There are some lapses on the part of the assessee which are punishable through the courts. Whenever Income-tax department feels that a particular person has committed a particular offence, a wrongful act or he is guilty of a crime, the department will initiate the proceedings before a magistrate. The proceedings, before the magistrate shall be heard under the Criminal Procedure Code and onus to prove the guilt before the magistrate shall fall, upon the department. The assesee is considered to be an innocent person unless proved otherwise. Punishment given by the department is of monetary nature whereas for some specific offences punishment can be in the shape of imprisonment. But for that, the income-tax authorities have to launch the proceedings in a court of law The following are cases where the person commits offence under the Act, making the guilty persons liable to be punished by the court.
1. For removing any Asset, Books of account, documents etc. found during search in contravention of order served under [Section 132 (3)]. Such a person shall be punishable with rigorous imprisonment which may extend upto 2 years and shall also be liable to fine. [Section 275A].
2. Removal, Concealment, transfer or delivery of property to avoid tax recovery [Section 276]. When a person fraudulently removes, conceals, transfers or delivers an asset with the objective of thwarting recovery of tax, he shall be liable to rigorous imprisonment upto 2 years and with fine.
3. Default on the part of Liquidator [Section 276 (A)]. Under the provisions of Section 178 (1), a liquidator of a company is supposed to inform the Assessing Officer about his appointment as such within 30 days. Under Section 178 (3) he is required not to part with any assets or properties without the permission of the Commissioner. He is further supposed to set aside an amount equal to the amount of tax payable by the company (as intimated by the I.T.O.).
If the liquidator contravenes any of these provisions, he shall be punishable with rigorous imprisonment which may extend upto a maximum of 2 years. If there are no special reasons, the imprisonment shall not be less than 6 months.
4. Failure to comply with provisions regarding transfer of immoveable property [Section 276 AB]. When a person fails to comply with provisions u/s 269 UC, 269 UE and 269 UL, (covered under acquisition of immovable property) he shall be liable to a punishment of rigorous imprisonment up to 2 years and with fine. If there are no special reasons, the imprisonment shall not be less than 6 months.
5. Failure to pay the tax deducted at source [Section 276 W]. If a person fails to pay to the credit of the Central Government the tax deducted at source by him as required or tax payable by him as required u/s 1150; or second proviso of section 194B by or under the provision of this Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.
6. Failure to pay the tax collected at source [Section 276 (BB)]. If a person fails to pay to the credit of the Central Government, the tax collected by him as authorize under the provisions of Section 206 C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
7. Willful attempt to evade Tax, Penalty, Interest etc. [Section 276 C (1)]. If a person intentionally tries to evade any tax, penalty or interest, he shall be liable to a punishment of rigorous imprisonment of 6 months to 7 years and fine if the tax sought to be evaded exceeds Rs. 1,00,000 and 3 months to 3 years and fine if the amount of evasion is less than Rs. One lakh.
In case a person willfully attempts to evade the payment of tax, penalty or interest, he shall be punishable with rigorous imprisonment of a term from 3 months to 3 years and with fine [Section 276 C(2)]. The punishment of imprisonment is without prejudice to any penalty that may be imposable on him under any other provision of the Act
8. Failure to furnish return of income (Section 276 CC). If a person willfully or intentionally fails to furnish in due time the return of income which he is required to furnish u/s 1 15WD(1) or I I5WH(2) or 139 (1) or 142 (1)(i) or 148, or u/s 153A he shall be punishable:
(i) In a case where the amount of tax which would have been evaded if the failure had not been discovered, exceeds Rs. 1,00,000 with a rigorous imprisonment which shall not be less than 6 months but which may extend to 7 years and with fine
(ii) in any other case, with imprisonment which shall not be less than 3 months but which may extend to 3 years and with fine.
It may be noted that person shall not be proceeded against under this section in the following cases :
- For any assessment year commencing prior to 1-4-1975.
(ii) For any assessment year commencing on or after 1-4-1975 if
(a) the return is furnished by him before the expiry of the assessment year ; or
(b) the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax paid, if any, and any tax deducted at source, does not exceed Rs. 3,000.
9. Failure to furnish return of income in search cases u/s 158 BC (Section 276 CCC). In case a person willfully fails to furnish in due time, return of total income under a notice served u/s 158 BC, he shall be punishable with imprisonment for 3 months to 3 years and with fine.
10. Failure to produce accounts and documents [Section 276 (D)]. If a person willfully fails to comply with the provisions of the notice served under Section 142 (1) regarding production of accounts, books or other documents, or willfully fails to comply with a direction issued to him under section 142 (2A) to get accounts audited by a Chartered Accountant, he shall be punishable with rigorous imprisonment which may extend upto one year or fine of Rs. 4 to Rs. 10 per day of default or with both.
11. False Statement in Verification [Section 277]. A person making a false statement or delivering a false account or statement, which he either knows or believes to be false or does not believe to be true, shall be punishable with rigorous imprisonment for- 6 months to 7 years, if the amount of tax evaded would have been more than Rs. One lakh and 3 monjhs to 3 years and fine in any other case.
