Prosecution for offences under Income Tax Act, 1961

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Income Tax Department
Ministry of Finance, Government of India

Prosecution for Offences

The income-tax authorities can initiate prosecution for offences specified under various sections. Imprisonment and fines vary depending on the nature of the offence.

Key Offences and Punishments

*Section*	*Description*	*Period of Imprisonment*
275A	Contravention of the order restricting the handling of seized assets	Up to 2 years (and fine)
275B	Non-compliance with search and seizure provisions	Up to 2 years (and fine)
276	Concealment or transfer of property to prevent tax recovery	Up to 2 years (and fine)
276B	Failure to pay TDS, dividend distribution tax, or ensure tax payment on income in kind under Sections 194B, 194BA, 194R, and 194S	3 months to 7 years (and fine)
276BB	Failure to pay TCS	3 months to 7 years (and fine)
276C(1)	Wilful attempt to evade tax or under-report income	3 months to 7 years (and fine)
276C(2)	Wilful attempt to evade payment of tax, penalty or interest	3 months to 2 years (and fine)
276CC	Failure to furnish return under Section 139(1) or notice	3 months to 7 years (and fine)
276CCC	Non-filing of return post-search/requisition on or after 01-09-2024	3 months to 3 years (and fine)
276D	Failure to produce accounts or comply with Section 142(2A)	Up to 1 year (and fine)
277	False statements in verification or accounts	3 months to 7 years (and fine)
277A	False entries or statements in accounts	3 months to 2 years (and fine)
278	Abetment of tax evasion	3 months to 7 years (and fine)
278A	Enhanced punishment for repeat offences	6 months to 7 years (and fine)
280	Unauthorized disclosure by a public servant	Up to 6 months (and fine)

Offences by Companies [Section 278B]

Where a company has committed an offence, both the company and the responsible persons are liable for prosecution. Companies face fines, while individuals will also face punishment under applicable provisions. A person won’t be punished if they prove that the offence happened without their knowledge or despite all due diligence on their part. The expression ‘company’ includes a firm and an association of persons (AOP) or body of individuals (BOI), whether incorporated or not.

Immunity from prosecution may be granted by the Principal Commissioner/Commissioner, but it will be withdrawn if the assessee fails to meet the required conditions and according to CBDT guidelines, the offence under this provision is compoundable.

Offence by Hindu Undivided Family [Section 278C]

The Karta of an HUF is deemed guilty of offences committed by the HUF. However, the Karta shall not be punished if he proves that the offence was committed without his knowledge or despite exercising all due diligence to prevent it.

If it is proved that the offence was committed with the consent, connivance, or due to neglect of any member of the HUF, such member shall also be deemed to be guilty and shall be liable for prosecution and punishment.

Disclosure by Public Servants

Public servants are restricted from disclosing specified information as per section 138(2) except under legal obligation. Violations attract prosecution under Section 280.

Immunity from prosecution may be granted by the Principal Commissioner/Commissioner, but it will be withdrawn if the assessee fails to meet the required conditions.

Relaxation from Prosecution

No punishment shall be imposed for failure under Sections 276A, 276AB, 276B, or 276BB if reasonable cause is proven.

Presumptions in Prosecution

Section 278D:Where money, bullion, jewellery or other valuable articles or any books of account or documents are found during a search, the following presumptions may be made by the income-tax authorities:
- Such assets or documents belong to the person from whose possession or control they are found;
- The contents of the books of account or documents are true;
- The signatures and handwriting in the documents are presumed to be of the person they appear to belong to;
- Stamped, executed, or attested documents are presumed to have been duly completed by the person who appears to have done so.
Section 278E:Presumption of culpable mental state applies by the Court unless proven otherwise by the accused.

Approval for Prosecution [Section 279]

Prosecution cannot be initiated without prior approval of the Principal Commissioner/Commissioner, Joint Commissioner (Appeals), or Commissioner (Appeals), as applicable. Directions or instructions may also be issued by the Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General.

Compounding of Offence

An offence may be compounded by the Principal CC/CC or Principal DG/DG, either before or after proceedings are initiated.

Prosecution for contravention of the order restricting the handling of seized assets [Section 275A]

Nature of Default

During search operations, if it is not practicable to seize any valuable article, thing, book of account or document due to physical constraints, the authorized officer may issue an order directing the person not to remove or deal with such items without prior permission. Contravention of this order constitutes an offence under this section.

Period of Imprisonment

The offence is punishable with rigorous imprisonment which may extend to 2 years, and shall also be liable to fine.

Prosecution for non-compliance with search and seizure provisions [Section 275B]

Nature of Default

If a person having possession or control of books of account or other documents, including those maintained in electronic form, fails to provide necessary facility for their inspection during search and seizure, prosecution may be launched under this provision. Prosecution requires prior approval of the Principal Commissioner, Commissioner, Commissioner (Appeals), or other prescribed authority.

Period of Imprisonment

The offence is punishable with rigorous imprisonment which may extend to 2 years, and shall also be liable to fine.

Prosecution for concealment or transfer of property to prevent tax recovery [Section 276]

Nature of Default

Prosecution is attracted when a person fraudulently removes, conceals, transfers, or delivers any property or interest therein to prevent such property from being attached or taken in execution of a certificate for the recovery of tax

Punishment

The offence is punishable with rigorous imprisonment for a term which may extend up to 2 years and shall also be liable to fine.

Prosecution for failure to pay TDS, dividend distribution tax, or ensure tax payment on income in kind [Section 276B]

Nature of Default

Prosecution may be initiated in the following cases:

- Failure to pay TDS;
- Failure to pay dividend distribution tax on dividends declared, distributed, or paid on or before 31.03.2020;
- Failure to ensure payment of tax on winnings in kind, whether wholly or partly, under section 194B;
- Failure to ensure payment of tax on winnings from online games in kind, whether wholly or partly, under Section 194BA;
- Failure to ensure payment of tax on benefit or perquisite in kind under section 194R;
- Failure to ensure payment of tax on consideration in kind for transfer of VDA under section 194S.

No prosecution shall be launched for failure to deposit TDS if the amount is deposited on or before the due date for filing the TDS statement. If the government extends the due date, the extended date shall be considered for calculating the limitation period for immunity from prosecution.

Non-cognizable Offence

The offence is non-cognizable under section 279A, i.e., police cannot register an FIR or initiate investigation/arrest without court permission.

Exception

As per CBDT Circular No. 24/2019, dated 09.09.2019, no prosecution shall be initiated where:

- The TDS default is Rs. 25 lakh or below, and
- The delay in deposit is less than 60 days from the due date.
  However, in exceptional cases (e.g., habitual defaulters), prosecution may be initiated with prior approval of a collegium of two officers of CCIT/DGIT rank.
Period of Imprisonment

Punishable with rigorous imprisonment ranging from 3 months to 7 years along with fine.

Prosecution for Subsequent Offences

For second and subsequent convictions, the person shall be punishable with rigorous imprisonment from 6 months to 7 years and with fine.

Penalty for failure to deduct or pay

Failure to deduct or pay tax as required under Sections 194B, 194BA, 194R, 194S, or Dividend Distribution Tax, makes a person liable to penalty under Section 271C.

Relaxation from Prosecution

Prosecution for failure to pay TCS [Section 276BB]

Nature of Default

Prosecution applies when a person collects tax under section 206C but fails to deposit it wholly or partly to the Central Government.

However, no prosecution shall be initiated if the TCS amount is deposited on or before the due date of filing the TCS statement. If the Government extends such due date, the extended date shall be considered for calculating the limitation for prosecution immunity.

Exception

As per CBDT Circular No. 24/2019, dated 09.09.2019, prosecution shall not be initiated where:

- The defaulted TCS amount is Rs. 25 lakh or less, and
- The delay in deposit is less than 60 days.

