Chapter XXII - Offences and Prosecution
Section 480
Section 480: failure to furnish return of income setting forth undisclosed income
Section 480 is a search-case provision: it punishes the wilful failure to file, in due time, a return of undisclosed income for the block period when required by a notice under section 294(1)(a). Like several other offence sections in this Chapter, the punishment is graded by the amount of tax involved.
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Need advice on Section 480?
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
If a person wilfully fails to furnish in due time the return of income, setting forth his undisclosed income for the block period, which is required to be furnished by notice given under section 294(1)(a), he shall be punishable—
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax exceeds fifty lakh rupees; or
(b) with simple imprisonment up to six months, or with fine, or with both, where the amount of tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.
Introduction
Section 480 covers wilful failure to furnish a block-period return of undisclosed income required by a notice under section 294(1)(a). The Finance Act, 2026 replaced the earlier single imprisonment band with tax-amount tiers.
Key takeaways
Block-period notice
The required return must follow a section 294(1)(a) notice and set out undisclosed income.
Wilful delay
The offence is framed around wilful failure to furnish it in due time.
Current punishment
The amended law distinguishes tax above ₹50 lakh, above ₹10 lakh through ₹50 lakh, and other cases.
What Section 480 says
"If a person wilfully fails to furnish in due time the return of income, setting forth his undisclosed income for the block period, which is required to be furnished by notice given under section 294(1)(a), he shall be punishable--"
- With simple imprisonment for a term up to two years, or with fine, or with both - where the amount of tax exceeds fifty lakh rupees.
- With simple imprisonment up to six months, or with fine, or with both - where the amount of tax exceeds ten lakh rupees but does not exceed fifty lakh rupees.
- With fine, in any other case.
Note on an earlier version of this section
The Act's footnotes record that this section (along with section 481) was substituted by the Finance Act, 2026, with effect from 1 April 2026. Before that substitution, the equivalent provision was titled "Failure to furnish return of income in search cases" and punished a wilful failure to furnish the return of total income (required by notice under section 294(1)(a)) with imprisonment of not less than three months, extendable to three years, and with fine.
Applying Section 480 in practice
Narrow offence. The section concerns wilful failure to furnish a return of undisclosed income for a block period in time after a section 294(1)(a) notice. It is not the general offence for every late ordinary return. Finance Act 2026 provides graded punishment by tax amount (above ₹50 lakh, above ₹10 lakh through ₹50 lakh, and other cases).
Step-by-step flow for applying Section 480
- 1
Was a notice issued under section 294(1)(a) requiring a return of undisclosed income for the block period?
- No: Section 480 does not apply.
- Yes: Go to the next step.
- 2
Was the return not furnished in due time?
Due time is the period specified in the section 294(1)(a) notice.
- Furnished in time: No offence under Section 480.
- Not furnished in time: Go to the next step.
- 3
Was the failure wilful?
Section 490 lets the court presume the culpable mental state; the accused may prove otherwise.
- Not wilful (proved): No offence under Section 480.
- Wilful: Go to the next step.
- 4
What is the amount of tax?
Above ₹50 lakh: simple imprisonment up to two years, or fine, or both. Above ₹10 lakh but not above ₹50 lakh: simple imprisonment up to six months, or fine, or both. Any other case: fine only. The Act does not state the amount of the fine here.
Practical checklist
Do
- block-period notice and service, due date, return history, tax computation and evidence of wilfulness.
Illustrative example
Worked example: block-period return not filed after a search
Hypothetical facts (illustration only, not a real taxpayer): After a search, a business owner receives a notice under section 294(1)(a) to furnish a return of undisclosed income for the block period within the period stated in the notice. He deliberately lets the period lapse. The tax involved is ₹35,00,000 (assumed figure).
Notice
The return was required by notice under section 294(1)(a), which is the return covered by Section 480.
Failure and intent
It was not furnished in due time, and the failure was deliberate, so it is wilful.
Tier
₹35,00,000 exceeds ₹10 lakh but not ₹50 lakh, so Section 480(b) applies: simple imprisonment up to six months, or fine, or both.
Outcome
- On these assumed facts the owner falls in the middle tier of Section 480.
- Section 480 has no exception like Section 479(2); the only questions are the notice, due time, wilfulness and the tax amount.
Frequently asked questions
What triggers the offence under Section 480?
A wilful failure to furnish, in due time, the return of income setting forth undisclosed income for the block period, where that return was required by a notice under section 294(1)(a).
What is the punishment?
Graded by the amount of tax involved: simple imprisonment up to two years (or fine, or both) above ₹50 lakh; up to six months (or fine, or both) where the amount exceeds ₹10 lakh but does not exceed ₹50 lakh; fine only in any other case.
Does a missed due date alone establish the offence?
The word “wilfully” is an element requiring separate assessment.
Need help applying this provision to your situation?
Talk to our tax team about a search-case noticeLast updated 10 October 2026