Section 465 of the Income-tax Act, 2025 — Penalty for Failure to Answer Questions, Sign Statements, Furnish Returns/Statements or Allow Inspection

In plain language

What Section 465 is about

Section 465 of the Income-tax Act, 2025 is the "process-compliance" penalty section. It punishes a taxpayer or other person who does not cooperate with the routine machinery of the tax department — refusing to answer questions, refusing to sign a statement, ignoring a summons, not filing certain returns/statements on time, or not allowing an officer to inspect records. It is the 2025 Act's re-enactment of the old Section 272A of the Income-tax Act, 1961, and it takes effect from 1 April 2026.

Section 465 is deliberately split into two "buckets" of default, each with its own penalty rate:

• Bucket 1 — a flat ₹10,000 for each default (the "answer/sign/summons" failures).
• Bucket 2 — ₹500 for every day the failure continues (the "furnish return/statement/allow inspection" failures).

Bucket 1: ₹10,000 flat penalty for each default

A person is liable to a penalty of ₹10,000 for each failure or default if, being legally bound, he:

• Refuses to answer a question put to him by an income-tax authority when he is legally bound to state the truth on any matter touching his assessment;
• Refuses to sign a statement made by him during any proceeding that an authority may legally require him to sign;
• Ignores a summons issued under Section 246(1) (the 2025 equivalent of Section 131 of the 1961 Act) to attend, give evidence or produce books of account/documents, and fails to attend or produce them; or
• Fails to comply with a notice/direction under Section 268(1) (inquiry before assessment — old Section 142(1)), Section 270(2) (scrutiny notice — old Section 143(2)) or a special-audit direction.

Bucket 2: ₹500 for every day the default continues

For failures relating to furnishing statements/returns or allowing inspection — for example TDS/TCS statements, information returns and statements of financial transactions (SFT) under provisions such as Sections 397, 507, 393/394, 252 and 255 of the 2025 Act, and not allowing inspection of prescribed registers — the penalty is ₹500 for every day during which the failure continues. Importantly, for TDS/TCS statement failures the penalty cannot exceed the amount of tax that was deductible or collectible, so the daily levy does not grow without limit.

Who can impose the penalty

• If the default happens during a proceeding before an authority of the rank of Joint Director / Joint Commissioner or above, that authority imposes it.
• For notice-related defaults, the officer who issued the notice or direction.
• For certain statement/return defaults, the Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner.
• In any other case, the Joint Director or Joint Commissioner.

Key conditions and safeguards

• Reasonable cause is a defence. Read with the general "reasonable cause" relief in the 2025 Act (the successor to Section 273B of the 1961 Act), no penalty is imposed if the person proves a genuine, reasonable cause for the failure.
• Opportunity of being heard. A show-cause notice must be issued and the person heard before any penalty is levied — it is not automatic.
• Per-default counting. Each separate non-compliance is a separate ₹10,000 default; multiple ignored notices can therefore attract multiple penalties.

Practical implications

For ordinary taxpayers the most common trigger is ignoring an assessment notice under Section 268(1) or a scrutiny notice under Section 270(2) — each such non-response can cost ₹10,000. For businesses and deductors, the bigger exposure is the ₹500-per-day levy on late TDS/TCS statements and information returns. The safest course is to respond to every notice on the e-filing portal before the due date, and if you cannot, to file an adjournment request documenting a reasonable cause.