In exceptional cases like habitual defaults, prosecution may be initiated with prior approval of a collegium of two officers of CCIT/DGIT rank.

Period of Imprisonment

Punishable with rigorous imprisonment for a term ranging from 3 months to 7 years and fine.

Prosecution for Subsequent Offences

On second and subsequent convictions, punishment shall be rigorous imprisonment for 6 months to 7 years and fine.

Penalty for failure to collect tax

Failure to collect TCS under Section 206C attracts penalty under Section 271CA.

Relaxation from Prosecution

Prosecution for wilful attempt to evade tax

Wilful attempt to evade tax [Section 276C(1)]

Nature of Default

Prosecution shall be initiated if a person wilfully attempts to evade any tax, penalty, or interest chargeable or imposable under the Act or under-reports his income.

Meaning of wilful attempt

Includes the following:

➢ Possessing or controlling books/documents containing false entries or statements;

➢ Making or causing to be made false entries or statements;

➢ Wilfully omitting or causing omission of relevant entries or statements;

➢ Creating circumstances that facilitate evasion of tax, penalty, interest, or payment.

Period of Imprisonment

➢ Where the tax sought to be evaded or tax on under-reported income exceeds Rs. 25 lakh: rigorous imprisonment of 6 months to 7 years and with fine;

➢ In other cases: rigorous imprisonment of 3 months to 2 years and with fine.

Wilful attempt to evade payment of tax [Section 276C(2)]

Nature of Default

Prosecution shall be initiated where there is wilful attempt to evade payment of tax, penalty, or interest.

Period of Imprisonment

Punishable with rigorous imprisonment of 3 months to 2 years and with fine.

Non-cognizable Offence

The offence is non-cognizable under section 279A, meaning FIR, investigation, or arrest requires court permission.

Exception

As per CBDT Circular No. 24/2019, dated 09.09.2019:

- Where the amount sought to be evaded or tax on under-reported income is Rs. 25 lakh or less, prosecution shall be initiated only with prior approval of a collegium of two officers of CCIT/DGIT rank.
- Prosecution shall not be launched unless the order imposing penalty is confirmed by the ITAT.
Prosecution for Subsequent Offences

For second and subsequent convictions, rigorous imprisonment of 6 months to 7 years and with fine shall apply.

Penalty for under-reporting of income

Under-reporting of income attracts penalty under Section 270A.

Relaxation from Prosecution

Prosecution for failure to furnish return of income [Section 276CC]

Nature of Default

Prosecution may be initiated if a person fails to furnish return of income:

- Under section 139(1);
- In response to a notice under section 142(1)(i);
- In response to a notice under section 148 for reassessment;
- In response to a notice under section 153A in case of search.
Such offence is non-cognizable under section 279A, i.e., police cannot act without court’s prior permission.

Exception

No prosecution shall be launched for failure to furnish return under section 139(1) if:

- The return is filed before the end of the assessment year, or an updated return is filed within 48 months from the end of the relevant assessment year.
- The tax payable (excluding company cases), after adjusting advance tax, self-assessment tax, and TDS/TCS, does not exceed Rs. 10,000.

As per CBDT Circular No. 24/2019, dated 09.09.2019, if the amount of tax sought to be evaded is Rs. 25 lakh or less, prosecution requires prior approval of a collegium of two CCIT/DGIT rank officers.

Period of Imprisonment
- Where the tax sought to be evaded exceeds Rs. 25 lakh: rigorous imprisonment of 6 months to 7 years and with fine;
- In other cases: rigorous imprisonment of 3 months to 2 years and with fine.
Prosecution for Subsequent Offences

For second and subsequent offences, punishment is rigorous imprisonment of 6 months to 7 years and with fine.

Relaxation from Prosecution

Prosecution for non-filing of return post-search/requisition on or after 01-09-2024 [Section 276CCC]

Nature of Default

If a search is initiated under Section 132 or a requisition is made under Section 132A on or after 01-09-2024, and the assessee fails to file a return in response to a notice issued under Section 158BC(1)(a), prosecution can be launched under this section.

Period of Imprisonment

Punishable with rigorous imprisonment of 3 months to 3 years and with fine.

Prosecution for failure to produce accounts and documents [Section 276D]

Nature of Default

Prosecution may be initiated if a person wilfully:

- Fails to produce, or causes failure in producing, books of accounts or documents as required under a notice issued under section 142(1); or
- Fails to get accounts audited or inventory valued in compliance with directions issued under section 142(2A).
Period of Imprisonment

Punishable with rigorous imprisonment for a term which may extend to 1 year and with fine. Prosecution requires prior approval of the Principal Commissioner, Commissioner, Commissioner (Appeals), or other prescribed authority

Penalty for under-reporting of income

Under-reporting of income attracts penalty under Section 272A.

Relaxation from Prosecution

Prosecution for making false statements in verification [Section 277]

Nature of Default

Prosecution shall be initiated where a person:

- Makes a false statement in any verification under the Act, or
- Delivers an account or statement which is false and which he knows or believes to be false, or does not believe to be true.

Such offence is classified as non-cognizable under section 279A, i.e., police cannot act without prior permission of the court.

Period of Imprisonment
- Where the tax sought to be evaded exceeds Rs. 25 lakh: rigorous imprisonment of 6 months to 7 years and with fine;
- In other cases: rigorous imprisonment of 3 months to 2 years and with fine.
Prosecution for Subsequent Offences

For second and subsequent convictions under this provision, the punishment shall be rigorous imprisonment of 6 months to 7 years and with fine.

Relaxation from Prosecution

Prosecution for falsification of books of account or document, etc. [Section 277A]

Nature of Default

Prosecution under this provision is initiated when the following conditions are met:

- A person makes or causes to make a statement or entry;
- The statement or entry is false, and the person knew or believed it to be false;
- It appears in books of account or documents relevant to any proceeding under the Act;
- It is made wilfully and with intent;
- It enables another person to evade tax, interest, or penalty chargeable under the Act.

Unlike Section 278, it is not necessary to prove that tax evasion actually occurred for prosecution under Section 277A.

Period of Imprisonment

Punishable with rigorous imprisonment of 3 months to 2 years and with fine.

Relaxation from Prosecution

Prosecution for abetment to make a false return, etc. [Section 278]

Nature of Default

Prosecution under this section arises when a person:

- Abets or induces another to make and deliver a false account, statement, or declaration relating to taxable income, knowing it to be false or not believing it to be true; or
- Abets or induces another to evade tax, penalty, or interest or to under-report income, as referred in Section 276C(1).

Prosecution under this provision is contingent upon the establishment of tax evasion by the other person.

Period of Imprisonment
- If the amount of tax, penalty, or interest that would have been evaded exceeds Rs. 25 lakh: Rigorous imprisonment of 6 months to 7 years and fine.
- In other cases: Rigorous imprisonment of 3 months to 2 years and fine.
Non-Cognizable Offence

As per Section 279A, the offence under Section 278 is non-cognizable, meaning police cannot initiate investigation or arrest without prior permission of the court.

Subsequent Offences

On second and subsequent convictions under this section, the person shall be punishable with rigorous imprisonment of not less than 6 months, extendable up to 7 years, and with fine.

