Income Tax Law / Professional Penalties

Section 271J: Penalty for Incorrect Information in Reports or Certificates

Section 271J of the Income-tax Act, 1961 provides a penalty of Rs 10,000 for each incorrect report or certificate furnished by an accountant, merchant banker or registered valuer under the Act or its rules. This guide explains who is covered, the statutory definitions, the penalty procedure and the corresponding provision in the Income-tax Act, 2025.

Current-law distinction: Section 271J is the provision under the Income-tax Act, 1961. The corresponding provision in the Income-tax Act, 2025 is Section 463. The applicable statute and transitional provisions must be considered for the relevant tax year and proceedings.

On this page

Statutory rule Definitions Penalty calculation Relief and procedure 2025 Act Official sources

What does Section 271J provide?

Where, during proceedings under the Income-tax Act, 1961, the Assessing Officer, Joint Commissioner (Appeals) or Commissioner (Appeals) finds that an accountant, merchant banker or registered valuer has furnished incorrect information in a report or certificate under the Act or its rules, that authority may direct the professional to pay Rs 10,000 for each such report or certificate.

The penalty is imposed on the professional responsible for the report or certificate, not automatically on the taxpayer who used it. The provision applies to incorrect information in statutory reports and certificates, not to every informal opinion or communication.

The Finance Act, 2017 introduced Section 271J with effect from 1 April 2017. The Finance Act, 2023 added the Joint Commissioner (Appeals) to the authorities empowered under the section, effective 1 April 2023.

Who can be penalised? Statutory definitions

Accountant

For Section 271J, an accountant means an accountant referred to in the Explanation below Section 288(2) of the Income-tax Act, 1961. The definition generally concerns a chartered accountant satisfying the statutory eligibility and independence requirements.

Merchant banker

A merchant banker is a Category I merchant banker registered with the Securities and Exchange Board of India (SEBI), established under Section 3 of the SEBI Act, 1992.

Registered valuer

Under Section 271J, registered valuer carries the meaning assigned by Section 2(oaa) of the Wealth-tax Act, 1957. This statutory cross-reference should not be replaced automatically with other professional-registration definitions.

Amount of penalty and examples

Situation	Penalty under Section 271J
One statutory report containing incorrect information	Rs 10,000
Three separate statutory reports containing incorrect information	Rs 30,000 in total, if penalty is imposed for each report
Multiple inaccuracies within one report	Rs 10,000 for that report, not automatically per individual error

The amount is fixed per report or certificate; it is not a percentage of the tax demand, valuation or transaction amount. Whether a particular report contains incorrect information and whether penalty should be directed depends on the facts and applicable law.

Reasonable cause, procedural safeguards and appeals

Section 273B of the Income-tax Act, 1961 provides protection against specified penalties, including Section 271J, where the person proves that there was reasonable cause for the relevant failure. It is not an automatic exemption: supporting evidence and the circumstances must be considered.

Section 274 generally requires a reasonable opportunity of being heard before a penalty order is made. Professionals should examine the notice, identify the exact report or certificate, reconcile the alleged inaccuracy with working papers, and submit a timely, documented explanation. Applicable appeal provisions and limitation periods should be checked against the order and governing statute.

Practical due-diligence checklist

Verify source documents and material representations before certification.
Retain audit, valuation or transaction working papers and correspondence.
Review calculations, statutory references and disclosures before signing.
Document qualifications, assumptions and information limitations clearly.
Respond promptly to notices and preserve evidence supporting reasonable cause.

Income-tax Act, 2025: Corresponding Section 463

The Income-tax Act, 2025 contains the corresponding penalty provision in Section 463. It provides for a penalty of Rs 10,000 for each report or certificate containing incorrect information furnished by an accountant, merchant banker or registered valuer under that Act or its rules.

Section 463 identifies the Assessing Officer, Joint Commissioner (Appeals) and Commissioner (Appeals) as authorities who may direct payment when the incorrect information is found during proceedings. For the 2025 Act, the definition of registered valuer refers to a person registered under Section 514. The 2025 Act's definitions and procedural provisions must be read in their own context.

Frequently asked questions

Is the penalty Rs 10,000 per error?

No. The statutory measure is Rs 10,000 for each incorrect report or certificate, rather than for every incorrect line or figure within one report.

Can an accountant seek relief?

Under the 1961 Act, Section 273B may provide relief where reasonable cause is proved. The availability of relief under the 2025 Act must be examined under that Act's provisions.

Does Section 271J apply to all tax returns?

No. It addresses incorrect information in reports or certificates furnished by the specified professionals under the Act or rules. Other statutory provisions may apply to incorrect returns or taxpayer defaults.

Official statutory references

Updated: 28 October 2026. This article provides general legal information; the statute, rules, notifications and relevant proceedings should be checked for individual cases.