The section bars punishment for a failure referred to in section 476 or section 477, irrespective of anything contained in that section, if the person proves that there was reasonable cause for the failure. The burden lies on the person claiming the defence, and the defence is confined to those two sections.
Why it is there
Sections 476 and 477 make certain failures punishable on their own terms, without asking why they happened. This section supplies the qualification: a failure explained by reasonable cause, proved by the person, does not attract punishment. The non obstante words place it above the two sections, so their own language cannot exclude the defence.
Who it applies to
A person facing punishment for a failure referred to in section 476
A person facing punishment for a failure referred to in section 477
What this means in practice
The defence is narrow in scope and heavy in burden: it reaches only the failures in sections 476 and 477, and it requires the person to prove reasonable cause rather than merely to raise it. What it does not do is undo the failure, or touch anything the Act attaches to that failure other than punishment. Because it operates irrespective of anything contained in those sections, it survives even where they are drafted in absolute terms.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A person is proceeded against for a failure referred to in section 476 and establishes, on the evidence he puts forward, that there was reasonable cause for it. Section 486 then bars punishment notwithstanding the terms of section 476. It is not enough to assert reasonable cause — the section requires him to prove it — and the defence does not run to any other failure under the Act.
Where you meet this section
In a prosecution launched for a failure referred to in section 476 or 477, where this is the defence the person raises. The section speaks of punishment for those two failures and of nothing else.
The words themselves
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.
Section 486, Income-tax Act, 2025.
What people get wrong
Reading it as a general reasonable cause defence. It is confined to a failure referred to in section 476 or 477.
Assuming the Department must disprove reasonable cause. The section puts the burden on the person: "if he proves".
Treating it as undoing the failure. It bars punishment; it does not say the failure did not occur.
Reading it as subject to sections 476 and 477. The non obstante words place it above them.
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.
278AA - Punishment not to be imposed in certain cases
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 486. 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.
Madhumilan Syntex Ltd v Union of IndiaSupreme CourtHelps departmenttagged s.278AA I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
ITO v MKY Constructions P LtdHigh CourtHelps taxpayertagged s.278AA We paid the whole TDS default with interest before the complaint was filed. Can we still be prosecuted under s.276B?
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.