12. Falsification of books of account or document, etc. [Section 277A]. If any person (hereafter in this section referred to as the first person) uthorize and with intent to enable any other person (hereafter in this section referred to as the second person) to evade any tax or interest or penalty chargeable and impossible under this Act, makes or cause to be made any entry or statement which is false and which the first person either knows to be false or does not believe to be true, in any books of account or other document relevant to or useful in any proceedings against the first person or the second person, under this Act, the first person shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.
It shall be sufficient in any charge under this section to allege a general intent to enable the second person to evade any tax, penalty or interest, without specifying any particular instance or sum of tax, penalty or interest which has been or would have been evaded by such second person.
13. Abetment in False Return (Section 278). If a person abets or induces in any manner another person to make and deliver a false account, statement or declaration relating to any income chargeable to tax or to commit an offence u/s 276 C (1), he shall be punishable with rigorous imprisonment for a minimum term of six months and a maximum of seven years, if the amount of tax evaded would have been more than Rs. 1,00,000 and 3 months to 3 years in any other case and with fine.
.14. Punishment of Second and Subsequent Offences (Section 278 A). If a person convicted of an offence under Section 276 B, 278 C(l), 276 CC, 276 DD, 276 D, 276 E, 277 or 278 is again convicted for an offence under any of these provisions, he shall be punishable for second and every subsequent offence with rigorous imprisonment of a term of not less than 6 months but which may extend to 7 years and with fine.
The approval of Commissioner of Income-tax is necessary to launch prosecution for offences under section 275, 276 A, 276 B, 276 C, 276 CC, 276 D, or 277 or 278 A, against any person. The Commissioner may compound any such offence (279). All the offences mentioned in Section 279 shall be deemed to be non-cognizable under the code of Criminal Procedure 1973.
15. Punishment not to be imposed in certain cases (Section 278 AA). Notwithstanding anything contained in Section 276 A, 276 AB or Sec. 276 B, no person shall be punishable for any failure referred to in the aforesaid provisions if he proves that there had been a reasonable cause for such failure.
Power of Commissioner to grant immunity from Prosecution [Section 278AB]
I. If a person has made an application for settlement, he may make an application to the commissioner for granting immunity from prosecution.
2. This type of application shall not be made after the institution of the prosecution proceedings after abatement.
3. If the commissioner is satisfied, that the person has, after the abatement, co-operated with income-tax authority and has made full and true disclosures of his income and the manner in which income has been derived, the commissioner may grant to the person immunity from prosecution and he may also impose such conditions as he may think fit.
4. The immunity granted shall stand withdrawn if conditions imposed by the Commissioner are not complied with.
5. The immunity granted can be withdrawn by the Commissioner at any time if he is satisfied that the person hasconcealed any particular material to the assessment or had given false evidence. Such a person shall be tried for the offence ith respect to which immunity was granted or for any other offence of which he appears to have been guilty.
16. Offences by Companies (Section 278 B).
(1) Where an offence under the Act has been committed, by a company, eveiy person who, at the time offence was committed, was incharge of, and was responsible to the company for the conduct of the business as well as company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
Such a person shall not be held liable to any punishment if he proves that the offence was committed without his knowledge or that he has exercised all due diligence to prevent the commission of such offence.
(2) Section 278B says that notwithstanding anything contained in sub-section (1) where an offence by a company under this Act is committed and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary, or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Section 278B Where an offence under this Act has been committed by a person, being a company, and the punishment for such offense is imprisonment and fine, then, without prejudice to the provisions contained in sub-section (1) or sub-section (2), such company shall be punished with fine and every person, referred to in sub-section (1), or the director, manager, secretary or other officer of the company referred to in sub-section (2), shall be liable to be proceeded against and punished in accordance with the provisions of this Act.”
17. Offences by Hindu Undivided Families. (Section 278 C). For any offence committed by H.U.F., its Karta shall be liable for punishment and if any member was also involved, he shall also be punishable.
But if Karta can prove that the offence was committed without his knowledge or that he has exercised all due diligence to present the commission of such offence he can escape punishment.
18. Presumption as to Assets, Books of Account etc. in certain cases. (Section 278 D). Where during any search conducted u/s 132, any money, bullion, uthori or other valuable article or thing or any books of account or other documents has or have been found in the possession or control of any person and such assets or books or documents are tendered by the prosecution in evidence against such person the provisions of Section 132 (4A) shall apply to such assets.
19. Prosecution to be at the instance of commissioner [Section 279]
A person shall not be proceeded against for any offence under Sections 275 A, 276, 276 A, 276 B, 276 BB, 276 C, 276 CC, 276 D, 277, 278 except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority
It is also provided that the Chief Commissioner or, as the case may be Director General, may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for the institution of proceeding under this sub-Section. Appropriate authority shall have the same meaning as in Section 269
No prosecution u/s 276 or 277 shall be made in relation with assessment years in respect of which penalty has been reduced or waived by the Chief Commissioner or Commissioner.
Any offence under this chapter may either before or after the institution of proceedings be compounded by the Chief Commissioner or Director General. [Section 279 (2)]
Where any proceedings has been taken against any person, any statement made or account or other document produced by such person before any of the income-tax authorities shall not be inadmissible as evidence for the purposes of such proceedings merely on the ground that such statement was made or account or document was produced in the belief that the penalty imposable would be reduced or waived under section 273 A or that the offence in respect of which such proceeding was taken would be compounded. [Section 279 (3)]