Chapter XXI - Penalties
Section 463
Section 463: penalty for furnishing incorrect information in reports or certificates
Section 463 targets the professionals who sign off on reports and certificates required under the Income-tax Act, 2025 - accountants, Category I merchant bankers and registered valuers. If a report or certificate they furnish under the Act (or the rules made under it) contains incorrect information, they face a fixed penalty of ₹10,000, payable separately for each such report or certificate.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Any accountant or merchant banker or registered valuer, shall be liable to pay a penalty of ₹10000 for any incorrect information in any report or certificate furnished under any provision of this Act or the rules made thereunder.
(2) The penalty under sub-section (1) shall be payable for each such report or certificate.
(3) The penalty under sub-section (1) shall be payable on directions of the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) where the incorrect information mentioned in sub-section (1) is found by such authority in the course of any proceedings under this Act.
(4) In this section,—
(a) “merchant banker” means Category I merchant banker registered with the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); and
(b) “registered valuer” means a person registered as a valuer under section 514.
Introduction
Section 463 sets a ₹10,000 penalty per incorrect report or certificate furnished by an accountant, Category I merchant banker or registered valuer under the Act or its rules. The named authority must find the incorrect information during a proceeding.
Key takeaways
Professional classes
The provision names accountants, Category I merchant bankers and section 514 registered valuers.
Per report or certificate
The ₹10,000 amount is payable for each incorrect report or certificate.
Finding in proceedings
The specified authority directs the penalty after finding incorrect information during an Act proceeding.
What Section 463 says
"Any accountant or merchant banker or registered valuer, shall be liable to pay a penalty of ₹10,000 for any incorrect information in any report or certificate furnished under any provision of this Act or the rules made thereunder."
The penalty applies for each such report or certificate that contains incorrect information - so a professional who furnishes multiple flawed reports can face the ₹10,000 penalty for each one.
Who directs the penalty
The penalty is payable on the directions of the Assessing Officer, the Joint Commissioner (Appeals) or the Commissioner (Appeals), where that authority finds the incorrect information in the course of any proceedings under the Act.
Who this section applies to
Section 463 defines two of the three categories it applies to:
- "Merchant banker" means a Category I merchant banker registered with the Securities and Exchange Board of India, established under section 3 of the Securities and Exchange Board of India Act, 1992.
- "Registered valuer" means a person registered as a valuer under section 514.
- The third category, "accountant", is not separately defined within this section's text.
Step-by-step flow for applying Section 463
- 1
Is the person an accountant, a merchant banker or a registered valuer?
Under Section 463(4), "merchant banker" means a Category I merchant banker registered with SEBI, and "registered valuer" means a person registered as a valuer under section 514.
- No: Section 463 does not apply.
- Yes: Go to the next step.
- 2
Does a report or certificate furnished under the Act or the rules contain incorrect information?
- No: No penalty under Section 463.
- Yes: Go to the next step.
- 3
Was the incorrect information found by the Assessing Officer, the Joint Commissioner (Appeals) or the Commissioner (Appeals) in the course of proceedings under the Act?
Under Section 463(3), the penalty is payable on the directions of that authority.
- 4
Count the reports or certificates
Under Section 463(1) and (2), the penalty is ₹10,000 for each report or certificate that contains incorrect information.
- 5
Check for reasonable cause
Section 470 lists Section 463. No penalty is imposed if reasonable cause for the failure is proved.
Practical checklist
Do
- Identify the exact report or certificate and the allegedly incorrect information.
- Check the preparer’s statutory professional category and the proceeding where the error was found.
Avoid
- Do not assume one ₹10,000 amount covers multiple separate incorrect reports.
Illustrative example
Worked example: errors in three reports
Hypothetical facts (illustration only, not a real taxpayer): A registered valuer, registered under section 514, issued four valuation reports that were furnished under the rules for different clients. During assessment proceedings, the Assessing Officer finds incorrect information in three of them. The fourth is correct. The facts are assumed.
Coverage
The person is a registered valuer within Section 463(4)(b).
Who directs
The incorrect information was found by the Assessing Officer during proceedings, so the penalty is payable on that officer's directions (Section 463(3)).
Count
Section 463(2) makes the penalty payable for each report. Three reports contain incorrect information: 3 × ₹10,000 = ₹30,000. The correct fourth report attracts nothing.
Reasonable cause
If the valuer proves a reasonable cause for any of the errors, Section 470 bars the penalty for that failure.
Outcome
- Penalty of ₹30,000 (₹10,000 for each of three reports), subject to Section 470.
- The penalty attaches to the professional who issued the report, not to the client.
Frequently asked questions
How much is the penalty under Section 463?
₹10,000, payable for each report or certificate that contains incorrect information.
Who can be penalised under Section 463?
An accountant, a Category I merchant banker registered with SEBI, or a registered valuer under Section 514, who furnishes a report or certificate under the Act containing incorrect information.
Who decides whether the penalty applies?
The penalty is payable on the directions of the Assessing Officer, the Joint Commissioner (Appeals) or the Commissioner (Appeals), where the incorrect information is found during proceedings under the Act.
Need help applying this provision to your situation?
Talk to our tax team about report and certification complianceLast updated 9 October 2026