Section 448 — Penalty re Failure to Deduct Tax at Source | ITA 2025

Section 448 of the Income-tax Act, 2025 corresponds to s. 271 C of the Income-tax Act, 1961. STATUTORY ARCHITECTURE Penalty equal to tax not deducted -- in addition to s. 398 (consequences of failure) interest. Discretionary -- AO must…

Section 448 — - PENALTY RE FAILURE TO DEDUCT TAX AT SOURCE

Section 448 of the Income-tax Act, 2025 corresponds to s. 271C of the Income-tax Act, 1961.

Statutory text — Income-tax Act, 2025

If any person fails to—

(a) deduct the whole or any part of the tax as required under Chapter XIX-B; or

(b) pay or ensure the payment of, the whole or any part of the tax as required by or under—

10. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, section 446 read as under : “446. Failure to get accounts audited.—If any person fails to get his accounts audited for any tax year or years or furnish the audit report as required under section 63, the Assessing Officer may impose a penalty on such person, which shall be the lesser of—

(a) 0.5% of the total sales, turnover, or gross receipts in business, or the gross receipts in profession for such tax year or years; or

(b) ` 150000.”

11. Omitted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its omission, section 447 read as under : “447. Penalty for failure to furnish report under section 172.—If any person fails to furnish a report from an accountant as required by section 172, the Assessing Officer may impose a penalty of ` 100000 on such person.”

(i) Note 2 below the Table in section 393(3); or

(ii) Note 6 to section 393(1) (Table: Sl. No. 8), then, the Assessing Officer may impose on him, a penalty equal to the tax which such person failed to deduct or pay or ensure payment of, as aforesaid. Penalty for failure to collect tax at source.

STATUTORY ARCHITECTURE

Penalty equal to tax not deducted -- in addition to s. 398 (consequences of failure) interest. Discretionary -- AO must give opportunity of hearing.

PRACTITIONER PLANNING NOTES

Reasonable cause defence: bona fide belief regarding chargeability (e.g. cross-border foreign payment treatment) -- US Technology International Pvt Ltd. v. CIT (2023) 453 ITR 644 (SC).

CROSS-REFERENCES

s. 439 (under-reporting or misreporting -- master penalty).
s. 440 (immunity application).
s. 469 or 470 (waiver or reasonable-cause).
s. 471 or 472 (procedure or limitation).

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
2025 provision	1961 counterpart
s. 448 -- Penalty re Failure to Deduct Tax at Source	s. 271C