Alignment of the provisions relating to Offences and Prosecutions under Chapter XXII of the Act
Sections 269UC/UE/UL along with other provisions of Chapter XX-C have been made inapplicable with effect from 01.07.2002. Vide Finance Act, 2002, section 269UP was introduced providing that the provisions of the Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after 01.07.2002. Consequently, prosecution provisions u/s 276AB are not relevant, as launching prosecution against offences committed more than twenty years ago, that is prior to 2002 would be beyond reasonable time.
2. Since such cases involve transfer of immovable property, it is not improbable that prosecution cases launched previously while the relevant provisions were still in effect might be ongoing. Therefore, in order to take those cases to logical conclusion without any interpretational issue arising on applicability of the section or otherwise, it is proposed to amend section 276AB to align it with the provisions of the Act that have been made inapplicable, by providing a sunset clause. Hence, it is proposed that no fresh prosecution proceeding shall be initiated under this section on or after 1st April, 2022.
3. Section 276B provides for prosecution for a term ranging from three months to seven years with fine for failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. Under this section, a person shall be punishable for failure to
a) deduct the tax as required under the provisions of Chapter XVII-B which deals with deduction of tax at source, or
b) to pay the tax, as required by or under––
(i) sub-section (2) of section 115-O or
(ii) the second proviso to section 194B.
Section 194B was amended vide Finance Act 1999 w.e.f. 01.04.2000 by which the first proviso to the section was omitted and the section currently has only one proviso. Therefore, to avoid ambiguity among the sections 276B and 194B, it is proposed to substitute the sub-clause (ii) of clause (b) of section 276B with “proviso to section 194B”.
Similar amendment is proposed in Section 271C.
4. Sections 278A and 278AA are related to punishment with prosecution against persons for failure to pay tax to the credit of Central Government under Chapter XVII-B for tax deducted at source. However, similar provisions for offence with respect to tax collected at source under Chapter XVII-BB, providing for punishment with prosecution against persons failing to pay tax collected at source is not there under sections 278A and 278AA.Therefore, it is proposed to include section 276BB under sections 278A and 278AA owing to the similar nature of offences that are punishable under section 276B and section 276BB.
5. These amendments will take effect from 1stApril, 2022.
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Note on Clauses 77,79, 80,, 82 and 83 of Finance Bill 2022
Clause 77 seeks to amend the section 271C of the Income-tax Act relating to penalty for failure to deduct tax at source. It provides for penalty for failure to credit tax deducted at source to the Central Government or the tax payable by him as required by or under the second proviso to section 194B.
The first proviso to section 194B was omitted by the Finance Act, 1999 with effect from the 1st day of April, 2000 and the said section currently has only one proviso.
To give consequential effect, it is proposed to omit the word “second” in sub-clause (ii) of clause (b) of sub-section (1) of the section.
This amendment will take effect from lst April, 2022.
Clause 79 seeks to amend section 276AB of the Income-tax Act relating to failure to comply with the provisions of sections 269UC, 269UE and 269UL.
It is proposed to insert a second proviso to the said section so as to provide that no proceeding under this section shall be initiated on or after the 1st day of April, 2022.
This amendment will take effect from 1st April, 2022.
Clause 80 seeks to amend section 276B of the Income-tax Act relating to failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
The first proviso to Section 194B was omitted vide the Finance Act, 1999 with effect from the 1st April, 2000 and the section currently has only one proviso.
It is proposed to omit the word “second” in the said section 276B. This amendment will take effect from 1st April, 2022.
Clause 82 seeks to amend the section 278A of the Income-tax Act relating to punishment for second and subsequent offences.
Section 276B provides for prosecution for failure to credit tax deducted at source to the Central Government and section 276BB provides for prosecution for failure to credit tax collected at source to the Central Government.
It is proposed to amend the said section 278A so as to bring section 276BB within the purview of said section.
This amendment will take effect from 1st April, 2022.
Clause 83 seeks to amend section 278AA of the Income-tax Act relating to punishment not to be imposed the certain cases.
Section 276B provides for prosecution for failure to credit tax deducted at source to the Central Government and section 276BB provides for prosecution for failure to credit tax collected at source to the Central Government.
It is proposed to amend the said section 278AA so as to bring section 276BB also within the purview of said section.
This amendment will take effect from 1st April, 2022.
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Extract of Clauses 77,79, 80,, 82 and 83 of Finance Bill 2022
77. Amendment of section 271C.
In section 271C of the Income-tax Act, in sub-section (1), in clause (b), in sub-clause (ii), the word “second” shall be omitted.
79. Amendment of section 276AB.
In section 276AB of the Income-tax Act, after the proviso, the following proviso shall be inserted, namely:––
“Provided further that no proceeding under this section shall be initiated on or after the 1st day of April, 2022.”.
80. Amendment of section 276B.
In section 276B of the Income-tax Act, in clause (b), in sub-clause (ii), the word “second” shall be omitted.
82. Amendment of section 278A.
In section 278A of the Income-tax Act, after the word, figures and letter “section 276B”, the words, figures and letters “or section 276BB” shall be inserted.
83. Amendment of section 278AA.
In section 278AA of the Income-tax Act, after the words, figures and letter “or section 276B”, the words, figures and letters “or section 276BB” shall be inserted.
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