Section 444
Section 444: penalty for a false entry in books of account
Section 444 penalises deliberate manipulation of books of account - a false entry, or a knowing omission of an entry, made to evade tax liability - with a penalty equal to the full amount involved, not a percentage of it.
What the section covers
The Assessing Officer, the Joint Commissioner (Appeals), or the Commissioner (Appeals) may impose a penalty equal to the aggregate amount of a false or omitted entry, where during any proceeding under the Act it is found that a person's books of account contain a false entry, or an omission of an entry relevant to computing that person's total income, made to evade tax liability.
How severe this penalty is
Unlike most penalties in this chapter, which are a percentage or a fixed sum, this one is pegged at 100% of the false or omitted amount - reflecting that deliberate falsification of accounting records, as opposed to an honest error or a reporting lapse, is treated as one of the more serious compliance failures under the Act.
Frequently asked questions
How much is the penalty for a false entry in books of account?
An amount equal to the full false or omitted entry - not a percentage, the entire amount involved.
Does an honest bookkeeping mistake trigger this penalty?
The section is aimed at a false entry or omission made to evade tax liability - the emphasis on intent to evade suggests it targets deliberate falsification rather than genuine error, though how this is applied in practice should be confirmed with a tax professional.
Want this applied to your actual filing, not just explained?
Get help if you're facing a books-of-account penalty noticeLast updated 9 September 2026