Punishment not to be imposed in certain cases
[Section-486 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
No person shall be punishable for any failure referred to in section 476 or 477, irrespective of anything contained in that section, if he proves that there was reasonable cause for such failure.
FAQs on Section 486 of Income Tax Act 2025
What is the main purpose of Section 486 of the Income Tax Act, 2025?
Section 486 provides relief from punishment for failures under Sections 476 or 477 if the person can prove there was reasonable cause for the failure.
Does Section 486 override Sections 476 and 477?
Yes, Section 486 operates notwithstanding anything contained in Sections 476 and 477. This means it provides an exception even if those sections prescribe punishment.
What is meant by ‘reasonable cause’ under Section 486?
‘Reasonable cause’ refers to a justifiable reason or explanation for the failure which a prudent person would accept as valid under the circumstances. The determination of reasonable cause depends on the facts of each case.
Who has the burden of proving reasonable cause under Section 486?
The burden lies on the person who has committed the failure. They must prove to the satisfaction of the authorities that the cause was reasonable.
Is punishment under Sections 476 or 477 automatic in every case of failure?
No, punishment is not automatic. If the person proves there was reasonable cause for the failure, no punishment shall be imposed as per Section 486.
What kinds of failures are covered under Section 486?
It specifically applies to failures referred to in Section 476 (Failure to deduct, collect or pay tax) and Section 477 (Failure to furnish returns, statements or reports).
Can a taxpayer seek benefit under Section 486 more than once?
There is no specific limit prescribed in Section 486. As long as the taxpayer can prove reasonable cause each time, they may avail the benefit.
Is a written explanation sufficient to prove reasonable cause under Section 486?
A written explanation may form part of the evidence, but it must be supported by facts, documents, or circumstances that clearly demonstrate the reasonableness of the cause.
Does Section 486 apply automatically or does the taxpayer need to make a claim?
The taxpayer needs to actively assert and prove reasonable cause to avoid punishment under Sections 476 or 477.
From which date is Section 486 applicable?
Section 486 is applicable with effect from 1st April, 2026.