Section 471
Section 471: procedure
Section 471 lays down the procedural safeguards and approval requirements that must be followed before a penalty under Chapter XXI (Penalties) can be imposed, including a newer set of rules - added by the Finance Act, 2026 - on how penalties merge into assessment or reassessment orders made on or after 1 April 2027.
Right to be heard
"No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard by way of a show-cause notice to that effect."
The words "by way of a show-cause notice to that effect" were inserted by the Finance Act, 2026, with effect from 1 April 2026.
Prior approval thresholds
No order imposing a penalty under this Chapter shall be made without the prior approval of the Joint Commissioner:
- Where the penalty exceeds ₹10,000, imposed by the Income-tax Officer.
- Where the penalty exceeds ₹20,000, imposed by the Assistant Commissioner or Deputy Commissioner.
Copy to the Assessing Officer
An income-tax authority making an order under this Chapter imposing a penalty must send a copy of the order to the Assessing Officer, unless that authority is itself the Assessing Officer.
Penalty as part of assessment/reassessment orders (from 1 April 2027)
Sub-sections (4) and (5), inserted by the Finance Act, 2026 with effect from 1 April 2026, provide that where a draft of the proposed order of assessment under section 275, an assessment under section 270, or a reassessment under section 279 is made on or after 1 April 2027:
- Any penalty under section 439 shall constitute part of such draft assessment, or shall be imposed as part of the order of assessment or reassessment.
- Any reference to the assessment order or the penalty order under section 439 in other provisions of the Act shall be taken as a reference to that order of assessment or reassessment.
- Where the approval of the Joint Commissioner is taken for passing an order of assessment or reassessment on or after 1 April 2027, that approval is also deemed to be the approval for imposing the section 439 penalty forming part of that order.
Frequently asked questions
Must the assessee be heard before a penalty is imposed?
Yes - Section 471(1) requires the assessee to be heard, or given a reasonable opportunity of being heard by way of a show-cause notice, before any penalty order under Chapter XXI is made.
Is approval needed before an officer can impose a penalty?
Yes - prior approval of the Joint Commissioner is required where the penalty exceeds ₹10,000 (Income-tax Officer) or ₹20,000 (Assistant Commissioner or Deputy Commissioner).
What changes from 1 April 2027?
For draft assessments under section 275, assessments under section 270, or reassessments under section 279 made on or after 1 April 2027, any section 439 penalty is folded into that assessment/reassessment order itself, rather than issued as a separate penalty order.
Related sections
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Talk to our tax team about a penalty proceedingLast updated 9 September 2026