Section 472 · Penalties
Section 472 of the Income-tax Act, 2025 — Bar of Limitation for Imposing Penalties
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XXI
📜 What the law says — Section 472, Income-tax Act 2025
472. (1) No order imposing a penalty under this Chapter shall be passed after the
expiry of six months from the end of the quarter in which—
(a) the proceedings, in the course of which action for the imposition of
penalty has been initiated, are completed, if the relevant assessment or
other order is not the subject-matter of an appeal under section 356 or
357 or 362;
(b) the order of revision is passed, if the relevant assessment or other order
is the subject-matter of revision under section 377 or 378;
(c) the order of appeal is received by the jurisdictional Principal Commis-
sioner or Commissioner, if the relevant assessment or other order is the
subject-matter of an appeal under section 356 or 357 or 362;
(d) notice for imposition of penalty is issued, in any other case.
(2) The order imposing or enhancing or reducing or cancelling penalty or drop-
ping the proceedings for the imposition of penalty may be revised on the basis of
assessment as revised by giving effect to the order under section 356 or 357 or 362
or 365 or 367 or revision under section 377 or 378, where the relevant assessment
or other order is the subject-matter of an appeal or revision under the said sections.
(3) No order imposing or enhancing or reducing or cancelling penalty or dropping
the proceedings for the imposition of penalty under sub-section (2) shall be passed—
17. Sub-sections (4) and (5) inserted by the Finance Act, 2026, w.e.f. 1-4-2026.
(a) unless the assessee has been heard, or has been given a reasonable
opportunity of being heard;
(b) after the expiry of six months from the end of the quarter in which the
order under section 356 or 357 or 362 or 365 or 367 is received by the
jurisdictional Principal Commissioner or Commissioner or the order of
revision under section 377 or 378 is passed.
(4) The provisions of section 471(2) shall apply to the order imposing or enhancing
or reducing penalty under this section.
(5) In computing the period of limitation for the purposes of this section, following
period shall be excluded—
(a) the time taken in giving an opportunity to the assessee to be reheard
under section 244(2);
(b) the period commencing on the date on which stay on proceeding for levy
of penalty was granted by an order or injunction
In plain language
What Section 472 is about
Section 472 of the Income-tax Act, 2025 sets the bar of limitation for imposing penalties — that is, the outer deadline by which a tax officer must pass a penalty order. It is the direct successor to Section 275 of the old Income-tax Act, 1961. The single biggest idea is simple: the Income-tax Department cannot keep the threat of a penalty hanging over you forever. If the officer does not pass the penalty order within the time allowed, the penalty becomes time-barred and cannot legally be levied.
The 2025 Act (effective 1 April 2026) modernises the old rule by replacing the confusing patchwork of different deadlines with one clean, uniform yardstick: six months from the end of the quarter in which the relevant triggering event happens.
The core rule — six months from end of quarter
No order imposing a penalty under the penalties chapter can be passed after the expiry of six months from the end of the quarter in which the triggering event falls. The four main triggering events are:
- Assessment/proceedings completed (no appeal): where the connected assessment or other proceedings conclude and no appeal is filed.
- Appellate order received: where the relevant order is subject to appeal (before the Joint Commissioner (Appeals), Commissioner (Appeals) or the Income Tax Appellate Tribunal) — the clock runs from the end of the quarter in which the appellate order is received by the jurisdictional Principal Commissioner or Commissioner.
- Revision order passed: where the order is revised under the revision powers (Sections 377/378) — from the end of the quarter in which the revision order is passed.
- Other cases (penalty notice): from the end of the quarter in which the penalty notice/action is issued.
Who this applies to
- Every taxpayer — individuals, HUFs, firms, LLPs, companies and others — who faces any penalty proceeding under the Act.
- The Assessing Officer and other penalty-imposing authorities, who are legally bound by the deadline.
- It covers not just imposing a penalty but also orders that enhance, reduce, cancel a penalty or drop penalty proceedings.
Mandatory hearing (natural justice)
Section 472 preserves a crucial safeguard: no penalty order can be passed unless the taxpayer has been heard or given a reasonable opportunity of being heard. This applies to fresh penalties and to any order enhancing, reducing or cancelling a penalty. A penalty passed without a hearing is liable to be struck down, quite apart from the limitation question.
What time is excluded from the limitation clock
Certain periods are excluded (paused) when computing the six months, so officers are not unfairly penalised for delays outside their control:
- The time taken in giving the taxpayer an opportunity to be reheard under Section 244(2).
- The period during which levy of penalty was stayed by a court order or injunction — from the date the stay is granted until the date the jurisdictional Principal Commissioner/Commissioner receives a certified copy of the order vacating the stay.
How it interacts with related sections
- Linked to assessments: the penalty deadline is tied to when the underlying assessment, appeal or revision concludes — keeping penalty timelines in sync with the substantive tax determination.
