The Income Tax Act, 1961, mandates prosecution for several severe non-compliance and fraudulent activities, primarily involving rigorous imprisonment and fines. Offences related to cooperation with tax authorities include: Section 275A (failing to comply with an order not to deal with seized goods); Section 275B (failing to provide inspection facility during search); and Section 276D (wilful failure to produce accounts or undergo special audit). All these carry imprisonment up to 2 years, with Section 276D limited to 1 year. Furthermore, Section 276 targets individuals who fraudulently conceal or transfer property to prevent tax recovery. For company liquidators, Section 276A (proceedings barred after 01-04-2023) penalizes failure to notify the Assessing Officer or set aside tax demand funds, with minimum imprisonment of 6 months up to 2 years.
The most serious offences center on evasion and collection failures. Section 276C(1) criminalizes wilful attempts to evade tax or under-report income, including using false entries in books, while Section 276C(2) targets wilful attempts to evade payment of tax, penalty, or interest. These carry imprisonment up to 7 years when the evaded amount exceeds Rs. 25 lakh, or up to 2 years otherwise. Failure to deduct or pay TDS/TCS is covered by Section 276B and Section 276BB, respectively, both punishable with minimum imprisonment of 3 months up to 7 years; however, prosecution may be avoided if the due tax is remitted to the government before the time prescribed for filing the relevant quarterly statement. Additionally, non-filing of the return of income is penalized under Section 276CC, with imprisonment terms ranging from 3 months to 7 years, though minor cases (tax payable under Rs. 10,000 for non-companies) are generally exempt. Finally, making a false statement or verification (Section 277), making a false entry to enable another person to evade tax (Section 277A), or abetting evasion (Section 278) all attract penalties similar to those for tax evasion, confirming the Act’s comprehensive scope in prosecuting non-compliance and fraud.
Q.1 When prosecution under Section 275A may be launched?
Ans. Prosecution under Section 275A may be launched if a person fails to comply with the order of the authorities to not deal with the goods that are impracticable to be seized.
Q.2 What is the punishment and fine for the offence under section 275A?
Ans. Such offence shall be punishable with rigorous imprisonment which may extend to 2 years and shall also be liable to fine.
Q.3 When prosecution under Section 275B shall be launched?
Ans. Prosecution under Section 275B shall be launched if a person fails to provide the facility to the authorised officer to inspect any books of accounts or other documents during the search and seizure.
Q.4 What is the punishment and fine for the offence under section 275B?
Ans. Such offence shall be punishable with rigorous imprisonment which may extend to 2 years and shall also be liable to fine.
Q.5 When prosecution under Section 276 shall be launched?
Ans. Prosecution under Section 276 shall be launched if a person fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, to prevent the recovery of tax.
Q.6 When prosecution under Section 276A can be launched?
Ans. Prosecution under Section 276A can be launched where any person, appointed as liquidator of a company, has committed any of the following defaults:
a. He fails to give notice of his appointment within 30 days to the Assessing Officer having jurisdiction over such company;
b. He fails to set aside the amount, notified to him by the Assessing Officer, to meet the tax demand;
c. He parts with any of the assets of the company or properties in hand, until the amount to be set aside, is notified by the Assessing officer, without the prior approval of the prescribed tax authority; or
d. He parts with any of the assets of the company or properties in hand until the amount of tax demand notified by the Assessing Officer is set aside.
No proceedings shall be initiated under this provision on or after 01-04-2023.
Q.7 What is the punishment and fine for the offence under section 276A?
Ans. Such offence shall be punishable with rigorous imprisonment which may extend to 2 years. In the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be less than 6 months.
Q.8. When penalty under Section 276B shall be imposed?
Ans. Prosecution under Section 276B shall be launched if any of the following defaults are committed:
a. Failure to deduct tax at source (whole or partly);
b. Failure to pay dividend distribution tax;
c. Failure to pay or ensure payment of tax in respect of the winnings in kind, whether wholly or partly, where the cash part is not sufficient to meet the liability for deduction of tax in respect of whole winnings as referred to in Section 194B;
d. Failure to ensure payment of tax in respect of the winnings from the online game in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of whole winnings from online games as referred to in Section 194BA;
e. Failure to ensure payment of tax in respect of the benefit or perquisite in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of the whole of such benefit or perquisite as referred to in Section 194R;
f. Failure to ensure payment of tax in respect of the consideration for transfer of virtual digital asset (VDA) in kind, whether wholly or partly, where cash part is not sufficient to meet the liability for deduction of tax in respect of such consideration for the transfer of VDA as referred to in Section 194S.
Note 1: No prosecution shall be launched if the payment of tax deducted in respect of a quarter has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TDS statement of such quarter (w.e.f 01-10-2024).
Note 2: No prosecution shall be launched if the payment of tax collected in respect of a quarter has been made to the credit of the Central Government at any time on or before the time prescribed for filing the TCS statement of such quarter (w.e.f 01-04-2025).
Q.9 What is the punishment and fine for the offence under section 276B?
Ans. Such person shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.
However, if any person is convicted again of a similar offence under this provision, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
Q.10 When prosecution under Section 276BB shall be launched?
Ans. Prosecution under Section 276BB shall be launched on a person who after collecting tax at source under section 206C, fails to pay the same (either whole or any part of it) to the credit of the Central Government. However, this section doesn’t apply if the tax collected at source is paid to the Central Government on or before the due date for filing the TCS statement related such tax collected.
Q.11 When prosecution under Section 276C(1) shall be launched?
Ans. Prosecution under Section 276C(1) shall be launched where a person wilfully attempts to evade any tax, penalty or interest chargeable or imposable under this Act or under-reports his income.
