Section 466 of the Income-tax Act, 2025 — Penalty for Failure to Comply with Section 254 (Power to Call for Information)

In plain language

What Section 466 says in plain English

Section 466 of the Income-tax Act, 2025 is a short but important penalty provision. It punishes any person who fails to comply with Section 254 — the section that gives certain income-tax officers the power to enter business or professional premises and call for information. In simple words: if a tax officer lawfully visits your shop, office, factory or professional premises and asks you to furnish prescribed information, and you refuse or fail to provide it, you can be penalised under Section 466.

The exact statutory position is: "If a person fails to comply with the provisions of section 254, the Joint Commissioner, Deputy Director or Assistant Director or the Assessing Officer, may impose a penalty which may extend up to [the prescribed limit] on him."

The penalty amount — and the big 2026 change

• Original limit (Act as enacted): penalty up to ₹1,000.
• Revised limit (Finance Act, 2026, effective 1 April 2026): the maximum penalty has been raised sharply from ₹1,000 to up to ₹25,000. This applies from tax year 2026-27 onwards.

The word "may" matters twice over. The officer may impose a penalty (it is discretionary, not automatic), and it may extend up to the maximum (so the actual penalty can be any amount from a token sum up to the ceiling, depending on the seriousness of the default).

Who can impose the penalty

Section 466 does not let just any officer levy the penalty. Only these authorities can:

• Joint Commissioner
• Deputy Director / Assistant Director
• Assessing Officer (AO)

These are broadly the same class of officers empowered under Section 254 to call for the information in the first place.

Who does it apply to

Section 466 can apply to a wide set of people connected with business or professional premises visited under Section 254:

• The proprietor or owner of the business or profession;
• Employees or persons attending to the business/profession at the time of the visit;
• Any other person present who is required to furnish the prescribed information.

It is not limited to the assessee alone — a manager, accountant or staff member who refuses to cooperate can also attract the penalty.

How Section 254 (the trigger) works

To understand Section 466 you must understand what compliance with Section 254 requires. Under Section 254, the notified income-tax authorities (Joint Commissioner, Joint/Assistant Director, Assessing Officer, or an Inspector authorised by the AO) may:

• Enter any place within their area at which a business or profession is carried on (it need not be the principal place of business);
• Enter only during business hours of that premises;
• Require the proprietor, employee or other person to furnish such information as may be prescribed.

Crucially, Section 254 is a limited information-gathering / verification power, not a full search. The officer cannot remove or seize books of account, documents, cash, stock or other valuables. It is effectively the successor to the old "power to collect certain information" / business-premises survey power.

How it interacts with related sections

• Section 254 is the enabling power; Section 466 is the enforcement penalty attached to it. One cannot be applied without the other being the trigger.
• Section 268 (reasonable opportunity of being heard): before any penalty under Chapter penalties, the person must be given a fair chance to explain. A penalty imposed without hearing is liable to be set aside.
• Section 269 (reasonable cause / good faith defence): if you can show a reasonable cause for the failure, no penalty should be levied. This is a genuine defence — e.g., the information was not readily available, the person present was not competent to furnish it, or the request was outside the officer's jurisdiction.
• Distinct from bigger survey/search penalties: Section 466 covers only the narrow Section 254 information failure. Serious non-cooperation during a full survey or search is dealt with under separate, heavier provisions.

Practical implications for taxpayers

• Cooperate on the spot. When an authorised officer visits during business hours and asks for prescribed information, provide it. The cheapest outcome is compliance.
• Check authority and jurisdiction. The premises must be within the officer's area or the occupant must fall within their jurisdiction; entry must be during business hours. If these are not met, that itself may be a reasonable cause.
• The stakes have risen 25×. With the ceiling now ₹25,000 from 1 April 2026, casual non-cooperation is far more expensive than the old ₹1,000 slap-on-the-wrist.
• Keep records ready. Businesses that maintain organised records can furnish prescribed information immediately and avoid any exposure.

This is the 2025 Act's re-enactment of the older 1961-Act framework — Section 254 corresponds broadly to old Section 133B (power to collect certain information), and Section 466 corresponds to the old penalty in Section 272AA.