As Follows :- There Was A Search & Seizure Operation Conducted By The Revenue U/S 132 Of The Act In Jai Balaji Group. The Assessee Was Also A Part Of The Jai Balaji Group & The Assessee’S Business Premises Was Also Search By The Revenue On 09.06.2011. In The Course Of Search The Assessee Made Disclosure Of Rs.46 Lakhs In The Statement Of The Director Recorded U/S 132(4) Of The Act. The Director Of The Assessee Made A Disclosure Of Rs.46 Lakhs As Undisclosed Income & Agreed To Disclose The Said Sum In The Return Of Income To Be Filed For A.Y.2009-10.The Break-Up Of The Disclosure Of Undisclosed Income Can Be Summed Up In The Form Of The Following Chart :-

For Appellant: Shri A.K.Tulsiyan, FCAFor Respondent: Shri Bani Brata Dutta, Addl. CIT(DR)
Section 132Section 132(4)Section 139(1)Section 153ASection 271(1)(c)Section 5A