I am checking whether a penalty order is out of time. Is the old six-months-from-the-end-of-the-month rule still the test?
No. Section 275 has been substituted, and under the substituted provision no penalty order under Chapter XXI may be passed after the expiry of six months from the end of the QUARTER in which the triggering event occurs, with five separate triggers in clauses (a) to (e). The financial-year limb and the month-end limb of the old sub-section (1), and the old proviso giving one year from the end of the financial year in which the appellate order was received, are gone.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Income-tax Act, 1961, section 275 as substituted by the Finance Act, 2025 (Act No. 7 of 2025), with effect from 1 April 2025. It bears on section 275, section 274, section 274(2), section 246, section 246A, section 253, section 263, section 264, section 260A, section 261, section 129 of the Income Tax Act 1961, in Penalty, How Tax Law Is Read and Appeals matters.
Every limitation computation carried over from the older authorities will now be wrong at the margins, and limitation is the ground that most often defeats a penalty. Three changes matter in practice. First, the clock runs from the end of a QUARTER, not the end of a month or of a financial year, so the outer date shifts. Second, the triggers are now expressly separated: completion of the proceedings where there is no appeal, receipt of the CIT(A) or JCIT(A) order where there is one and no further appeal, receipt of the Tribunal's order where there is, the passing of the revision order, and — the residuary case — the ISSUE OF THE NOTICE for imposition of penalty. That last clause matters for the procedural penalties in this slice: a section 272A, 271FA, 271H or 271J penalty is not integrally linked to an assessment, so it will usually fall in clause (e) and the clock will run from the penalty notice. Third, the exclusion for a court stay now runs to the date the certified copy of the vacating order is received by the jurisdictional Principal Commissioner or Commissioner, which is later than the old formulation.
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The substituted section, as reproduced in the Jaipur Tribunal's order, reads: '275. (1) No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,- (a) the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, if the relevant assessment or other order is not the subject matter of an appeal under section 246 or section 246A or section 253; (b) the order of revision under section 263 or section 264 is passed, if the relevant assessment or other order is the subject matter of revision under the said sections; (c) the order of appeal under section 246 or section 246A is received by the jurisdictional Principal Commissioner or Commissioner, if the relevant assessment or other order is the subject matter of an appeal under the said sections and no further appeal has been filed under section 253; (d) the order of appeal under section 253 is received by the jurisdictional Principal Commissioner or Commissioner, if the relevant assessment or other order is the subject matter of an appeal under the said section; (e) notice for imposition of penalty is issued, in any other case. (2) The order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be revised on the basis of assessment as revised by giving effect to the order passed under section 246 or section 246A or section 253 or section 260A or section 261 or revision under section 263 or section 264, where the relevant assessment or other order is the subject matter of an appeal or a revision under the said sections. (3) No order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty under sub-section (2) shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the quarter in which the order passed under section 246 or section 246A or section 253 or section 260A or section 261 is received by the jurisdictional Principal Commissioner or Commissioner, or the order of revision under section 263 or section 264 is passed. (4) The provisions of sub-section (2) of section 274 shall apply to the order imposing or enhancing or reducing penalty under sub-section (2). (5) In computing the period of limitation for the purposes of this section, the following period shall be excluded:- (a) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; (b) the period commencing on the date on which stay on proceeding for levy of penalty was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner.'
Statutory position — no holding is asserted; this entry reproduces statutory text. Under the substituted section 275 the limitation for every penalty under Chapter XXI is six months from the end of the quarter in which one of five events occurs: completion of the proceedings in which the penalty action was initiated (where the order is not under appeal); the passing of the revision order under section 263 or section 264; receipt by the jurisdictional Principal Commissioner or Commissioner of the appellate order under section 246 or section 246A (where no further appeal has been filed under section 253); receipt of the Tribunal's order under section 253; or, in any other case, the issue of the notice for imposition of penalty.
The scheme of the substituted section is to replace the three-category structure of the old section 275(1) — appeal-linked, revision-linked and residuary, each with its own composite test — with five mutually exclusive starting points measured on a single uniform clock of six months from the end of a quarter. Sub-section (2) preserves the power to revise a penalty order to follow the assessment as revised on appeal or revision, and sub-section (3) subjects that revising power both to a hearing requirement and to its own six-month-from-the-end-of-the-quarter limit. Sub-section (4) imports the section 274(2) approval thresholds into a revised penalty order. Sub-section (5) states the only two exclusions.