Relaxation from Prosecution

*******

Tax Reference Tables

Penalties and Prosecutions

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

PENALTIES & PROSECUTION

Section	Nature of default	Penalty leviable
(1)	(2)	(3)
140A(3)	Failure to pay wholly or partly—	Such amount as Assessing Officer may impose but not exceeding tax in arrears
	(a) self-assessment tax, or
	(b) interest and fee, or
	(c) both
	under section 140A(1)
158BFA(2)	Determination of undisclosed income of block period	50 per cent of tax leviable in respect of undisclosed income
221(1)	Default in making payment of tax	Such amount as Assessing Officer may impose but not exceeding amount of tax in arrears
234E	Failure to file statement within time prescribed in section 200(3) or in proviso to section 206C(3)	Rs. 200 for every day during which failure continues but not exceeding tax deductible/collectible
234F	Default in furnishing return of income within time prescribed in section 139(1)	Rs. 5,000 if return is furnished after due date specified under section 139(1). However if the total income of the person does not exceed Rs. 5 lakhs then Rs. 1,000 shall be the late filing fees.
234G	Fee for default in submission of statement/certificate prescribed under section 35/ Section 80G	Rs. 200 per day
234H	Fee for default in intimating the Aadhaar Number	a) Rs. 500, if such intimation is made between 01-04-2022 and 30-06-2022; and b) Rs. 1,000, in all other cases.
270A(1)	Under-reporting and misreporting of income	A sum equal to 50% of the amount of tax payable on under-reported income. However, if under-reported income is in consequence of any misreporting thereof by any person, the penalty shall be equal to 200% of the amount of tax payable on under-reported income
271A	Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA	Rs. 25,000
271AA(1)	(1) Failure to keep and maintain information and documents required by section 92D(1) or 92D(2)	2% of value of each international transaction/or specified domestic transaction entered into
	(2) Failure to report such transaction
	(3) Maintaining or furnishing incorrect information or document
271AA(2)	Failure to furnish information and document as required under Section 92D(4)	Rs. 5,00,000/-
271AAA	Where search has been initiated before 1-7-2012 and undisclosed income found	10% of undisclosed income
271AAB(1)	Where search has been initiated on or after 1-7-2012 but before 15-12-2016 and undisclosed income found	(a) 10% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income
		(b) 20% of undisclosed income of the specified previous year if assessee does not admit the undisclosed income, and on or before the specified date declare such income in the return of income furnished for the specified previous year and pays the tax, together with interest thereon;
		(c) 60% of undisclosed income of the specified previous year if it is not covered by (a) or (b) above
271AAB(1A)	Where search has been initiated on or after 15-12-2016 but before 01-09-2024 and undisclosed income found	(a) 30% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income (b) 60% of undisclosed income of the specified previous year in any other case.
271AAC	Income determined by Assessing Officer or the Commissioner (Appeals) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year. [if such income is not included by assessee in his return or tax in accordance with section 115BBE has not been paid]	10% of tax payable under section 115BBE.
271AAD	Penalty, if during any proceedings under the Act, it is found that in the books of accounts maintained by assessee, there is: a) A false entry; or b) Any entry relevant for computation of total income of such person has been omitted to evade tax liability.	100% of such false entries or omitted entry.
271AAE	Penalty for violation of the provisions of 21st proviso to section 10(23C) or section 13(1)(c) pertaining to passing of unreasonable benefits to trustees or specified person	(a) For the first violation: to the extent of income applied by the institution for the benefit of any interested party referred to in section 13(3); (b) For any violation in subsequent years: twice the amount of such income so applied (“double penalty”).
271B	Failure to get accounts audited or furnish a report of audit as required under section 44AB	One-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, which-ever is less
271BA	Failure to furnish a report from an accountant as required by section 92E	Rs. 1,00,000
271C	Failure to deduct tax at source, wholly or partly, under sections 192 to 196D (Chapter XVII-B) or failure to pay wholly or partly tax u/s 115-O(2) or proviso to section 194B, or failure to pay or ensure payment of tax as required by 115-O(2), first proviso to section 194R(1), proviso to section 194S(1) or section 194BA(2).	Amount equal to tax not deducted or paid
271CA	Failure to collect tax at source as required under Chapter XVII-BB	Amount equal to tax not collected
271D	Taking or accepting any loan or deposit or specified sum in contravention of the provisions of Section 269SS. “Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.	Amount equal to loan or deposit or specified sum so taken or accepted
271DA	Receiving an amount of Rs. 2 lakh or more from a person in a day [section 269ST]	Amount equal to such receipt
271DB	Failure to provide facility for accepting payment through prescribed electronic modes of payment as referred to in section 269SU	Rs. 5,000 rupees for every day of default
271E	Repayment of any loan or deposit or specified advance otherwise than in accordance with provision of Section 269T. “Specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not transfer takes place.	Amount equal to loan or deposit or specified advance so repaid
271FA¹	Failure to furnish an annual information return as required under section 285BA(1)²	Rs. 500 per day of default
	Failure to furnish annual information return within the period specified in notice u/s 285BA(5)	Rs. 1,000 per day of default
271FAA	Failure to furnish a statement under section 285BA or failure to furnish a correction statement within the specified period or failure to comply with the due diligence requirement	Rs. 50,000
	Furnishing of inaccurate information by reporting financial institution and such inaccuracy is due to false or inaccurate information submitted by the holder of reportable accounts	Rs, 5,000 for every inaccurate reportable account
271FAB	Section 9A provides that fund management activity carried out by an eligible offshore investment fund through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India (subject to certain conditions). The provision requires that eligible investment fund shall furnish within 90 days from the end of the financial year a statement, in respect of its activities in a financial year, in the prescribed form containing information relating to fulfilment of specified conditions and such other information or documents as may be prescribed. Penalty to be levied if investment fund failed to comply with the requirement.	Rs. 5,00,000
271G³	Failure to furnish any information or document as required by section 92D(3)	2% of the value of the international transaction/specified domestic transaction for each failure
271GA	Section 285A provides for reporting by an Indian concern if following two conditions are satisfied: a) Shares or interest in a foreign company or entity derive substantial value, directly or indirectly, from assets located in India; and b) Such foreign company or entity holds such assets in India through or in such Indian concern. In this case, the Indian entity shall furnish the prescribed information for the purpose of determination of any income accruing or arising in India under Section 9(1)(i). In case of any failure, the Indian concern shall be liable to pay penalty.	Penalty shall be: a) a sum equal to 2% of value of transaction in respect of which such failure has taken place, if such transaction had effect of, directly or indirectly, transferring right of management or control in relation to the Indian concern; b) a sum of Rs. 5,00,00 in any other case.
271GB(1)	Failure to furnish report under section 286(2)	Rs. 5,000 per day upto 30 days and Rs. 15,000 per day beyond 30 days
271GB(2)	Failure to produce the information and documents within the period allowed under section 271GB(6)	Rs. 5,000 for every day during which the failure continues.
271GB(3)	Failure to furnish report or failure to produce information/documents under section 286 even after serving order under section 271GB(1) or 271GB(2)	Rs. 50,000 for every day for which such failure continues beginning from the date of serving such order.
271GB(4)	Failure to inform about inaccuracy in report furnish under section 286(2) Or furnishing of inaccurate information or document in response to notice issued under section 286(6).	Rs. 5,00,000
271GC	Failure to submit statement under section 285 by a non-resident having liaison office in India (applicable with effect from April 1, 2025)	Rs. 1,000 per day of failure, up to 3 months; or Rs. 1,00,000 in any other case
271H⁴	Failure to deliver/cause to be delivered a statement within the time prescribed in section 200(3) or the proviso to section 206C(3), or furnishes incorrect information in the statement	W.e.f. 1-10-2014 Assessing Officer may direct payment of penalty. Penalty shall not be less than Rs. 10,000 but may extend to Rs. 1,00,000
271K	Penalty of default in submission of statement/certificate prescribed under section 35/Section 80G	Rs. 10,000 to Rs. 1 lakh
271-I	As per section 195(6) of the Act, any person responsible for paying to a non-resident or to a foreign company, any sum (whether or not chargeable to tax), shall furnish the information relating to such payment in Form 15CA and 15CB. Penalty shall be levied in case of any failure.	Rs. 1,00,000
271J	Furnished incorrect information in any report or certificate by an accountant or a merchant banker or a registered valuer	Rs. 10,000 for each incorrect report or certificate
272A(1)	Refusal or failure to :	Rs. 10,000 for each failure/default
	(a) answer questions
	(b) sign statement
	(c) attend to give evidence or produce books of account, etc., in compliance with summons under section 131(1)
	(d) comply with notice u/s 142(1), 143(2) or failure to comply with direction issued u/s 142(2A).
272A(2)	Failure to :
	(a) furnish requisite information in respect of securities as required under section 94(6) ;	Rs. 500 for every day during which the failure continues. (In respect of penalty for failure, in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns u/ss 206 and 206C and statements under Section 200(2A) or section 200(3) or proviso to section 206C(3) or section 206C(3A), penalty shall not exceed amount of tax deductible or collectible)
	(b) give notice of discontinuance of business or profession as required under section 176(3) ;
	(c) furnish in due time returns, statements or certificates, deliver de-claration, allow inspection, etc., under sections 133, 134, 139(4A), 139(4C), 192(2C), 197A, 203, 206, 206C, 206C(1A) and 285B;
	(d) deduct and pay tax under section 226(2)
	(e) file a copy of the prescribed statement within the time specified in section 200(3) or the proviso to section 206C(3) (up to 1-7-2012)
	(f) file the prescribed statement within the time specified in section 206A(1)
	(g) Failure to deliver or cause to be delivered a statement under Section 200(2A) or Section 206C(3A) within prescribed time. With effect from June 1, 2015, it is mandatory for an office of the Government, paying TDS or TCS, as the case may be, without production of a challan, to deliver a statement in the prescribed form and manner to the prescribed authority.
272AA(1)	Failure to comply with section 133B	Not exceeding Rs. 1,000
272B	Failure to comply with provisions relating to PAN or Aadhaar as referred to in section 139A/139A(5)(c)/(5A)/(5C)	Rs. 10,000 for each default
272BB(1)	Failure to comply with section 203A	Rs. 10,000 for each failure/default
272BB(1A)	Quoting false tax deduction account number/tax collection account number/tax deduction and collection account number in challans/certificates/statements/documents referred to in section 203A(2)	Rs. 10,000

