Sections 46-47 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 46 and 47 say how a penalty under Chapter IV is imposed and for how long the power to impose it lasts. Section 46 is the procedure: a show-cause notice, a hearing, approval for larger penalties and a notice of demand. Section 47 is the limitation: a one-year bar, with provision for revising or reviving a penalty after an appeal or revision.
As per the Act as enacted and published in the Gazette of India on 27 May 2015, no penalty under Chapter IV can be imposed without a show-cause notice and an opportunity of being heard (section 46). Larger penalties need the approval of the Joint Commissioner in the cases the section names. A penalty order cannot be passed after one year from the end of the financial year in which the notice is issued (section 47(1)), subject to the exclusions in section 47(4).
Section 46: the procedure, sub-section by sub-section
The marginal note of section 46 is "Procedure". It applies to "any penalty under this Chapter", so it governs the penalties in sections 41 to 45.
Sub-section (1): show-cause notice. The tax authority shall, for the purposes of imposing any penalty under the Chapter, issue a notice to the assessee requiring him to show cause why the penalty should not be imposed on him. If you are served such a notice, a written, reasoned reply within the time stated is the natural first step, and our legal dispute resolution team can help you prepare it.
Sub-section (2): when the notice is issued. The notice is issued:
- (a) during the pendency of any proceedings under this Act for the relevant previous year, in respect of the penalty referred to in section 41; and
- (b) within a period of three years from the end of the financial year in which the default is committed, in respect of penalties referred to in section 45.
Sub-section (2) names only sections 41 and 45. It prints no period for the notice in respect of sections 42, 43 or 44. The Act as enacted is silent on that point, and this article does not fill the gap.
Sub-section (3): hearing. No order imposing a penalty under the Chapter shall be made unless the assessee has been given an opportunity of being heard.
Sub-section (4): approval of the Joint Commissioner. An order imposing a penalty shall be made with the approval of the Joint Commissioner if:
- (a) the penalty exceeds one lakh rupees and the tax authority levying it is in the rank of Income-tax Officer; or
- (b) the penalty exceeds five lakh rupees and the tax authority levying it is in the rank of Assistant Commissioner or Deputy Commissioner.
Sub-section (5): notice of demand. Every order of penalty shall be accompanied by a notice of demand for the amount of penalty imposed, and that notice of demand is deemed to be a notice under section 13.
Section 46 at a glance
| Step | What the section requires (as enacted) |
|---|---|
| Notice | Show-cause notice from the tax authority, for any penalty under Chapter IV |
| Timing for section 41 penalty | During the pendency of any proceedings under the Act for the relevant previous year |
| Timing for section 45 penalty | Within three years from the end of the financial year in which the default is committed |
| Hearing | Opportunity of being heard before any order |
| Approval | Joint Commissioner, where the penalty exceeds one lakh rupees (Income-tax Officer) or five lakh rupees (Assistant Commissioner or Deputy Commissioner) |
| Demand | Notice of demand with the order, deemed to be a notice under section 13 |
The penalty amounts the procedure applies to are in our articles on section 41, section 43 and sections 44 and 45.
Section 47: bar of limitation
The marginal note is "Bar of limitation for imposing penalty". Section 47 has four sub-sections.
Sub-section (1). No order imposing a penalty under the Chapter shall be passed after the expiry of a period of one year from the end of the financial year in which the notice for imposition of penalty is issued under section 46. The clock runs from the end of the financial year of the notice, not from the date of the default and not from the date of the notice itself.
Sub-section (2). An order imposing, or dropping the proceedings for imposition of, a penalty under the Chapter may be revised, or revived, as the case may be, on the basis of the assessment of the undisclosed foreign income and asset as revised after giving effect to the order of the Commissioner (Appeals), the Appellate Tribunal, the High Court or the Supreme Court, or an order of revision under section 23 or section 24.