No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,-
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Handle my notice → Ask a CA on WhatsAppNo. Section 275 has been substituted, and under the substituted provision no penalty order under Chapter XXI may be passed after the expiry of six months from the end of the QUARTER in which the triggering event occurs, with five separate triggers in clauses (a) to (e). The financial-year limb and the month-end limb of the old sub-section (1), and the old proviso giving one year from the end of the financial year in which the appellate order was received, are gone. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 275, section 274, section 274(2), section 246, section 246A, section 253, section 263, section 264, section 260A, section 261, section 129 of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, section 275 as substituted by the Finance Act, 2025 (Act No. 7 of 2025), with effect from 1 April 2025. Every limitation computation carried over from the older authorities will now be wrong at the margins, and limitation is the ground that most often defeats a penalty. Three changes matter in practice. First, the clock runs from the end of a QUARTER, not the end of a month or of a financial year, so the outer date shifts. Second, the triggers are now expressly separated: completion of the proceedings where there is no appeal, receipt of the CIT(A) or JCIT(A) order where there is one and no further appeal, receipt of the Tribunal's order where there is, the passing of the revision order, and — the residuary case — the ISSUE OF THE NOTICE for imposition of penalty. That last clause matters for the procedural penalties in this slice: a section 272A, 271FA, 271H or 271J penalty is not integrally linked to an assessment, so it will usually fall in clause (e) and the clock will run from the penalty notice. Third, the exclusion for a court stay now runs to the date the certified copy of the vacating order is received by the jurisdictional Principal Commissioner or Commissioner, which is later than the old formulation. If it applies to you, the first step is this: Identify which of clauses (a) to (e) your case falls in before you compute anything; for a stand-alone procedural penalty that is ordinarily clause (e), running from the issue of the penalty notice.
The substituted section, as reproduced in the Jaipur Tribunal's order, reads: '275. (1) No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,- (a) the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, if the relevant assessment or other order is not the subject matter of an appeal under section 246 or section 246A or section 253; (b) the order of revision under section 263 or section 264 is passed, if the relevant assessment or other order is the subject matter of revision under the said sections; (c) the order of appeal under section 246 or section 246A is received by the jurisdictional Principal Commissioner or Commissioner, if the relevant assessment or other order is the subject matter of an appeal under the said sections and no further appeal has been filed under section 253; (d) the order of appeal under section 253 is received by the jurisdictional Principal Commissioner or Commissioner, if the relevant assessment or other order is the subject matter of an appeal under the said section; (e) notice for imposition of penalty is issued, in any other case. (2) The order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be revised on the basis of assessment as revised by giving effect to the order passed under section 246 or section 246A or section 253 or section 260A or section 261 or revision under section 263 or section 264, where the relevant assessment or other order is the subject matter of an appeal or a revision under the said sections. (3) No order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty under sub-section (2) shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the quarter in which the order passed under section 246 or section 246A or section 253 or section 260A or section 261 is received by the jurisdictional Principal Commissioner or Commissioner, or the order of revision under section 263 or section 264 is passed. (4) The provisions of sub-section (2) of section 274 shall apply to the order imposing or enhancing or reducing penalty under sub-section (2). (5) In computing the period of limitation for the purposes of this section, the following period shall be excluded:- (a) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; (b) the period commencing on the date on which stay on proceeding for levy of penalty was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner.' The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Statutory position — no holding is asserted; this entry reproduces statutory text. Under the substituted section 275 the limitation for every penalty under Chapter XXI is six months from the end of the quarter in which one of five events occurs: completion of the proceedings in which the penalty action was initiated (where the order is not under appeal); the passing of the revision order under section 263 or section 264; receipt by the jurisdictional Principal Commissioner or Commissioner of the appellate order under section 246 or section 246A (where no further appeal has been filed under section 253); receipt of the Tribunal's order under section 253; or, in any other case, the issue of the notice for imposition of penalty.
The scheme of the substituted section is to replace the three-category structure of the old section 275(1) — appeal-linked, revision-linked and residuary, each with its own composite test — with five mutually exclusive starting points measured on a single uniform clock of six months from the end of a quarter. Sub-section (2) preserves the power to revise a penalty order to follow the assessment as revised on appeal or revision, and sub-section (3) subjects that revising power both to a hearing requirement and to its own six-month-from-the-end-of-the-quarter limit. Sub-section (4) imports the section 274(2) approval thresholds into a revised penalty order. Sub-section (5) states the only two exclusions. In the words reproduced by the source cited on this page: "No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,-"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Income-tax Act, 1961, section 275 as substituted by the Finance Act, 2025 (Act No. 7 of 2025), with effect from 1 April 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 275, section 274, section 274(2), section 246, section 246A, section 253, section 263, section 264, section 260A, section 261, section 129, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Statutory position — no holding is asserted; this entry reproduces statutory text. Under the substituted section 275 the limitation for every penalty under Chapter XXI is six months from the end of the quarter in which one of five events occurs: completion of the proceedings in which the penalty action was initiated (where the order is not under appeal); the passing of the revision order under section 263 or section 264; receipt by the jurisdictional Principal Commissioner or Commissioner of the appellate order under section 246 or section 246A (where no further appeal has been filed under section 253); receipt of the Tribunal's order under section 253; or, in any other case, the issue of the notice for imposition of penalty. It arises in Penalty, How Tax Law Is Read and Appeals matters, on section 275, section 274, section 274(2), section 246, section 246A, section 253, section 263, section 264, section 260A, section 261, section 129 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Compute in quarters: find the quarter in which the triggering event falls, take its end, and add six months. Check which text applies. The substitution was made by the Finance Act, 2025 (Act No. 7 of 2025) with effect from 1 April 2025 — it was NOT made by the Finance (No. 2) Act 2024, which only deleted the words 'Principal Chief Commissioner or Chief Commissioner or' from the old section with effect from 1 October 2024. The Jaipur Bench applied the old section in DCIT v Ashwani Gupta (10 November 2025) to a penalty order of 28 December 2024. Fix the date of the penalty ORDER against 1 April 2025: the substituted section applies from that date, and a penalty order passed before it is governed by the old section 275, which turns on the financial year of completion of the proceedings or six months from the end of the MONTH.
