Chapter XXI - Penalties
Section 467
Section 467: penalty for failure to comply with sections 262 and 397
The Finance Act, 2026 amended this section's heading to refer to sections 262 and 397. Its four operative subsections specify ₹10,000 penalties for general non-compliance with section 262 and three document-specific PAN or Aadhaar defaults. Subsections (2) to (4) specify ₹10,000 for each such default. Section 468 separately addresses section 397 defaults.
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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) If a person fails to comply with the provisions of section 262, the Assessing Officer may impose a penalty of ₹10,000 on him.
(2) If a person, required to quote or intimate his Permanent Account Number or Aadhaar number in any document as referred to in section 262(9)(a), provides or quotes or intimates a number which is false, knowing or believing it to be false, the Assessing Officer may impose a penalty of ₹10,000 on him for each such default.
(3) If a person fails to quote or authenticate his Permanent Account Number or Aadhaar number in any document referred to in section 262(9)(a), the Assessing Officer may impose a penalty of ₹10,000 on him for each such default.
(4) If a person referred to in section 262(9)(b) responsible for ensuring the correct quoting or authentication of Permanent Account Number or Aadhaar number, in documents relating to transactions prescribed under section 262(9)(a) fails to do so, the Assessing Officer may impose a penalty of ₹10,000 on him for each such default.
Introduction
Section 467 contains four PAN and Aadhaar compliance penalty limbs. They distinguish a general section 262 failure, a knowingly false number, failure to quote or authenticate, and a failure by the person responsible for checking the number.
Key takeaways
General PAN default
Subsection (1) allows a ₹10,000 penalty for failure to comply with section 262.
Document-specific defaults
Subsections (2) to (4) address knowingly false numbers, failure to quote or authenticate a number, and failure by the responsible person to ensure correct quoting or authentication; each can attract ₹10,000 for each default.
General section 262 compliance
Failure to comply with section 262 may attract a ₹10,000 penalty imposed by the Assessing Officer under section 467(1). Identify the exact section 262 duty before relying on this general limb.
Knowingly false PAN or Aadhaar number
A person required to quote or intimate a PAN or Aadhaar number in a document referred to in section 262(9)(a) may be penalised ₹10,000 for each default if a false number is provided, quoted or intimated knowingly or believing it false. The knowledge condition is explicit.
Missing quotation or authentication
A failure to quote or authenticate PAN or Aadhaar in the specified document is a separate ₹10,000-per-default limb. Keep the transaction document and applicable duty distinct from a knowingly false number case.
Duty of the person checking the number
The person responsible under section 262(9)(b) for correct quotation or authentication in the prescribed transaction documents can also face ₹10,000 for each default. This limb concerns the responsible checker, rather than only the person providing the number.
Step-by-step flow for applying Section 467
- 1
Did the person fail to comply with section 262 generally?
For example, not applying for or quoting a Permanent Account Number as section 262 requires.
- Yes: The Assessing Officer may impose ₹10,000 under Section 467(1); then continue to the next step.
- No: Go to the next step.
- 2
In a document referred to in section 262(9)(a), did the person quote a PAN or Aadhaar number knowing or believing it to be false?
- Yes: ₹10,000 for each such default under Section 467(2); then continue to the next step.
- No: Go to the next step.
- 3
Did the person fail to quote or authenticate his PAN or Aadhaar number in such a document?
- Yes: ₹10,000 for each such default under Section 467(3); then continue to the next step.
- No: Go to the next step.
- 4
Is the person referred to in section 262(9)(b), responsible for ensuring correct quoting or authentication, and did he fail to ensure it?
- Yes: ₹10,000 for each such default under Section 467(4); then continue to the next step.
- No: Go to the next step.
- 5
Check for reasonable cause and hearing
Section 470 lists Section 467, so proving reasonable cause bars the penalty. Section 471(1) requires a hearing before any order.
Practical checklist
Do
- Identify the precise section 262 duty and whether the alleged default concerns the person providing a number or the person responsible for ensuring correct quoting or authentication.
- Retain the relevant document, quoted or authenticated number and correction records. For a false-number allegation under subsection (2), distinguish knowledge or belief of falsity from a mere mismatch.
Avoid
- Do not extend the operative penalty beyond its stated section 262 duties merely because the section heading also mentions another provision.
Illustrative example
Worked example: false PAN in several documents
Hypothetical facts (illustration only, not a real taxpayer): A buyer quotes a PAN he knows is not his in three documents of a kind referred to in section 262(9)(a). The person referred to in section 262(9)(b) who received those documents did not check the number. The facts are assumed.
Buyer
Quoting a number known to be false is covered by Section 467(2), at ₹10,000 for each default: 3 × ₹10,000 = ₹30,000.
Receiving person
If that person was responsible under section 262(9)(b) for ensuring correct quoting, the failure is covered by Section 467(4), again ₹10,000 for each default: 3 × ₹10,000 = ₹30,000.
Discretion
Section 467 says the Assessing Officer "may" impose the penalty, so it is not automatic.
Reasonable cause
The receiving person may try to prove reasonable cause under Section 470. The buyer's knowing use of a false number is hard to fit within that.
Outcome
- Exposure of up to ₹30,000 each for the buyer and the receiving person on these facts.
- Each document is a separate default under Section 467(2) to (4).
Frequently asked questions
What is the penalty for not obtaining or quoting PAN correctly?
Subsection (1) allows ₹10,000 for a general Section 262 failure. Subsections (2) to (4) allow ₹10,000 for each specified PAN or Aadhaar document default.
Is the ₹10,000 penalty automatic?
The Assessing Officer "may" impose it, indicating discretion rather than an automatic, mandatory penalty in every instance of non-compliance.
Can repeated document defaults incur separate penalties?
For the defaults described in subsections (2), (3) and (4), the Act specifies ₹10,000 for each such default.
Need help applying this provision to your situation?
Apply for or correct your PAN with our teamLast updated 10 October 2026