Income-tax Act, 1961 | Penalty provisions

Section 273B of the Income-tax Act, 1961: Penalty Relief for Reasonable Cause

Section 273B protects a taxpayer from specified income-tax penalties when the taxpayer proves that there was a reasonable cause for the relevant failure. The protection is conditional, evidence-based and limited to the provisions expressly covered by the section.

Law applicable in 2026: The Income-tax Act, 2025 applies from 1 April 2026. Under section 536 of that Act, the 1961 Act continues to govern saved proceedings relating to tax years beginning before 1 April 2026. Determine the applicable law and version of the penalty provision for the relevant period before relying on section 273B.

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Meaning Covered penalties Reasonable cause How to claim 2026 transition Official sources

What does Section 273B provide?

Section 273B is a statutory exception to specified penalty provisions in Chapter XXI of the Income-tax Act, 1961. Its operative condition is that the person or assessee proves reasonable cause for the failure. If the condition is established and the relevant penalty is expressly listed, the section states that no penalty shall be imposable for that failure.

The phrase reasonable cause is not defined exhaustively in section 273B. Whether the explanation is sufficient depends on the circumstances, contemporaneous records and applicable judicial interpretation. Mere assertion of difficulty does not automatically establish the defence.

Which penalties are covered?

The statutory list is specific and has been amended over time. The Income Tax Department's consolidated text of the 1961 Act, as amended by the Finance Act, 2025, includes the following references (subject to the precise wording and effective dates):

Statutory references: 271(1)(b), 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAA, 271FAB, 271FB, 271G, 271GA, 271GB, 271GC, 271H, 271-I, 271J, 272A(1)(c) and (d), 272A(2), 272AA(1), 272B, 272BB(1) and (1A), 272BBB(1), and specified clauses of section 273.

Illustrative provision	General subject
Section 271A	Failure to keep, maintain or retain prescribed books or documents
Section 271B	Failure to obtain or furnish a tax audit report as required
Section 271C	Specified failures relating to deduction or payment of tax
Sections 271D and 271E	Contraventions relating to specified loans, deposits or repayments
Section 271H	Specified defaults concerning tax deduction or collection statements
Section 272A	Specified failures to furnish information or comply with statutory requirements

These examples are summaries, not a replacement for the full statutory list. Some provisions are historical or apply only to specified periods. Section 273B does not create a blanket defence against every penalty, including penalties not expressly mentioned.

What may amount to reasonable cause?

A credible explanation supported by documents is essential. Depending on the statutory default and the facts, relevant evidence may include serious disruptions beyond the taxpayer's control, documented technical failures, medical emergencies, or circumstances showing genuine inability despite diligent compliance efforts. None of these is an automatic exemption.

Evidence can include dated correspondence, portal error acknowledgements, bank records, professional communications, medical records and a chronology of corrective action. The taxpayer should explain both why compliance failed and what was done to rectify the default.

How to seek relief under Section 273B

Identify the exact penalty section, tax year and applicable statutory version.
Confirm that the penalty provision is covered by section 273B.
Prepare a factual timeline explaining the failure and the steps taken to comply.
Submit a written response with supporting records to the competent tax authority within the specified deadline.
Refer to section 274 where applicable: it requires a hearing or a reasonable opportunity of being heard before a penalty under the relevant chapter is imposed.
If an adverse order is made, review the applicable appeal provisions and limitation period promptly.

Income-tax Act, 2025 and the 2026 transition

The Income-tax Act, 2025 repealed the 1961 Act with effect from 1 April 2026, subject to its repeal-and-savings provisions. Section 536 preserves the application of the 1961 Act to qualifying proceedings, including penalty proceedings concerning tax years beginning before that date. For later tax years, examine the applicable penalty and relief provisions of the 2025 Act rather than assuming that section 273B applies unchanged.

Frequently asked questions

Does reasonable cause automatically cancel a penalty?

No. The taxpayer must establish reasonable cause, and the default must fall within a provision specified by section 273B.

Can Section 273B be claimed for every tax penalty?

No. Its scope is confined to the enumerated statutory provisions, read with the law applicable to the relevant year.

Does Section 273B still matter after 1 April 2026?

Yes, for cases preserved by the repeal-and-savings provisions of the Income-tax Act, 2025, including qualifying earlier-year penalty proceedings.

Official legislation and further reading

Historical amendment references

Section 273B was inserted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from 10 September 1986. Subsequent legislation extended and modified the list of covered defaults. The original webpage recorded amendments including the Direct Tax Laws (Amendment) Act, 1987, Finance Acts of 1990, 1997, 2001, 2002, 2004, 2005, 2006, 2012, 2015 and 2016, and the Finance Act, 2017. The consolidated official text additionally reflects the Finance (No. 2) Act, 2024 insertions of sections 271FAA and 271GC with their respective commencement dates.

For an historical penalty, consult the text in force during the relevant period rather than applying later amendments retrospectively.

This article provides general legal information and is not a substitute for advice on an individual case. Last reviewed: 28 October 2026.