Income Tax Act 2025: Section 470 for Tax Year 2026-27

Penalty not to be imposed in certain cases

[Section-470 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Irrespective of anything contained in the provisions of section 441 or 442 or 446 or 447 or 448 or 449 or 450 or 451 or 454 or 455 or 456 or 457 or 458 or 459 or 460 or 461 or 462 or 463 or 465(1)(c) or 465(1)(d) or 465(2)(c) or 465(2)(d) or 466 or 467 or 468(1) or 468(2), no penalty shall be imposed on a person or assessee for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure.

FAQs on Section 470 of Income Tax Act 2025

What does Section 470 of the Income Tax Act, 2025 provide for?
Section 470 provides that no penalty shall be imposed on a person or assessee for failures under the specified penalty provisions if he proves there was reasonable cause for the failure.

Which sections are covered under the protection of Section 470?
The section covers failures under sections 441, 442, 446, 447, 448, 449, 450, 451, 454, 455, 456, 457, 458, 459, 460, 461, 462, 463, 465(1)(c), 465(1)(d), 465(2)(c), 465(2)(d), 466, 467, 468(1), and 468(2).

What is meant by “reasonable cause” under Section 470?
“Reasonable cause” refers to a justification or explanation that is considered valid and acceptable under law for a person’s failure to comply with specified provisions.

Can an assessee avoid penalty under Section 470 even after a failure is established?
Yes, if the assessee is able to prove that there was reasonable cause for the failure, the penalty will not be imposed despite the failure.

Is Section 470 applicable automatically in every penalty case?
No, the assessee must prove reasonable cause for the failure. If the assessing authority is satisfied with the explanation, the penalty will not be imposed.

From when is Section 470 applicable?
Section 470 is applicable with effect from 1st April, 2026.

Does Section 470 override the listed penalty provisions?
Yes, it overrides the listed penalty sections but only to the extent that no penalty will be levied if reasonable cause is proven.

Can the assessing authority reject a claim of reasonable cause?
Yes, if the assessing authority is not satisfied with the explanation or evidence provided for reasonable cause, the penalty may still be imposed.

Is the burden of proof on the assessee under Section 470?
Yes, the assessee must provide sufficient evidence to prove the existence of reasonable cause for the failure.

Does Section 470 provide immunity from all consequences of failure?
No, it only provides relief from penalty. Other consequences such as interest or prosecution may still apply, depending on the facts and applicable provisions.

Does this section apply to both individuals and companies?
Yes, it applies to any person or assessee, including individuals, firms, companies, or other entities.

Will a claim of ignorance of law qualify as reasonable cause under Section 470?
Generally, ignorance of the law is not accepted as a valid reasonable cause, unless it is supported by extraordinary circumstances.

Is Section 470 relief available during assessment proceedings?
Yes, if during assessment or penalty proceedings, the assessee invokes Section 470 and substantiates reasonable cause, relief from penalty can be granted.

Can appellate authorities apply Section 470 during appeals?
Yes, appellate authorities can consider reasonable cause and apply Section 470 to set aside penalties where applicable.

Does Section 470 allow partial relief if reasonable cause existed for part of the failure period?
Yes, if reasonable cause is established only for a portion of the failure, penalty may be waived proportionately for that period.