Sub-section (3). An order revising or reviving the penalty under sub-section (2) shall not be passed after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals), the Appellate Tribunal, the High Court or the Supreme Court is received by the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner, or the order of revision under section 23 or section 24 is passed.
Sub-section (4). In computing the period of limitation, the following are not included: (a) the time taken in giving an opportunity to the assessee to be reheard under section 7; and (b) any period during which a proceeding under the Chapter for the levy of penalty is stayed by an order, or injunction, of any court.
Section 47 at a glance
| Question | Printed answer (as enacted) |
|---|---|
| Main bar | One year from the end of the financial year in which the section 46 notice is issued |
| Revision or revival after an appeal | Allowed, based on the revised assessment (sub-section (2)) |
| Time for that revision or revival | Not after six months from the end of the month in which the appellate order is received by the named authority, or the revision order under section 23 or 24 is passed |
| Time not counted | Rehearing time under section 7; any period of stay or injunction |
A worked example
Karan Mehta is served a show-cause notice on 10 February in a financial year, for a penalty under section 45. On the Act as enacted, the notice had to be issued within three years from the end of the financial year of the default (section 46(2)(b)). The one-year bar in section 47(1) then runs from the end of the financial year in which the notice was issued, that is, from the next 31 March. If Karan obtains a stay from a court for three months, those three months are not counted (section 47(4)(b)). He must also have been heard (section 46(3)). If the penalty is above one lakh rupees and the levying authority is an Income-tax Officer, the Joint Commissioner's approval must be on record (section 46(4)(a)).
Now suppose that in a different case a penalty under section 41 was dropped, and the assessment is later revised after an order of the Commissioner (Appeals). Under section 47(2) the dropped penalty may be revived on the basis of the revised assessment, and under section 47(3) the order reviving it cannot be passed after six months from the end of the month in which that appellate order is received by the named authority.
Points a reader should not over-read
- Section 46 says nothing about what the notice must contain beyond requiring the assessee "to show cause why the penalty should not be imposed". Service of notices generally is dealt with in sections 74 to 76; see our article on service and authentication of notices.
- The section does not say how long the assessee has to reply. The notice itself will set a date.
- Sections 46 and 47 govern penalties only. Prosecution under Chapter V runs on its own track, and section 48(2) says Chapter V is independent of any order under the Act, and that it is no defence that an order has not been made on account of time limitation or for any other reason.
References and what to check
The Act as enacted prints these periods and amounts; they are labelled "as enacted" throughout. Later Finance Act amendments to sections 46 and 47 should be checked before acting. Our guide on limitation periods for suits and appeals is general reading on timelines under other laws.
Need help with a penalty notice?
If you have been served a show-cause notice or a penalty order under this Act, our legal dispute resolution team can examine the notice, the limitation dates and the approval requirement with you, and help prepare the reply.
Key takeaways
- A show-cause notice and a hearing come before any penalty order under Chapter IV.
- Section 46(2) fixes a time for the notice only for penalties under sections 41 and 45.
- Joint Commissioner approval is needed above one lakh rupees (Income-tax Officer) or five lakh rupees (Assistant Commissioner or Deputy Commissioner).
- The penalty order comes with a notice of demand, deemed to be a notice under section 13.
- The general bar is one year from the end of the financial year in which the notice is issued, with exclusions for rehearing and stays.
- Check later Finance Act amendments before relying on any period.
Read next
- Section 41: penalty in relation to undisclosed foreign income and asset
- Sections 44 and 45: penalty for tax arrear default and other defaults
- Sections 48 and 49: prosecution for wilful failure to furnish return
- Appeal to the CIT(A): section 246A process
Disclaimer: Based on the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 as enacted and published in the Gazette of India on 27 May 2015, and on the Rules of 2015 as notified on 2 July 2015, as consulted on 2 October 2026. Later Finance Act amendments, amendment rules and the current income-tax law should be checked. This article is general information, not legal advice; check the official text before acting.