- Revision of penalties: where the underlying assessment is later modified in appeal or revision, the penalty order can be revised, and a fresh six-month window applies from the modified order.
- It cross-refers to appeal Sections (356/357/362), revision Sections (377/378) and the rehearing provision (Section 244).
Practical implications for taxpayers
- Check the date. If a penalty order is passed after the six-month-from-quarter-end window (adjusting for excluded periods), it is time-barred — a strong legal ground to get it quashed in appeal.
- Do not ignore penalty notices, but keep a note of the triggering event date, because that starts the clock.
- A court stay is not a free pass: the stay period is added back, so the deadline effectively extends.
💡 Example
Worked example 1 — assessment, no appeal: Suppose your scrutiny assessment for Tax Year 2026-27 is completed on 10 May 2028, and no appeal is filed. That event falls in the quarter ending 30 June 2028. The six-month limitation runs from the end of that quarter (30 June 2028), so the penalty order must be passed on or before 31 December 2028. If the Assessing Officer passes a penalty order of, say, ₹1,50,000 on 15 January 2029, it is time-barred and can be cancelled in appeal.
Worked example 2 — with a court stay: Take the same case with a deadline of 31 December 2028. Assume a High Court grants a stay on penalty proceedings on 1 August 2028 and the certified copy of the order vacating the stay reaches the Commissioner on 1 November 2028 — a stay of 3 months. That 3-month period is excluded, so the deadline shifts forward by 3 months to roughly 31 March 2029. A penalty order passed on 20 March 2029 would now be within time.
A short story: Meera, a Jaipur boutique owner, received a penalty notice in 2028. Months passed and she heard nothing, so she assumed it was over. In early 2029, an order landed demanding ₹80,000. Her CA checked the dates, found the assessment had concluded in the June 2028 quarter, and that the six-month limit under Section 472 had expired on 31 December 2028. Because no court stay applied, the order was time-barred. Meera appealed on that single ground and the penalty was cancelled — a reminder that when an order is passed can matter as much as why.
| Triggering event | When the 6-month clock starts | Deadline to pass penalty order |
|---|
| Assessment / proceedings completed, no appeal filed | End of quarter in which proceedings are completed | 6 months from that quarter-end |
| Order subject to appeal (JCIT(A) / CIT(A) / ITAT) | End of quarter in which appellate order is received by Pr. CIT/CIT | 6 months from that quarter-end |
| Order revised under Sections 377/378 | End of quarter in which revision order is passed | 6 months from that quarter-end |
| Other cases (penalty notice issued) | End of quarter in which penalty notice/action is issued | 6 months from that quarter-end |
| Excluded time — Sec 244(2) rehearing opportunity | Paused / added back | Deadline extends by that period |
| Excluded time — court stay on penalty | From stay grant to receipt of vacation order | Deadline extends by the stay period |
Related sections
Section 275 (1961 Act) — Old bar of limitation for penalties Section 244 — Opportunity of being reheard / rehearing Section 377 — Revision of orders prejudicial to revenue Section 378 — Revision of other orders by Commissioner Section 356 — Appeals to the Commissioner (Appeals) Section 471 — Procedure and limitation for related orders
Frequently asked questions
What does Section 472 of the Income-tax Act, 2025 actually do?
It sets the deadline within which a penalty order must be passed. In most cases this is six months from the end of the quarter in which the triggering event (completion of assessment, receipt of appellate order, revision order, or issue of penalty notice) occurs. If the officer misses it, the penalty is time-barred.
Which old section does Section 472 replace?
It replaces Section 275 of the Income-tax Act, 1961. The 2025 version simplifies the earlier multiple deadlines into a single uniform 'six months from end of quarter' rule.
What happens if the penalty order is passed after the deadline?
A penalty order passed after the limitation period (after adjusting for any excluded periods) is time-barred and legally invalid. You can challenge it in appeal purely on the ground of limitation.
Can the deadline ever be extended?
Yes. Time taken to give a rehearing opportunity under Section 244(2), and any period during which a court stays the penalty proceedings (until the vacation order is received by the Commissioner), are excluded from the count, effectively extending the deadline.
Must I be given a hearing before a penalty is imposed?
Yes. Section 472 requires that no penalty order — including one that enhances, reduces or cancels a penalty — can be passed unless you have been heard or given a reasonable opportunity of being heard.
When does Section 472 come into effect?
The Income-tax Act, 2025 (as amended by the Finance Act, 2026) is effective from 1 April 2026, applying from Tax Year 2026-27 onwards.
If my assessment is changed in appeal, can the penalty be revised?
Yes. Where the underlying assessment is modified in appeal or revision, the penalty order can be revised to match, and a fresh six-month limitation period runs from the modified order.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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