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Prosecution under income tax regime


SEPTEMBER 05, 2022

By Mahi Yadav & Yatharth Gupta, Advocates, Majesty Legal

THE Income Tax Act, 1961 empowers the tax authorities to prosecute any person who contravenes the provisions of Act, 1961. The empowerment has been rendered upon by the Parliament for effective implementation of the provisions and restricts tax evasion.

Article 265 of the Constitution prescribes safeguard against arbitrary collection of tax as no tax could be levied or collected except by authority of law.

The Chapter XXII of the Income Tax Act, 1961 contains offences and prescribe punishment for the listed offences. As per the provision any person (not necessary to be an assesse) can be prosecuted. In case of Company, Firm, Association of Persons or Body of Individuals, the person(s) in-charge or responsible for the conduct of the business is deemed guilty 1, whereas for Hindu Undivided Family, the Karta of the family is responsible for any offences 2.

Presumption of culpable mens rea

Section 278E provides that during the prosecution of any offences, it is presumed that the accused has malafide intention, unless the accused proves otherwise. The evidentiary standard of burden of proof is beyond the reasonable doubt and not merely preponderance of probability.

Constitution of Special Courts and Procedure

Section 280A of the Act, 1961, provides that the Central Government in consultation with the Hon'ble Chief Justice of the Hon'ble jurisdictional High Court to establish Special Court to adjudicate offences prescribed under the Act, 1961.

Section 280B(b) provides that the Special Court shall take cognizance upon the complaint received from the competent authority.

Section 280C provides that the proceedings be conducted summarily as per Code of Criminal Procedure, 1973, for offence whose punishment is not exceeding 2 years or with fine or both.

Section 280D prescribes that the prosecution shall administered as per the provisions of the Criminal Code of Procedure, 1973 and the prosecution shall be conducted by a prosecutor or a special public prosecutor.

Offences under IT Act

1. Non-compliance with provisions of the Act

- Violation of Section 178(1) and (3) by a person shall be liable for imprisonment for a term of 6 month to rigorous imprisonment upto a term of 2 years. 3

- Failure to comply with the procedure while transferring the property as per Section 269UC and 269UL(2) or failure to surrender or deliver possession of the property in which the Central Government has vested interest as per Section 269UE shall be liable for imprisonment for a term of 6 month to rigorous imprisonment upto a term of 2 years. 4

- Non-payment to the credit of the Central Government 5 or tax collected at source 6 is punishable with rigorous imprisonment for a minimum term of 3 months and maximum term of 7 years, along with fine.

2. Failure to comply with the order made under the Section 132 (3), is punishable with rigorous imprisonment upto 2 years and liable for fine. 7

3. Non-cooperation with the tax authorities

Any person who failed to afford adequate facility to the authorised officers, while inspecting the books of accounts or other documents as required under Section 132(1)(iib) 8 or fraudulently removes, conceals, transfers or delivers to any person, any property or interest therein from being taken in execution 9.

4. Wilful failure/non-compliance

- "Wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment" means making false entry or statement in book of account or other documents or wilful omission of relevant entry or statement.

- Wilful evasion of any tax, penalty or interest 10 or wilful evasion of the payment of the same 11 is punishable as per the provision of the Act.

- Wilful failure in furnishing the returns of income is punishable with rigorous imprisonment of 6 months to 7 years for amount evading exceeds Rs. 250,000 12 or rigorous imprisonment ranging for a term between 3 month to 2 years, in any other cases 13, both along with fine.

- Wilful failure to provide return of income in search cases is punishable with imprisonment for a term of not exceeding 3 months to 3 years, with fine. 14

- Wilful failure to produce accounts and documents is punishable with rigorous imprisonment for a term not more than 1 year, along with fine. 15

5. False statement in verification

A person making a false statement in verification or delivers an untrue statement or account is punishable with rigorous imprisonment of 6 months to 7 years for amount evading exceeds Rs. 250,000 16 or rigorous imprisonment ranging for a term between 3 month to 2 years, in any other cases 17 , both along with fine.

6. Abetment

Inducement or abetment to other person for making or delivering false account or statement or declaration is punishable with rigorous imprisonment of 6 months to 7 years for amount evading exceeds Rs. 250,000 18 or rigorous imprisonment ranging for a term between 3 month to 2 years, in any other cases 19, both along with fine.

7. Repeated Offenders

A convicted person under section 276B, 276C(1), 276CC, 277 or 278 and again convicted under the aforesaid provisions, shall be punishable with rigorous imprisonment for a term not less than 6 months, which may extend upto 7 years, along with fine. 20

Compounding of Offence

The Act under Section 279(2) provides that the enlisted officials of the department may compound any offence either before or after institution of the proceedings.

[The views expressed are strictly personal.]

1 Section 278B(1)

2 Section 278C(1)

3 Section 276A.

4 Section 276AB

5 Section 276B

6 Section 276BB

7 Section 275A

8 Section 275B

9 Section 276

10 Section 276C(1)

11 Section 276C(2)

12 Section 276CC(i)

13 Section 276CC(ii)

14 Section 276CCC

15 Section 276D

16 Section 277(i)

17 Section 277(ii)

18 Section 278(i)

19 Section 278(ii)

20 Section 278A

(DISCLAIMER : The views expressed are strictly of the author and doesn't necessarily subscribe to the same. Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)


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