Note : No penalty is imposable for any failure under sections 271(1)(b), 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAB, 271FB, 271G, 271GA, 271GB, 271H, 271-I, 272A(1)(c) or (d), 272A(2), 272AA(1), 272B, 272BB(1), 272BB(1A), 272BBB(1), 273(1)(b), 273(2)(b) and 273(2)(c) if the person or assessee proves that there was reasonable cause for such failure (section 273B).

Section 273AA provides that a person may make application to the Principal Commissioner/Commissioner for granting immunity from penalty, if (a) he has made an application for settlement under section 245C and the proceedings for settlement have abated; and (b) penalty proceeding have been initiated under this Act. The application shall not be made after the imposition of penalty after abatement.

OFFENCES AND PROSECUTIONS

Section	Nature of default	Punishment (rigorous imprisonment)	Fine
(1)	(2)	(3)	(4)
275A	Contravention of order made under section 132(1) (Second Proviso) or 132(3) in case of search and seizure	Up to 2 years	No limit
275B	Failure to afford necessary facility to authorised officer to inspect books of account or other documents as required under section 132(1)(iib)	Up to 2 years	No limit
276	Removal, concealment, transfer or delivery of property to thwart tax recovery	Up to 2 years	No limit
276A	Failure to comply with provisions of section 178(1) and (3) re : company in liquidation	6 months to 2 years	—
276B	Failure to pay to credit of Central Government (i) tax deducted at source under Chapter XVII-B (non-cognizable offence under section 279A), or proviso to section 194B, or failure to pay or ensure payment of tax as required by section 115O(2), first proviso to section 194R(1), proviso to section 194S(1) or section 194BA(2). Note: The provision of this section shall not apply if payment in respect to TDS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TDS statement in respect to such payment. (applicable w.e.f 01-10-2024)	3 months to 7 years	No limit
276BB	Failure to pay the tax collected under the provisions of section 206C Note: The provision of this section shall not apply if payment in respect to TCS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TCS statement in respect to such payment. (applicable w.e.f 01-04-2025)	3 months to 7 years	No limit
276C(1)	Wilful attempt to evade tax, penalty or interest or under-reporting of Income (non-cognizable offence under section 279A)—
	(a) where tax sought to be evaded exceeds Rs. 1 lakh (Rs. 25 lakh w.e.f. 1-7-2012)	6 months to 7 years	No limit
	(b) in other cases	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
276C(2)	Wilful attempt to evade payment of any tax, penalty or interest (non-cognizable offence under section 279A)	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
276CC	Wilful failure to furnish returns of fringe benefits under section 115WD/115WH or return of income under section 139(1) or under section 139(8A) or in response to notice under section 142(1)(i) or section 148 or section 153A (non-cognizable offence under section 279A)—
	(a) where tax sought to be evaded exceeds Rs. 1 lakh (Rs. 25 lakh w.e.f. 1-7-2012)	6 months to 7 years	No limit
	(b) in other cases Note : *** A person shall not be liable to be prosecuted under this section if he furnishes the return before expiry of assessment year or the tax payable by such person, not being a company, as reduced by the advance tax self-assessment tax paid before expiry of the assessment year, TDS and TCS, does not exceed Rs. 10,000.	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
276CCC	Wilful failure to furnish in due time return of total income required to be furnished by notice u/s 158BC(1)(a)	3 months to 3 years	No limit
276D⁶	Wilful failure to produce accounts and documents under section 142(1) or to comply with a notice under section 142(2A)	Up to 1 year	⁷Rs. 4 to Rs. 10 for every day of default
277	False statement in verification or delivery of false account, etc. (non-cognizable offence under section 279A)
	(a) where tax sought to be evaded exceeds Rs. 1 lakh (Rs. 25 lakh w.e.f. 1-7-2012)	6 months to 7 years	No limit
	(b) in other cases	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
277A	Falsification of books of account or document, etc., to enable any other person to evade any tax, penalty or interest chargeable/leviable under the Act	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
278	Abetment of false return, account, statement or declaration relating to any income or fringe benefits chargeable to tax (non-cognizable offence under section 279A)
	(a) where tax, penalty or interest sought to be evaded exceeds Rs. 1 lakh (Rs. 25 lakh w.e.f. 1-7-2012)	6 months to 7 years	No limit
	(b) in other cases	3 months to 3 years (2 years w.e.f. 1-7-2012)	No limit
278A	Second and subsequent offences under sections 276B, 276BB, 276C(1), 276CC, 276DD, 276E, 277 or 278	6 months to 7 years	No limit
280(1)	Disclosure of particulars by public servants in contravention of section 138(2) [Prosecution to be instituted with previous sanction of Central Government under section 280(2)]	Up to 6 months (simple/rigorous)	No limit

Notes :

1. No person is punishable for any failure under section 276A, 276ABor 276Bif he proves that there was reasonable cause for such failure (vide section 278AA).

2. (a) Prosecution for offences under section 275A, section 275B, section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D, section 277, section 277Aand section 278to be instituted with previous sanction of Principal Director General/Principal Chief Commissioner/Principal Commissioner/Director General/Chief Commissioner/Commissioner, except where prosecution is at the instance of the Commissioner (Appeals) or the appropriate authority (vide section 279).

(b) The offences under Chapter XXII can be compounded (either before or after the institution of proceedings) by Principal Director General/Director General or Principal Chief Commissioner/Chief Commissioner.

3. Where an offence under this Act has been committed by a person, being a company, and the punishment for such offence is imprisonment and fine, then, such company shall be punished with fine and every person, referred to in sub-section (1) of section 278B, or the director, manager, secretary or other officer of the company referred to in sub-section (2) of section 278Bshall be liable to be proceeded against and punished in accordance with the provisions of this Act.

