Chapter XXI - Penalties
Section 468
Section 468: penalty for failure to comply with the provisions of section 397
Section 468 describes two separate grounds on which the Assessing Officer may impose a ₹10,000 penalty: failure to comply with Section 397, and knowingly or believingly quoting a false Tax Deduction and Collection Account Number in specified documents.
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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 397, the Assessing Officer may impose a penalty of ₹10000 on him.
(2) If a person, required to quote his Tax Deduction and Collection Account Number in challans, certificates, statements or other documents referred to in section 397(1)(b), quotes a number which is false, knowing or believing it to be false or not true, the Assessing Officer may impose a penalty of ₹10000 on him.
Introduction
Section 468 addresses two failures concerning the Tax Deduction and Collection Account Number (TAN): non-compliance with section 397, and knowingly quoting a false TAN in the specified documents. The Assessing Officer may impose ₹10,000 under either applicable subsection.
Key takeaways
Section 397 failure
Subsection (1) permits a ₹10,000 penalty for failure to comply with Section 397.
False account number
Subsection (2) permits a ₹10,000 penalty for quoting a number known or believed to be false or not true in documents referred to in Section 397.
Discretionary wording
Both subsections say the Assessing Officer may impose the penalty.
Non-compliance with Section 397
If a person fails to comply with Section 397, the Assessing Officer may impose ₹10,000 under subsection (1).
False number in specified documents
Subsection (2) concerns a person required to quote the Tax Deduction and Collection Account Number in the specified documents who quotes a number knowing or believing it to be false or not true; the Assessing Officer may impose ₹10,000.
Applying Section 468 in practice
Two limbs. A general failure under section 397 can lead to a possible ₹10,000 penalty. A person required to quote a Tax Deduction and Collection Account Number in specified documents may face another ₹10,000 penalty for quoting a number known or believed to be false or untrue. A typing error without the required knowledge should not be described as the second limb automatically. Checklist: primary section 397 duty, document, quoted number, correct number, mental-state evidence and correction. Section 470 reasonable cause is listed for section 468.
Step-by-step flow for applying Section 468
- 1
Did the person fail to comply with the provisions of section 397?
- Yes: The Assessing Officer may impose ₹10,000 under Section 468(1); then continue to the next step, as Section 468(2) is a separate ground.
- No: Go to the next step.
- 2
Was the person required to quote a Tax Deduction and Collection Account Number in challans, certificates, statements or other documents referred to in section 397(1)(b)?
- No: Section 468(2) does not apply.
- Yes: Go to the next step.
- 3
Was the number quoted false, and did the person know or believe it to be false or not true?
A wrong number alone is not enough under Section 468(2); the knowledge or belief element must also exist.
- No: No penalty under Section 468(2).
- Yes: The Assessing Officer may impose ₹10,000 under Section 468(2); go to the next step.
- 4
Check for reasonable cause and hearing
Section 470 lists Section 468. Section 471(1) requires a hearing before any penalty order.
Practical checklist
Do
- Check the TAN quoted in challans, certificates and statements against the registered account.
- Identify which subsection the notice alleges and retain the underlying documents.
Avoid
- Do not equate an accidental transcription issue with the subsection (2) knowledge wording without examining the facts.
Illustrative example
Worked example: a typing error in the TAN
Hypothetical facts (illustration only, not a real taxpayer): A deductor's clerk mistypes one digit of the deductor's TAN on a challan. The deductor did not know of the error until the bank flagged it. Separately, the facts are tested on the basis that the deductor deliberately used another entity's TAN. All facts are assumed.
Typing error
The number was wrong, but the deductor did not know or believe it was false. Section 468(2) is not met.
Deliberate use
Using another entity's TAN while knowing it is not the deductor's number meets Section 468(2). The Assessing Officer may impose ₹10,000.
Section 468(1)
Whether either case is also a failure to comply with section 397 depends on that section's requirements. Section 468(1) carries a separate ₹10,000.
Reasonable cause
For the typing error, the deductor can also rely on Section 470 if any penalty is proposed.
Outcome
- Typing error: no penalty under Section 468(2).
- Deliberate use of another's TAN: ₹10,000 under Section 468(2), subject to a hearing.
Frequently asked questions
What amount is specified for each ground in Section 468?
₹10,000 is specified in each subsection.
Does an incorrect number automatically satisfy subsection (2)?
The subsection requires the person to know or believe the quoted number to be false or not true.
Need help applying this provision to your situation?
Talk to our tax team about TDS/TCS complianceLast updated 2026-10-10