Still good law. In force from 1 April 2025. The substituted text and its commencement were both verified this pass on the department's own page /w/section-275-64, which carries a 'Year: 2025' stamp and the footnote 'Sub. by Act No. 7 of 2025, w.e.f. 1-4-2025', and the text agrees word for word with a Tribunal reproduction recovered independently through five /docfragment/ retrievals. The date the substitution takes effect was cross-checked against the department's own Year 2024 (No. 2) page for the same section, which still prints the pre-substitution text. No decision construing the substituted section was located; it is too new. No 'Year: 2026' page for the section was found among the suffixes probed, so a further amendment by a 2026 Finance Act is not excluded — check before advising on a penalty order passed in or after April 2026. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Statutory entry, not a decision. 'tier' is set to 'cbdt' because the library's fixed tier vocabulary has no value for a statutory entry; the source is the Income-tax Department's own section page. 'decided_on' is the date the substitution takes effect, not a decision date. SOURCING. The substituted text was read in full, clause by clause, on the department's own page incometaxindia.gov.in/w/section-275-64, which prints the heading 'Bar of limitation for imposing penalties', names the Act as the Income-tax Act, 1961, places the section in 'CHAPTER XXI - PENALTIES IMPOSABLE', carries a 'Year: 2025' stamp, and carries the footnote 'Sub. by Act No. 7 of 2025, w.e.f. 1-4-2025.' It agrees word for word with the reproduction of the substituted section in DCIT v. Sh. Ashwani Gupta (ITAT Jaipur, 10 November 2025), recovered clause by clause through five separate /docfragment/ retrievals of that order. AMENDING ACT — CORRECTION TO A COMMON BELIEF. The substitution was NOT made by the Finance (No. 2) Act 2024 and did not commence on 1 October 2024. The department's Year 2024 (No. 2) page for this section, /w/section-275-63, still prints the old three-clause sub-section (1) with the 'end of the financial year' and 'end of the month' formulas, and its only amendments dated 1-10-2024 are four footnotes recording that the words 'Principal Chief Commissioner or Chief Commissioner or' were omitted by Act No. 15 of 2024. CAUTION ON SOURCES. The bare page incometaxindia.gov.in/w/section-275 is ARCHIVED — 'Year: 2000', pre-substitution text with the old sub-section (2) and the three-limb Explanation — and must never be used. Probing the /w/section-275-<suffix> family also returned three pages belonging to OTHER ACTS: -67 is section 275 of the Code of Criminal Procedure 1973, -68 is section 275 of the Companies Act 1956, and -69 is section 275 of the Companies Act 2013. Demanding the Act name is what caught them. Separately, the ?type=print rendering of the Ashwani Gupta order FABRICATED this section by splicing the pre-amendment sub-section (1)(a) to (c) onto the post-amendment sub-sections (2) to (5) and dropping clauses (d) and (e) entirely; that rendering was discarded and is recorded here as a known trap. The old section 275 also contained a sub-section (2) preserving the pre-1987 provisions for action initiated on or before 31 March 1989 and an Explanation with three exclusions; nothing equivalent appears in the substituted section. No 'Year: 2026' page for section 275 was located among the suffixes probed (-57 to -69 and the bare page), so a further amendment by a 2026 Finance Act has not been excluded. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Statutory position — no holding is asserted; this entry reproduces statutory text. Under the substituted section 275 the limitation for every penalty under Chapter XXI is six months from the end of the quarter in which one of five events occurs: completion of the proceedings in which the penalty action was initiated (where the order is not under appeal); the passing of the revision order under section 263 or section 264; receipt by the jurisdictional Principal Commissioner or Commissioner of the appellate order under section 246 or section 246A (where no further appeal has been filed under section 253); receipt of the Tribunal's order under section 253; or, in any other case, the issue of the notice for imposition of penalty.
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