4. With effect from 1-4-2008 under section 278ABa person may apply to the Principal Commissioner/Commissioner for granting immunity from prosecution, if he has applied for settlement under section 245Cand the proceedings have abated under section 245HA. The application shall not be made after institution of prosecution proceedings after abatement.

Notes:

^1.With effect from assessment year 2015-16 “annual information return” has been changed to “statement of financial transaction or reportable account” and word “return” has been changed to “statement”.

^2.With effect from assessment year 2015-16 a new section 271FAAhas been inserted to provide for a penalty of Rs. 50,000 for furnishing inaccurate statement of financial transaction or reportable account in certain cases.

^3.With effect from 1-10-2014 TPO can also levy penalty.

^4.Section 271Has amended with effect from 1-10-2014 provides that penalty shall be levied by Assessing Officer.

^5.Non-operative with effect from 1-7-2002.

^6.With effect from October 1, 2014, if a person wilfully fails to produce accounts and documents as stated or wilfully fails to comply with the direction given, he shall be punishable with rigorous imprisonment for a term which may extend to one year and with fine (quantum of fine has not been specified).

^7.No limit w.e.f. 1-10-2014.

[As Amended by Finance Act, 2025]

********

Tutorials

Offences liable to prosecution

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc

Offences liable to prosecution

Apart from levy of penalty for various defaults by the taxpayer, the Income-tax Law also contains provisions for launching prosecution for offences committed by the taxpayer. In this part you can gain knowledge about offences in respect of which prosecutions can be launched under the Income-tax Law. For provisions relating to punishment corresponding to the offences, refer tutorial on “Prosecutions and punishment under the Income-tax Law”.

1. Removing, parting or otherwise dealing with seized assets

Section 132 empowers the tax authorities to initiate search proceedings at the premises of the taxpayer. During the course of search the tax authorities are also empowered to seize money, bullion, jewellery or other valuable article or thing found from the taxpayer. Generally, the seized money, bullion etc. is taken by the tax authorities in their custody (i.e., in the custody of the Government) but if it is not possible or practicable for the tax authorities to take physical possession of the same or to remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature.

In such a case, second proviso to section 132(1) empowers the tax authorities to seize the asset by keeping the asset at the place of the taxpayer only. In such case, the asset will be seized by the tax authorities without physically taking the assets with them. For this purpose, the authorised officer would serve an order on the owner or the person who is in immediate possession or control of the asset that he shall not remove, part with or otherwise deal with the asset, except with the previous permission of such authorised officer. This action of the authorised officer shall be deemed to be a seizure of such valuable article or thing under the Income-tax Act.

Many times, during the course of search it may not be practicable to seize any books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to section 132(1) (as discussed above). In such cases, as per section 132(3), the tax authorities may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such officer. Such officer may take such steps as may be necessary for ensuring compliance with the provisions of section 132(3).

Contravening above discussed provision shall attract prosecution under section 275A.

2. Failure to provide necessary facility to inspect books of account or other documents tax authorities conducting search

In a case where a search is conducted by the tax authorities, the tax authorities as per Section 132(1)(iib) may require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents. Person who fails to provide such facility shall be punishable with rigorous imprisonment and fine under section 275B.

3. Removal, concealment, transfer or delivery of property to prevent tax recovery

If a taxpayer fails to discharge his tax liability, then the tax authority can recover the tax dues from him by attaching his movable and immovable property. If the taxpayer fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, intending thereby to prevent that property or interest therein from being attached for recovery of tax, then prosecution proceedings shall be initiated under section 276.

4. Failure by the liquidator of a company

As per section 178(1) every person:

(a) who is the liquidator of any company which is being wound up, whether under the orders of a Court or otherwise; or

(b) who has been appointed the receiver of any assets of a company, shall, within 30 days after he has become such liquidator give notice of his appointment to the tax authority who is entitled to assess the income of the company.

As per section 178(3) the liquidator:-

(a) shall not, without the leave of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, part with any of the assets of the company or the properties in his hands until he has been notified by the Assessing Officer in this regard; and

(b) on being so notified, shall set aside an amount, equal to the amount notified and, until he so sets aside such amount, shall not part with any of the assets of the company or the properties in his hands :

Nothing contained above shall debar the liquidator from parting with such assets or properties for the purpose of the payment of the tax payable by the company or for making any payment to secured creditors whose debts are entitled under law for priority payment over debts due to Government on the date of liquidation or for meeting such costs and expenses of the winding up of the company as are in the opinion of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner reasonable.

Section 276A provides for prosecution in the case of failure to give notice or setting aside the sum in compliance with the above provisions of sections 178(1)/178(3) as well as prosecution in case the liquidator parts with any of the assets of the company or the properties in his hands in contravention of the provision of section 178(3). However no fresh prosecution proceedings shall be initiated under section 276A on or after 01-04-2023.

5. Failure to pay/ensure payment of TDS or DDT to the credit of the Government

If a person fails to:

(i) Pay to the credit of the Central Government, the tax deducted by him (i.e., TDS); or

(ii) Pay tax or ensure payment of tax to the credit of the Central Government, as required by or under:

a. Section 115-O(2) – dividend distribution tax (DDT);

b. Section 194B – Tax on winnings from lottery or crossword puzzle;

c. Section 194R – Tax on benefit or perquisite in respect of business or profession;

d. Section 194S – Tax on payment on transfer of virtual digital asset;

e. Section 194BA – Tax on winning from online games.

Then, such person shall be punishable with rigorous imprisonment and a fine under section 276B.

Note: The provision of this section shall not apply if payment in respect to TDS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TDS statement in respect to such payment. (applicable w.e.f 01-10-2024)

6. Failure to pay the tax collected under the provisions of section 206C

Section 206C governs the provisions relating to the collection of tax at source. If a person fails to pay the tax collected by him to the credit of the Government, then he shall be prosecuted as per section 276BB.

Note: The provision of this section shall not apply if payment in respect to TCS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TCS statement in respect to such payment. (applicable w.e.f 01-04-2025)

7. Wilful attempt to evade tax, penalty or interest

If a person makes wilful attempt to evade tax, penalty or interest or under-reports his income, then prosecution proceedings shall be launched against such person under section 276C.

8. Wilful failure to furnish return of income

If a person makes wilful default in furnishing of return of income under section 139(1) or in response to notice under section 142(1)(i) or section 148 or section 153A then he shall be prosecuted under section 276CC.

However, the taxpayer shall not be prosecuted under this section for failure to furnish in due time the return of income under section 139(1), if:

(a) the return is furnished by such person before the expiry of the assessment year; or a return is furnished by him under section 139(8A) within due date specified in that sub-section; or

(b) the tax payable by such person (not being a company) on the total income determined on regular assessment, as reduced by advance tax self assessment tax, if any paid before expiry of the assessment year and TDS or TCS, if any, does not exceed Rs. 10,000.

9. Wilful failure to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A)

Section 142(1) deals with the general provisions relating to an inquiry before assessment. Under section 142(1), the Assessing Officer can issue notice asking the taxpayer to file the return of income, if he has not filed the return of income or to produce or cause to be produced such accounts or documents as he may require and to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the taxpayer, whether included in the accounts or not) as he may require.

Section 142(2A) deals with special audit. As per section 142(2A) if the conditions justifying special audit given in section 142(2A) are satisfied, the Assessing Officer may direct the taxpayer to get his accounts audited or re-audited from a chartered accountant as nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and to furnish a report of such audit in the prescribed form.

Section 276D provides for prosecution in the case of wilful failure by the taxpayer to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A).

