Section 446 — Penalty for failure to furnish information or for furnishing inaccurate information on transaction of crypto-asset. Successor to s.271B of the 1961 Act.
Section 446 is in Chapter XXI — Penalties, which runs from section 439 to section 472.
This section was substituted by Act No. 4 of 2026 with effect from 1 April 2026, and now penalises defaults in the crypto-asset reporting obligation, not audit defaults.
Sub-section (1) applies to a person required to furnish a statement in respect of a transaction of a crypto-asset under section 509(1). If he fails to furnish the statement within the time prescribed under that section, the prescribed income-tax authority under that section may impose a penalty of Rs. 200 for every day for which the failure continues.
Sub-section (2) allows the same authority to impose a penalty of Rs. 50000 on such a person where he provides inaccurate information in the statement and fails to remove the inaccuracy as required by section 509(4), or fails to comply with the due diligence requirement under section 509(5).
Before its substitution, section 446 penalised failure to get accounts audited or to furnish the audit report required under section 63, at the lesser of 0.5% of total sales, turnover or gross receipts and Rs. 150000. That is no longer what this section provides.
The reporting obligation in section 509 depends on entities that are not themselves the taxpayers whose transactions are reported, so the only lever on them is a penalty. A daily charge answers a late filing, because the harm grows with the delay, and a flat amount answers the two defaults that are not measured in time — leaving an inaccuracy uncorrected, and failing the due diligence by which crypto-asset users and owners are identified.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Penalty for late furnishing of the crypto-asset statement | Rs. 200 for every day | For every day for which the failure to furnish the statement within the time prescribed under section 509(1) continues | Sub-section (1) |
| Penalty for uncorrected inaccuracy or due diligence failure | Rs. 50000 | Where the person provides inaccurate information in the statement and fails to remove it as per section 509(4), or fails to comply with the due diligence requirement under section 509(5) | Sub-section (2) |
The daily penalty is a running charge, not a one-time amount — it accrues "for every day for which such failure continues", so the cost of a late statement is a function of how long the entity waits. Sub-section (2) is not an alternative to correction: it bites where inaccurate information was given and the inaccuracy was not removed as section 509(4) requires, and clause (b) makes a due diligence failure under section 509(5) penalisable in its own right, whether or not any statement was inaccurate. Both penalties are discretionary — the authority "may impose" — and both are in the hands of the prescribed income-tax authority under section 509, not the Assessing Officer. The most important point about this section is what it no longer says: the audit penalty that stood here until 31 March 2026 was substituted out by Act No. 4 of 2026 and cannot be applied under this section.
A prescribed reporting entity furnishes its crypto-asset statement forty days after the time prescribed under section 509(1). Sub-section (1) exposes it to Rs. 200 for each of those forty days — Rs. 8,000 — and the charge would have kept running had it delayed further. If the statement it eventually files carries wrong user details and the entity does not correct them as section 509(4) requires, the prescribed authority may impose a further Rs. 50,000 under sub-section (2), and a failure of the due diligence under section 509(5) would attract that amount independently.
In a penalty order from the prescribed income-tax authority under section 509, usually after the notice under section 509(3) requiring the statement to be furnished within a period not exceeding thirty days. An ordinary taxpayer does not meet this section — it binds the reporting entities.
the prescribed income-tax authority under that section may impose on him, a penalty of Rs. 200 for every day for which such failure continues
provides inaccurate information in the statement and fails to remove such inaccuracy as per section 509(4)
See the full 1961 to 2025 concordance.