Q.12 What is the meaning of a wilful attempt to evade tax?
Ans. Wilful attempt to evade tax, penalty or interest chargeable or imposable or payment thereof shall include the following:
a. Where any person has in his possession or controls any books of account or other documents (relevant to any proceedings under this Act) containing any false entry or statement;
b. Where any person makes or causes to be made any false entry or statement in such books of account or other documents;
c. Where any person wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or
d. Where any person causes any other circumstances to exist which have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.
Q.13 When prosecution under Section 276C(2) shall be launched?
Ans. Prosecution under Section 276C(2) shall be launched where a person wilfully attempts to evade payment of tax, penalty or interest chargeable or imposable under this Act.
Q.14 What is the punishment and fine for the offence under section 276C(2)?
Ans. Such 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 and with fine.
Q.15 When prosecution under Section 276CC shall be launched?
Ans. Prosecution under Section 276CC shall be launched if a person fails to furnish the return of income under the following provisions:
a. In accordance with Section 139(1);
b. In response to a notice issued under Section 142(1)(i);
c. In response to a notice issued under Section 148 for re-assessment; or
d. In response to a notice issued under Section 153A for assessment in case of search.
Q. 16 When prosecution under section 276CC shall not be launched?
Ans. No prosecution under this provision shall be launched for failure to furnish return of income under section 139(1), if:
a. The return is furnished by the assessee before the expiry of the assessment year or an updated return is furnished within 48 months from the end of the relevant assessment year; 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 or self-assessment tax paid before the expiry of the assessment year or tax deducted or tax collected at source, does not exceed Rs. 10,000.
Q.17 What is the punishment and fine for the offence under section 276CC?
Ans. a. Rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine, where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds Rs. 25,00,000;
b. With imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine, in any other case.
If any person is convicted again of the similar offence under this provision, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
Q.18 When prosecution under Section 276CCC shall be launched?
Ans. Prosecution under Section 276CCC shall be launched where a person wilfully fails to furnish in due time return of total income which he is required to furnish by notice given under section 158BC(a).
However, no prosecution is launched under this provision where the search is initiated under Section 132 or books of account, other documents or assets are requisitioned under section 132A after 31-05-2003. In such a case, on failure to furnish a return of income in response to a notice issued by the assessing officer, the prosecution shall be launched under Section 276CC.
Q.19 What is the punishment and fine for the offence under section 276CCC?
Ans. Such person shall be punishable with imprisonment for a term which shall not be less than 3 months but which may extend to 3 years and with fine.
Q.20 When prosecution under Section 276D shall be launched?
Ans. Prosecution under Section 276D shall be launched if a person commits any of the following defaults:
1. Willful failure to produce or causes to be produced such accounts and documents as required in a notice issued by the Assessing Officer under Section 142(1); or
2. Willful failure to get the accounts audited or inventory valued on the directions issued by the assessing officer for special audit or inventory valuation under Section 142(2A).
Q.21 What is the punishment and fine for the offence under section 276D?
Ans. Such person shall be punishable with rigorous imprisonment for a term which may extend to 1 year and with a fine.
Q.22 When prosecution under Section 277 shall be launched?
Ans. Prosecution under Section 277 shall be launched if a person makes a statement in any verification under this Act, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true.
Q.23 What is the punishment and fine for the offence under section 277?
Ans. a. With rigorous imprisonment for a term which cannot be less than 6 months but which may extend to 7 years and with fine, where the amount of tax, that would have been evaded if the statement or account had been accepted as true, exceeds Rs. 25,00,000;
b. With rigorous imprisonment which shall not be less than 3 months but which may extend up to 2 years and with fine, in any other case.
If any person is convicted again of a similar offence under this provision, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
Q.24 When prosecution under Section 277A shall be launched?
Ans. Prosecution under Section 277A shall be launched if the following conditions are satisfied:
a. A person makes or causes to make any entry or statement;
b. Such entry or statement is false or he either knew it to be false or does not believe it to be true;
c. Such entry or statement is found in any books of account or document relevant to or useful in any proceeding under the Act against him or any other person;
d. The entry or statement is made wilfully and with intent; and
e. Such entry or statement enables any other person (‘the other person’) to evade any tax or interest or penalty chargeable or imposable under the Act.
Q.25 When prosecution under Section 278 shall be launched?
Ans. Prosecution under Section 278 shall be launched if a person commits any of the following defaults:
a. Abets or induces another person to make and deliver an account or a statement or declaration, relating to any income which is chargeable to tax, which is false and which he either knows to be false or does not believe to be true; or
b. Abets or induces another person to evade any tax, penalty or interest chargeable or imposable or to under-report his income under this Act as referred under Section 276C(1).
Q.26 What is the punishment and fine for the offence under section 278?
Ans. a. With rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine, if the amount of tax, penalty or interest that would have been evaded exceeds Rs 25 lakhs, if such declaration or account or statement had been accepted as true;
b. With rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine, in any other case.
If any person is convicted again of a similar offence under this provision, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
Q.27 When prosecution under Section 280 shall be launched?
Ans. Section 138(2) provides that the Central Government may direct that certain information or document may be furnished or produced by a public servant to the specified authorities.
Prosecution under Section 280 shall be launched where a public servant furnishes or produces (before any person or authority) any such document or record or any information or computerised data or part thereof as comes into his possession during the discharge of official duties in contravention of the provisions of Section 138(2). To initiate prosecution under this provision, the prior approval of the Central Government shall be required.
Q.28 What is the punishment and fine for the offence under section 280?
Ans. Such person shall be punishable with imprisonment which may extend to 6 months and shall also be liable to fine.
(Republished with amendments)