10. Delivery of false statement

If a taxpayer makes statement in any verification under the Act or under any rules made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe it to be true, he shall be prosecuted under section 277.

11. Enable any other person to evade any tax, penalty or interest

If any person (hereafter referred to as the first person) wilfully and with an intent to enable any other person (hereafter referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under the Act, makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe it 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 the Act, then the first person shall be prosecuted under section 277A.

12. Abetment of false return, account, etc.

if a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe it to be true or to commit an offence under section 276C(1), he shall be prosecuted under section 278.

13. Disclosure of particulars by public servants

Section 138(1) deals with disclosure of information by the tax authorities to other officer, authority, etc. Section 138(2) relates to restriction on declaring of information by the public servant. Section 280 provides for prosecution in the case of disclosure of information by the public servant in contravention of section 138(2).

However, no prosecution shall be instituted against a public servant as discussed above except with the previous sanction of the Central Government.

14. Second and subsequent offences under sections 276B, 276C(1), 276CC, 277 or 278

The provisions of sections 276B, 276BB, 276C(1), 276CC, 277 or 278 have already been discussed. Section 278A provides for prosecution in the case of second or subsequent offence under those sections.

15. Punishment in case of offence by a company

As per section 278B, where an offence under the Income-tax Act has been committed by a company (*), then every person who, at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

However if such person proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence then he shall not be deemed to be guilty of the offence.

Where an offence under the Income-tax Act has been committed by a company 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.

Where an offence under the Income-tax Act has been committed by a person, being a company, such company shall be punished with fine and every person referred to above or the director, manager, secretary or other officer of the company referred to above, shall be liable to be proceeded against and punished in accordance with the provisions of the Act.

(*) For the purposes of this section:

(a) “company” means a body corporate, and includes :-

(i) a firm; and

(ii) an association of persons or a body of individuals whether incorporated or not; and

(b) “director” in relation to :-

(i) a firm, means a partner in the firm;

(ii) any association of persons or a body of individuals, means any member controlling the affairs thereof

16. Punishment in case of offence by Hindu Undivided Family

As per section 278C, where an offence under the Income-tax Act has been committed by a Hindu Undivided Family, the karta shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

However, the karta shall not be liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

Where an offence has been committed by a Hindu Undivided Family 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 member of the Hindu Undivided Family, such member shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Faceless Prosecutions

To impart greater efficiency, transparency and accountability for the purpose of granting sanction for prosecution or compounding of offences, the Central Government may make a scheme by:

a) Eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible;

b) Optimizing utilization of the resources through economics of scale and functional specialization;

c) Introducing a team-based sanction to proceed against, or for compounding of, an offence, with dynamic jurisdiction.

The Central Government may, for the purpose of giving effect to the scheme, issue notification in the Official Gazette, to direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.

Such directions are to be issued on or before 31st March, 2022. Further, every notification issued shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

MCQ on Offences liable to prosecution

Q1. Contravening an order passed by the tax authorities in respect of dealing with seized assets may attract prosecution and can result in imprisonment and fine.

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

Contravening above discussed provision shall attract prosecution under section 275A. Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q2. No prosecution proceeding will be launched against taxpayer if he has not provided necessary facility to inspect books of account or other documents to tax authorities conducting search..

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

In a case where a search is conducted by the tax authorities, the tax authorities as per Section 132(1)(iib) may require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents.. Person who fails to provide such facility shall be punishable with rigorous imprisonment and fine under section 275B.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q3. If the taxpayer, fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein (which can be attached, to recover his tax dues), intending thereby to prevent that property or interest therein from being attached for recovery of tax, then prosecution proceedings shall be initiated against such person under section__________.

(a) Section 275A

(b) Section 276B

(d) Section 277

Correct answer : (c)

Justification of correct answer :

If a taxpayer fails to discharge his tax liability, then the tax authority can recover the tax dues from him by attaching his movable and immovable property. If the taxpayer fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein , intending thereby to prevent that property or interest therein from being attached for recovery of tax, then prosecution proceedings shall be initiated under section 276.

Thus, option (c) is the correct option.

Q4. As per section 178(3), the _____________of a company has to intimate the tax authority before he parts with any of the assets of the company or the properties in his hands and has to set aside the amount if any intimated to him by the tax authorities.

(a) Managing Director (b) Manager

Correct answer : (d)

Justification of correct answer :

As per section 178(3), the liquidator of a company has to intimate the tax authority before he parts with any of the assets of the company or the properties in his hands and has to set aside the amount if any intimated to him by the tax authorities.

Thus, option (d) is the correct option.

Q5. There are no prosecution proceedings under the Income-tax Act for failure to pay to the credit of Central Government a dividend distribution tax (DDT) as per section 115-O(2).

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

If a person fails to pay to the credit of the Central Government: (i) the tax deducted by him (i.e., TDS) or (ii) the dividend distribution tax (DDT) as per section 115-O(2) or (iii) tax in respect of winning from lottery or crossword puzzle as per section 194B , then such person shall be prosecuted under section 276B.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q6. Prosecution can be launched and the taxpayer can be punished for wilful failure to furnish return of income under section 139(1).

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

However, the taxpayer shall not be prosecuted under this section for failure to furnish in due time the return of income under section 139(1), if:

(c) the return is furnished by such person before the expiry of the assessment year; or a return is furnished by him under section 139(8A) within due date specified in that sub-section; or

(a) the tax payable by such person (not being a company) on the total income determined on regular assessment, as reduced by advance tax or self-assessment tax, if any, paid before the expiry of the assessment year and TDS or TCS, if any, does not exceed Rs. 10,000.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q7. Prosecution can be launched and the taxpayer can be punished if he commits wilful failure to produce before the tax authorities the accounts and documents as demanded under section _____________.

(a) 154 (b) 147

Correct answer : (d)

Justification of correct answer :

Section 276D provides for prosecution in the case of wilful failure by the taxpayer to produce accounts and documents under section 142(1)

Thus, option (d) is the correct option.

Q8. As per section_____________, the tax authorities can direct the taxpayer to get his accounts audited from a Chartered Accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

(a) 153A (b) 148

Correct answer : (c)

Justification of correct answer :

As per section 142(2A), the Assessing Officer may direct the taxpayer to get his accounts audited or re-audited from a chartered accountant as nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and to furnish a report of such audit in the prescribed form.

Thus, option (c) is the correct option.

Q9. No prosecution proceedings can be launched against a person who abates or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income which is false and which he either knows to be false or does not believe to be true or to commit an offence under section 276C(1).

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe it to be true or to commit an offence under section 276C(1), he shall be prosecuted under section 278. Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q10. Prosecution against a public servant is to be instituted with previous sanction of _____________under section 280(2).

(a) Central Government (b) State Government

Correct answer : (a)

Justification of correct answer :

Prosecution can be launched against a public servant for disclosure of particulars by him in contravention of section 138(2) which can result in imprisonment and fine [prosecution to be instituted with previous sanction of Central Government under section 280(2)].

Thus, option (a) is the correct option.

Prosecutions and punishment under the Income-tax Law

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

PROSECUTIONS AND PUNISHMENT UNDER THE INCOME-TAX LAW

Apart from penalty for various defaults, the Income-tax Act also contains provisions for launching prosecution proceedings against the taxpayers for various offences. In this part you can gain knowledge about the various provisions relating to prosecution which can be launched under the Income-tax Act.

Contravention of order made under section 132(1) (Second Proviso) or under section 132(3) in case of search and seizure

Section 132 empowers the tax authorities to initiate search proceedings at the premises of the taxpayer. During the course of search the tax authorities are also empowered to seize money, bullion, jewellery or other valuable article or thing found from the taxpayer. Generally, the seized money, bullion etc. is taken by the tax authorities in their custody (i.e., in the custody of the Government) but in certain cases it may not be possible or practicable for the tax authorities to take physical possession of the same or to remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature.

