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Income tax · Notice

Penalty show-cause: unexplained cash credits, money, investments or expenditure (Section 274 r/w 271AAC)

A show-cause notice before a penalty on income assessed under Sections 68 to 69D (unexplained cash credits, money, investments or expenditure) and taxed under Section 115BBE. What to do: check whether the income was returned and the tax paid in time, then explain the source of the credit, money, investment or expenditure. The notice states the date — read it from the document.

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Key facts

A show-cause notice before a penalty on income assessed under Sections 68 to 69D (unexplained cash credits, money, investments or expenditure) and taxed under Section 115BBE. The penalty is 10% of the tax payable under Section 115BBE(1)(i), in addition to that tax.

NoticePenalty show-cause: unexplained cash credits, money, investments or expenditure (Section 274 r/w 271AAC)
Issued byThe Income Tax Department (the authority named on the notice)
Issued underSection 274(1) r/w Section 271AAC, Income-tax Act 1961
Income-tax Act 2025Section 471(1) r/w Section 443, Income-tax Act 2025
What it asks of youA reply, within the time allowed
Your time to actThe notice states the date — read it from the document.
If it is ignoredAfter the opportunity lapses the penalty order is passed; a notice of demand under Section 156 follows, payable within 30 days of service (Section 220(1)).

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

  1. Check whether the income was returned and the tax paid in time

    No penalty where the income was included in the return under Section 139 and the Section 115BBE tax was paid on or before the end of the relevant previous year (proviso to Section 271AAC(1)).

  2. Explain the source of the credit, money, investment or expenditure

    The penalty follows the addition under Sections 68 to 69D; the explanation and evidence given in the assessment, and the appeal against that addition, bear on it.

  3. 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.

  4. 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.

  1. Reference: the notice's reference number and date, your PAN and the period it covers.
  2. An answer to each point the notice raises, in the same order, saying what you accept and what you dispute.
  3. Evidence for each point (from the steps for this notice): explain the source of the credit, money, investment or expenditure.
  4. 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 (Section 220(1)).
  • No penalty under Section 270A is imposed on the same income (Section 271AAC(2)).
  • 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)).

Official sources

Sources checked on 22 October 2026.

Frequently asked questions

What is an income-tax Section 274 r/w 271AAC notice?

A show-cause notice before a penalty on income assessed under Sections 68 to 69D (unexplained cash credits, money, investments or expenditure) and taxed under Section 115BBE. The penalty is 10% of the tax payable under Section 115BBE(1)(i), in addition to that tax.

How much time do I have to act on an income-tax Section 274 r/w 271AAC 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 271AAC notice?

After the opportunity lapses the penalty order is passed; a notice of demand under Section 156 follows, payable within 30 days of service (Section 220(1)). No penalty under Section 270A is imposed on the same income (Section 271AAC(2)). 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)).

Related guides

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.