Section 487 — Offences by Companies | ITA 2025

Section 487 of the Income-tax Act, 2025 corresponds to s. 278 B of the Income-tax Act, 1961. STATUTORY ARCHITECTURE Where offence committed by company, every person who at the time of offence was in charge of, and responsible for, the…

Section 487 — - OFFENCES BY COMPANIES

Section 487 of the Income-tax Act, 2025 corresponds to s. 278B of the Income-tax Act, 1961.

Statutory text — Income-tax Act, 2025

( 1) If an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(2) The provisions of sub-section (1) shall not apply if the person referred therein proves that the offence was committed without his knowledge or that he had exer- cised all due diligence to prevent the commission of such offence.

(3) Irrespective of anything contained in sub-sections (1) and (2), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any ne- glect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

(4) If an offence under this Act has been committed by a company and the punishment for such offence is imprisonment and fine, then, without prejudice to the provisions contained in sub-section (1) or (3), such company shall be punished with fine and every person referred to in sub-section (1), or the director, manager, secretary or other officer of the company referred to in sub-section (3), shall be liable to be proceeded against and punished as per the provisions of this Act.

(5) For the purposes of this section,—

(a) “company” means a body corporate and includes—

(i) a firm; and

(ii) an association of persons or a body of individuals, whether incor- porated or not; and

(b) “director”, in relation to—

(i) a firm, means a partner in the firm;

(ii) any association of persons or a body of individuals, means any member controlling the affairs thereof.

30. Substituted for “rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years, and with fine” by the Finance Act, 2026, w.e.f. 1-4-2026. Offences by Hindu undivided family.

STATUTORY ARCHITECTURE

Where offence committed by company, every person who at the time of offence was in charge of, and responsible for, the conduct of business shall be deemed to be guilty. Director/Manager defence: prove offence committed without his knowledge or that he exercised due diligence.

PRACTITIONER PLANNING NOTES

Director protection critical -- maintain Board minutes recording due diligence; resignation pre-default doesn't insulate; resign post-default doesn't insulate.
Sumit Mago / Hindustan Steel ratio applies on 'in charge of' standard.
Independent Directors' liability narrowed post-Companies Act 2013 s. 149(12) but Income-tax Act framework can override -- careful contractual indemnity.

CROSS-REFERENCES

s. 491 [279] -- sanction and compounding.
s. 486 [278AA] -- reasonable cause.
s. 487 [278B] -- offences by companies.
s. 490 [278E] -- presumption of culpable mental state.

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
2025 provision	1961 counterpart
s. 487 -- Offences by Companies	s. 278B