Section 275 of the Income Tax Act
Income-tax Act, 2025: s.472
Section 275 of the Income-tax Act, 1961 corresponds to section 472 (Bar of limitation for imposing penalties) of the Income-tax Act, 2025.
Read section 472 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 275 is CIT v. Hissaria Bros. (291 ITR 244), cited in 132 of the 312 judgments on BharatTax that turn on this section.
Leading authorities on Section 275
Penalty proceedings for defaults under Sections 269SS and 269T are independent of assessment proceedings; therefore, the limitation period under Section 275(1)(c) for imposing such penalties is not contingent on the completion of appellate quantum proceedings.
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.
A penalty levied under Section 271(1)(c) is not sustainable if the notice issued under Section 274 fails to specifically mention whether the charge relates to concealment of income or furnishing inaccurate particulars of income. The Assessing Officer must specify the exact charge for the penalty to be valid.
The date of initiation of penalty proceedings for the purpose of Section 275(1)(c) is when the Assessing Officer records a satisfaction or recommends penalty, not the later date when the Joint/Additional Commissioner of Income Tax issues the penalty notice.
The relevant date for determining the limitation period under Section 275(1)(c) for passing penalty orders under Sections 271D and 271E is the date of passing the assessment order.
Penalty proceedings under Section 271D or 271E are not justified if no regular assessment order has been framed; merely processing a return under Section 143(1)(a) is insufficient to initiate such penalty action.
Penalty orders under sections 271D and 271E passed beyond six months from the end of the month in which the assessment was completed are barred by limitation. Section 275(1)(c) is applicable to such cases, and the limitation period is not reckoned from the date of the show-cause notice.
Provisions for warranty expenses are allowable as a business deduction if they represent a probable outflow of resources and a reliable estimate can be made of the obligation. This applies even if the provision is revised based on actuarial valuation and expected claims.
The 'bright line test' is not an appropriate method for determining the existence of an international transaction for calculating arm's length price. This ruling overrules prior special bench decisions on AMP expenses.
