Income tax · Notice
Penalty show-cause: under-reporting or misreporting (Section 274 r/w 270A)
A show-cause notice before a penalty for under-reporting of income. What to do: identify the addition the penalty rests on, then build the explanation. The notice states the date — read it from the document.
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Key facts
A show-cause notice before a penalty for under-reporting of income. The penalty is 50% of the tax on the under-reported income, or 200% where the under-reporting is a consequence of misreporting (misrepresentation or suppression of facts, unrecorded investments or receipts, unsupported expenditure claims, false entries, or unreported international or specified domestic transactions).
| Notice | Penalty show-cause: under-reporting or misreporting (Section 274 r/w 270A) |
|---|---|
| Issued by | The Income Tax Department (the authority named on the notice) |
| Issued under | Section 274(1) r/w Section 270A, Income-tax Act 1961 |
| Income-tax Act 2025 | Section 471(1) r/w Section 439, Income-tax Act 2025 |
| What it asks of you | A reply, within the time allowed |
| Your time to act | The notice states the date — read it from the document. |
| If it is ignored | After the opportunity lapses the penalty order is passed; a notice of demand under Section 156 follows, payable within 30 days of service, with interest at 1% for every month or part of a month after that (Section 220). |
Time allowed
The notice states the date — read it from the document. The Act fixes no reply period: the show-cause notice sets the date (Section 274(1)).
The date stated on your notice always wins.
More time: If the date cannot be met, use "Seek/View Adjournment" in e-Proceedings before it passes: it asks for the date sought and the reason, and issues a Transaction ID. Under faceless assessment the time may be extended on an application (Section 144B(1)(v)).
What to do now
Identify the addition the penalty rests on
Under-reporting is measured against the income processed under Section 143(1)(a) or the basic exemption limit where no return was filed. Check which addition is relied on and whether it is under appeal.
Build the explanation
No penalty where the explanation is bona fide with all material facts disclosed, for estimates where accounts are complete, for a disclosed lower estimate, or for arm's-length transfer-pricing additions with the records kept (Section 270A(6)). Income on which the additional tax of an updated return was paid is excluded (Section 270A(11A)).
File the reply in e-Proceedings by the date in the notice
On the e-filing portal go to Dashboard > Pending Actions > e-Proceedings, open View Notice, then Submit Response (partial or full, with remarks and attachments). A response cannot be edited or withdrawn after submission; a Transaction ID and an e-mail confirm it.
Consider immunity under Section 270AA
An application to the Assessing Officer within 1 month from the end of the month in which the assessment order was received, where the tax and interest were paid within the demand period and no appeal is filed (in misreporting cases, with additional income-tax of 100% of the tax on the under-reported income paid within the demand period).
Check the Document Identification Number (DIN)
Every notice, order or letter should be referenced by a computer-generated DIN, in its body, in a covering document or in the covering e-mail (CBDT Circular 4/2026, which withdrew Circular 19/2019). A missing DIN is a point to raise with our expert team; by itself it does not invalidate an assessment that is referenced by a DIN in any manner (Section 292BA).
What a reply contains
A reply usually covers the points below. This is an outline, not a draft: our expert team writes it on your own records.
- Reference: the notice's reference number and date, your PAN and the period it covers.
- An answer to each point the notice raises, in the same order, saying what you accept and what you dispute.
- Evidence for each point: the returns, books and documents each answer relies on.
- Where it is filed: e-Proceedings on the income-tax e-filing portal.
If it is ignored
- After the opportunity lapses the penalty order is passed; a notice of demand under Section 156 follows, payable within 30 days of service, with interest at 1% for every month or part of a month after that (Section 220).
- The penalty order is appealable to the JCIT(A) / CIT(A) within 30 days of service of the demand notice (Sections 246A(1)(q), 249(2)(b)).
- For assessment orders made on or after 1 Apr 2027, the Section 270A penalty becomes part of the assessment order itself (Section 274(4) and (5)).
Official sources
Sources checked on 22 October 2026.
- Income-tax Act 1961, section 274 · read 22 October 2026
- Income-tax Act 1961, section 270A · read 22 October 2026
- Finance Act 2026 (gazette) · read 22 October 2026
- e-filing portal help: responding to e-Proceedings · read 22 October 2026
Frequently asked questions
What is an income-tax Section 274 r/w 270A notice?
A show-cause notice before a penalty for under-reporting of income. The penalty is 50% of the tax on the under-reported income, or 200% where the under-reporting is a consequence of misreporting (misrepresentation or suppression of facts, unrecorded investments or receipts, unsupported expenditure claims, false entries, or unreported international or specified domestic transactions).
How much time do I have to act on an income-tax Section 274 r/w 270A notice?
The notice states the date — read it from the document. The Act fixes no reply period: the show-cause notice sets the date (Section 274(1)). The date stated on your notice always wins. If the date cannot be met, use "Seek/View Adjournment" in e-Proceedings before it passes: it asks for the date sought and the reason, and issues a Transaction ID. Under faceless assessment the time may be extended on an application (Section 144B(1)(v)).
What happens if I ignore an income-tax Section 274 r/w 270A notice?
After the opportunity lapses the penalty order is passed; a notice of demand under Section 156 follows, payable within 30 days of service, with interest at 1% for every month or part of a month after that (Section 220). The penalty order is appealable to the JCIT(A) / CIT(A) within 30 days of service of the demand notice (Sections 246A(1)(q), 249(2)(b)). For assessment orders made on or after 1 Apr 2027, the Section 270A penalty becomes part of the assessment order itself (Section 274(4) and (5)).
Related guides
- Penalty show-cause: unexplained cash credits, money, investments or expenditure (Section 274 r/w 271AAC)
- Penalty show-cause notice (Section 274)
- Notice of Demand Under Section 156: 30 Days to Pay, Interest, Stay Requests, Set-off, Appeal Windows and Penalty Show-cause
- Where this sits: Reply and personal hearing
General information from the provisions this notice is issued under, not legal advice. The dates and periods stated on your notice always win. Our expert team can read the full notice with you.