Section 275A provides for prosecution in the case of contravention of any of the above discussed provisions by the taxpayers. As per section 275A, whoever contravenes of any of the above provisions shall be punishable with rigorous imprisonment of upto a period of 2 years and shall also be liable for fine.

Failure to afford necessary facility to authorised officer to inspect books of account or other documents as is required under section 132(1)(iib)

In a case where a search is conducted by the tax authorities, the tax authorities as per Section 132(1)(iib)may require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents.. Person who fails to provide such facility shall be punishable with rigorous imprisonment of up to a period of 2 years and shall also be liable to fine.

Removal, concealment, transfer or delivery of property to thwart tax recovery

If a taxpayer fails to discharge his tax liability, then the tax authority can recover the tax dues from him by attaching his movable and immovable property. If the taxpayer fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein , intending thereby to prevent that property or interest therein from being attached for recovery of tax, then prosecution proceedings can be initiated under section 276. As per section 276 a taxpayer shall be punished with rigorous imprisonment for a term which may extend to two years and shall also be liable for fine.

Failure to comply with provisions of section 178(1) and (3) dealing with company-in-liquidation

As per section 178(1) every person:

(a) who is the liquidator of any company which is being wound up, whether under the orders of a Court or otherwise; or

(b) who has been appointed the receiver of any assets of a company,

shall, within 30 days after he has become such liquidator give notice of his appointment to the tax authority who is entitled to assess the income of the company.

As per section 178(3) the liquidator:-

Section 276A provides for prosecution in the case of failure to give notice or setting aside the sum in compliance with the above provisions of sections 178(1)/178(3) as well as prosecution in case the liquidator parts with any of the assets of the company or the properties in his hands in contravention of the provision of section 178(3). A person who fails to comply with these provisions shall be punishable with rigorous imprisonment for a minimum period of 6 months which may extend to 2 years.

The Finance Act 2023 has amended section 276A by providing a sunset date that no fresh prosecution proceedings shall be initiated under this provision on or after 01-04-2023.

Failure to pay/ensure payment of TDS or DDT to the credit of the Government

If a person fails to:

(i) Pay to the credit of the Central Government, the tax deducted by him (i.e., TDS); or

(ii) Pay tax or ensure payment of tax to the credit of the Central Government, as required by or under:

a. Section 115-O(2)- dividend distribution tax (DDT);

b. Section 194B- Tax on winnings from lottery or crossword puzzle;

c. Section 194R- Tax on benefit or perquisite in respect of business or profession;

d. Section 194S- Tax on payment on transfer of virtual digital asset;

e. Section 194BA- Tax on winning from online games.

Then such person shall be punishable with rigorous imprisonment which shall not be less than 3 months but which may extend to 7 years and with fine.

Failure to pay the tax collected under the provisions of section 206C

Note: The provision of this section shall not apply if payment in respect of TCS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TCS statement in respect of such payment. (applicable w.e.f 01-04-2025)

Wilful attempt to evade tax, penalty or interest

Section 276C provides for punishment in the case of wilful attempt to evade tax, penalty or interest or under-reporting of income. As per section 276C if a person wilfully attempts to evade tax, penalty or interest or under-reports his income, then he shall be punished as follows:

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases.
Where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh till 30-6-2012), imprisonment could be for a period of not less than 6 months which may extend to 7 years and with fine.
In other cases imprisonment cannot be of less than 3 months, which may extend to 2 years (3 years upto 30-6-2012) and with fine.

Wilful failure to furnish return of income

Section 276CC provides for imprisonment in case of failure to file the return of income. Section 276CC is attracted for any of the following defaults by the taxpayer :

Failure to file the return of income as per section 139(1).
Failure to file the return of income in response to a notice issued under section 142(1)(i)or section 148or section 153A.

Punishment for the above failures shall be as under:

Rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
Rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases .
The taxpayer shall not be proceeded against under this section for failure to furnish in due time the return of income under section 139(1), if:

(a) the return is furnished by him before the expiry of the assessment year; or

(b) the tax payable by him (not being a company) on the total income determined on regular assessment, as reduced by advance tax and TDS, if any, does not exceed Rs. 10,000.

Note: With effect from Assessment Year 2022-23, no prosecution under this provision shall be launched for failure to furnish a return of income under section 139(1), if an updated return is furnished by the assessee within the time provided in Section 139(8A). [Amendment by the Finance Act, 2022]

Wilful failure to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A)

Section 276D provides for prosecution in the case of wilful failure by the taxpayer to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A). As per section 276D, if a person wilfully fails to produce accounts and documents as required in any notice issued under section 142(1) or wilfully fails to comply with a direction issued to him under section 142(2A), he shall be punishable with rigorous imprisonment for a term which may extend to one year and with fine.

False statement in verification or delivery of false account, etc.

Section 277 provides for prosecution for making false statement or producing false accounts / documents. If a taxpayer makes statement in any verification under the Act or under any rules made there under, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe it to be true, he shall be punishable as follows:

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases.

Falsification of books of account or document, etc., to enable any other person to evade any tax, penalty or interest chargeable/leviable under the Act

Section 277A provides for prosecution in the case of falsification of books of account or document etc. As per section 277A, if any person (hereafter referred to as the first person) wilfully and with an intent to enable any other person (hereafter referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under the Act, makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe it 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 the Act, then the first person shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years (3 years upto 30-6-2012) and with fine.

Abetment to make a false return, etc.

As per section 278 if a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe it to be true or to commit an offence under section 276C(1), he shall be punished as under:

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases.

Second and subsequent offences under sections 276B, 276C(1), 276CC, 277 or 278

The provisions of sections 276B, 276BB 276C(1), 276CC, 277 or 278 have already been discussed. Section 278A provides for prosecution in the case of second or subsequent offence under those sections. As per section 278A, a person shall be punishable with imprisonment for a period which shall not be less than 6 months but which may extend to 7 years and with fine.

Punishment in case of offence by a company

(*) For the purposes of this section:

(a) “company” means a body corporate, and includes :-

(i) a firm; and

(ii) an association of persons or a body of individuals whether incorporated or not; and

(b) “director” in relation to :-

(i) a firm, means a partner in the firm;

(ii) any association of persons or a body of individuals, means any member controlling the affairs thereof

Punishment in case of offence by Hindu Undivided Family

Disclosure of particulars by public servant

However, no prosecution shall be instituted against a public servant as discussed above except with the previous sanction of the Central Government.

No imprisonment in case of reasonable cause for failure

As per section 278AA no person is punishable for any failure under section 276A, section 276B and section 276BB if he proves that there was reasonable cause for such failure.

Initiating prosecution with the previous sanction of tax authorities

As per section 279, prosecution for offences under section 275A, section 275B, section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D, section 277, section 277A and section 278 are to be instituted with the previous sanction of Principal Commissioner or Commissioner or Commissioner (Appeals), The Principal Chief Commissioner or Chief Commissioner or, as the case may be, Principal Director General or Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub-section.

Immunity from prosecution

As per section 278AB, a person may apply to the Principal Commissioner or Commissioner for granting immunity from prosecution, if he has applied for settlement under section 245C and the proceedings have abated under section 245HA. However, the application for immunity shall not be made after institution of prosecution proceedings.

Other provisions relating to offences and prosecution

Provisions like compounding of offence, cognizable and non-cognizable offence, technical and non-technical offence, etc., are discussed separately under the topic “Offences and Prosecution”.

