Sub-section (1) makes it an offence for a person to wilfully fail to furnish in due time the return of income required under section 263(1), or by a notice given under section 268(1) or 280. As substituted by Act No. 4 of 2026 with effect from 1 April 2026, the punishment is graded by the tax that would have been evaded had the failure not been discovered: simple imprisonment for a term up to two years, or fine, or both, where that amount exceeds fifty lakh rupees; simple imprisonment for a term up to six months, or fine, or both, where it exceeds ten lakh rupees but does not exceed fifty lakh rupees; and fine alone in any other case.
Sub-section (2) bars proceedings for failure to furnish a section 263(1) return in due time in two situations: where a return is furnished by the person under section 263(4) or 263(6); or where the tax payable by such person, not being a company, on the total income determined on regular assessment, as reduced by advance tax or self-assessment tax paid before the expiry of the period specified under section 263(4) and by tax deducted or collected at source, does not exceed Rs. 10,000.
Why it is there
Failure to file is prosecuted only where it is wilful and the revenue at stake is real, so the section grades the punishment by the tax that would have escaped and gives a complete answer to anyone who files late under section 263(4) or 263(6) or whose net liability is trivial. The 2026 substitution rewrites that grading: it replaced two clauses with three, moved the top threshold from twenty-five lakh rupees to fifty lakh rupees, and removed both the mandatory minimum terms and the mandatory fine.
Who it applies to
A person required to furnish a return of income under section 263(1)
A person required to furnish a return by a notice under section 268(1) or 280
A person, not being a company, whose net tax on regular assessment does not exceed Rs. 10,000, who is protected by sub-section (2)(b)
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Punishment where the tax that would have been evaded exceeds fifty lakh rupees
Simple imprisonment for a term up to two years, or fine, or both
Substituted by Act No. 4 of 2026 w.e.f. 1-4-2026; two years is a maximum and there is no minimum term and no mandatory fine
Sub-section (1)(a)
Punishment for the middle band
Simple imprisonment for a term up to six months, or fine, or both
Where that amount exceeds ten lakh rupees but does not exceed fifty lakh rupees
Sub-section (1)(b)
Punishment in any other case
Fine
Where the amount that would have been evaded does not exceed ten lakh rupees; imprisonment is not available at all
Sub-section (1)(c)
Threshold below which no prosecution lies for a section 263(1) failure
Rs. 10,000
Tax payable by a person other than a company on the total income determined on regular assessment, reduced by advance tax or self-assessment tax paid before the expiry of the section 263(4) period and by tax deducted or collected at source
Sub-section (2)(b)
What this means in practice
Every term in sub-section (1) is now a maximum, and each clause offers imprisonment or fine or both, so there is no minimum sentence and no compulsory fine — the position before 1 April 2026, when clause (a) carried rigorous imprisonment of not less than six months extending to seven years together with a fine, was materially harsher. The thresholds are measured on the tax that would have been evaded had the failure not been discovered, not on the income concealed and not on the tax finally assessed. Sub-section (2)(a) is a complete answer for anyone who has in fact filed under section 263(4) or 263(6), however late, but it protects only against the section 263(1) limb — a failure to comply with a notice under section 268(1) or 280 is not covered by it. The Rs. 10,000 relief in clause (b) is computed after credit for advance tax and self-assessment tax, but only such tax as was paid before the section 263(4) period expired, and it is unavailable to a company.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An individual wilfully fails to file his return under section 263(1) and the tax that would have been evaded is Rs. 32 lakh. That falls in the band above ten lakh rupees but not above fifty lakh rupees, so sub-section (1)(b) allows simple imprisonment up to six months, or a fine, or both — not the two-year exposure in clause (a). If he files a return under section 263(4) before proceedings are launched, sub-section (2)(a) bars the prosecution altogether; and had his net tax on regular assessment, after advance tax, self-assessment tax paid in time and tax deducted at source, been Rs. 9,000, clause (b) would have barred it as well.
Where you meet this section
A taxpayer meets this section as a show cause notice or a criminal complaint for failure to file, usually after an assessment has quantified the tax that would have been evaded; it is the assessed figure in that order which decides which of the three clauses applies.
The words themselves
with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds fifty lakh rupees
Section 479(1)(a), as substituted by Act No. 4 of 2026 w.e.f. 1-4-2026, Income-tax Act, 2025.
with fine, in any other case
Section 479(1)(c), Income-tax Act, 2025.
a return is furnished by him under section 263(4) or 263(6)
Section 479(2)(a), Income-tax Act, 2025.
What people get wrong
Applying the old grading. Clauses (a), (b) and (c) were substituted for the earlier two clauses by Act No. 4 of 2026 with effect from 1 April 2026; the twenty-five lakh rupee threshold, the minimum terms and the mandatory fine are gone.
Reading the terms as minimum sentences. Each clause fixes a maximum and offers imprisonment or fine or both.
Measuring the thresholds on income or on the tax finally assessed. Sub-section (1) measures them on the tax which would have been evaded if the failure had not been discovered.
Relying on sub-section (2) against a notice-based charge. It bars proceedings only for failure to furnish the return of income under section 263(1) in due time.
Claiming the Rs. 10,000 relief for a company. Sub-section (2)(b) is expressly confined to a person not being a company.
Counting self-assessment tax paid at any time towards that relief. Clause (b) credits only advance tax or self-assessment tax paid before the expiry of the period specified under section 263(4), along with tax deducted or collected at source.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
Rules of the Income-tax Rules, 2026 that work section 479. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
Rule 231 — Form of application under section 440 — on reading the rule
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 479. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
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Read with
Section 263
Section 268
Section 280
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