MCQ ON PROSECUTION AND PUNISHMENT UNDER THE INCOME-TAX LAW

Q1. If a person fails to pay to the credit of the Central Government the tax deducted by him (i.e., TDS) or (ii) the dividend distribution tax (DDT) as per section 115-O(2) then such person shall be punishable with rigorous imprisonment for a period of not less than 3 months which may extend to 1 year and with fine

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

If a person fails to:

(i) Pay to the credit of the Central Government, the tax deducted by him (i.e., TDS); or

(ii) Pay tax or ensure payment of tax to the credit of the Central Government, as required by or under:

a. Section 115-O(2)- dividend distribution tax (DDT);

b. Section 194B- Tax on winnings from lottery or crossword puzzle;

c. Section 194R- Tax on benefit or perquisite in respect of business or profession;

d. Section 194S- Tax on payment on transfer of virtual digital asset;

e. Section 194BA- Tax on winning from online games.

Then such person shall be punishable with rigorous imprisonment which shall not be less than 3 months but which may extend to 7 years and with fine. However, the provision of this section shall not apply if payment in respect to TDS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TDS statement in respect to such payment. (applicable w.e.f 01-10-2024)

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q2. As per section 206C, if a person fails to pay the tax collected by him to the credit of the Government, then as per section 276BB he shall be punished with rigorous imprisonment for a period of which shall not be less than 3 months but which may extend to 7 years and with fine.

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

section 206C governs the provisions relating to collection of tax at source. If a person fails to pay the tax collected by him to the credit of the Government, then as per section 276BB he shall be punished with rigorous imprisonment for a period which shall not be less than 3 months but which may extend to 7 years and with fine. Further, the provision of this section shall not apply if payment in respect of TCS has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TCS statement in respect of such payment. (applicable w.e.f 01-04-2025)

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q3. Section provides for punishment in the case of wilful attempt to evade tax, penalty or interest or under-reporting of income.

(a) 276B (b) 276C

Correct answer : (b)

Justification of correct answer :

Section 276C provides for punishment in the case of wilful attempt to evade tax, penalty or interest. As per section 276C if a person wilfully attempts to evade tax, penalty or interest, then he shall be punished as follows:

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases .

Thus, option (b) is the correct option.

Q4. Section _____ provides for imprisonment in case of failure to file the return of income.

(a) 276AA (b) 276BB

Correct answer : (c)

Justification of correct answer :

Section 276CC provides for imprisonment in case of failure to file the return of income. Section 276CC is attracted for any of the following defaults by the taxpayer:

Failure to file the return of income as per section 139(1).
Failure to file the return of income in response to a notice issued under section 142(1)(i)or section 148or section 153A.

Punishment for the above failures shall be as under:

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases .

Thus, option (c) is the correct option.

Q5. Section 276D provides for prosecution in the case of wilful failure by the taxpayer to produce accounts and documents under section 142(1).

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q6. Section 277 provides for prosecution in the case of falsification of books of account or document etc.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

Section 277A provides for prosecution in the case of falsification of books of account or document etc. As per section 277A, if any person (hereafter referred to as the first person) wilfully and with an intent to enable any other person (hereafter in this referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under the Act, makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe it 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 the Act, then he (the first person) shall be punished with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years (3 years upto 30-6-2012) and with fine.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q7. If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe it to be true or to commit an offence under section 276C(1), then he shall be punished under section 278

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).
With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases .

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q8. Section 278A provides for prosecution in the case of second or subsequent offence under sections 276B, 276C(1), 276CC, 277 or 278.

(a) True (b) False

Correct answer : (a)

Justification of correct answer :

Section 278A provides for prosecution in the case of second or subsequent offence under sections 276B, 276C(1), 276CC, 277 or 278. As per section 278A, a person shall be punished with rigorous imprisonment for a period of which shall not be less than 6 months but which may extend to 7 years and with fine.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q9. As per section 278B, where an offence under the Income-tax Act has been committed by a company, then the directors shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

As per section 278B, where an offence under the Income-tax Act has been committed by a company, then every person who, at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q10. No prosecution can be initiated against public servant for improper discloser of the information.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

However, no prosecution shall be instituted against a public servant as discussed above except with the previous sanction of the Central Government.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

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Prosecution for offences under Income Tax Act, 1961

Section

Nature of default

Penalty leviable

(1)

(2)

(3)

140A(3)

Failure to pay wholly or partly—

Such amount as Assessing Officer may impose but not exceeding tax in arrears

(a) self-assessment tax, or

(b) interest and fee, or

(c) both

under section 140A(1)

158BFA(2)

Determination of undisclosed income of block period

50 per cent of tax leviable in respect of undisclosed income

221(1)

Default in making payment of tax

Such amount as Assessing Officer may impose but not exceeding amount of tax in arrears

234E

Failure to file statement within time prescribed in section 200(3) or in proviso to section 206C(3)

Rs. 200 for every day during which failure continues but not exceeding tax deductible/collectible

234F

Default in furnishing return of income within time prescribed in section 139(1)

Rs. 5,000 if return is furnished after due date specified under section 139(1). However if the total income of the person does not exceed Rs. 5 lakhs then Rs. 1,000 shall be the late filing fees.

234G

Fee for default in submission of statement/certificate prescribed under section 35/ Section 80G

Rs. 200 per day

234H

Fee for default in intimating the Aadhaar Number

a) Rs. 500, if such intimation is made between 01-04-2022 and 30-06-2022; and

b) Rs. 1,000, in all other cases.

270A(1)

Under-reporting and misreporting of income

A sum equal to 50% of the amount of tax payable on under-reported income.

However, if under-reported income is in consequence of any misreporting thereof by any person, the penalty shall be equal to 200% of the amount of tax payable on under-reported income

271A

Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA

Rs. 25,000

271AA(1)

(1) Failure to keep and maintain information and documents required by section 92D(1) or 92D(2)

2% of value of each international transaction/or specified domestic transaction entered into

(2) Failure to report such transaction

(3) Maintaining or furnishing incorrect information or document

271AA(2)

Failure to furnish information and document as required under Section 92D(4)

Rs. 5,00,000/-

271AAA

Where search has been initiated before 1-7-2012 and undisclosed income found

10% of undisclosed income

271AAB(1)

Where search has been initiated on or after 1-7-2012 but before 15-12-2016 and undisclosed income found

(b) 20% of undisclosed income of the specified previous year if assessee does not admit the undisclosed income, and on or before the specified date declare such income in the return of income furnished for the specified previous year and pays the tax, together with interest thereon;

(c) 60% of undisclosed income of the specified previous year if it is not covered by (a) or (b) above

271AAB(1A)

Where search has been initiated on or after 15-12-2016 but before 01-09-2024 and undisclosed income found

(b) 60% of undisclosed income of the specified previous year in any other case.

271AAC

10% of tax payable under section 115BBE.

271AAD

Penalty, if during any proceedings under the Act, it is found that in the books of accounts maintained by assessee, there is:

a) A false entry; or

b) Any entry relevant for computation of total income of such person has been omitted to evade tax liability.

100% of such false entries or omitted entry.

271AAE

Penalty for violation of the provisions of 21st proviso to section 10(23C) or section 13(1)(c) pertaining to passing of unreasonable benefits to trustees or specified person

(a) For the first violation: to the extent of income applied by the institution for the benefit of any interested party referred to in section 13(3);

(b) For any violation in subsequent years: twice the amount of such income so applied (“double penalty”).

271B

Failure to get accounts audited or furnish a report of audit as required under section 44AB

One-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, which-ever is less

271BA

Failure to furnish a report from an accountant as required by section 92E

Rs. 1,00,000

271C

Amount equal to tax not deducted or paid

271CA

Failure to collect tax at source as required under Chapter XVII-BB

271FA¹

Failure to furnish an annual information return as required under section 285BA(1)²

271G³

Rs. 1,000 per day of failure, up to 3 months; or
Rs. 1,00,000 in any other case

271H⁴