Income Tax Grievance Redressal Mechanism – Section 276B

Learn about the Income Tax Grievance Redressal Mechanism under Section 276B of the Income Tax Act 1961, including its provisions, penalties, and implications for taxpayers in India.

Grievance Redressal Mechanism under Chapter XII-D or XVII-B section 276B of Income Tax Act 1961

Failure to pay tax to the credit of Central Government is an offence under chapter XII-D or XVII-B section 276B of Income Tax Act, 1961. It is a serious offence in India and can subject a taxpayer to prosecution. The said offences are punishable under various provisions of the act including fines, imprisonment, etc.

The purpose of the article is to analyse section 276b of the Income Tax Act of 1961 in order to determine the liability of taxpayers for failure to pay or deposit taxes to the credit of Central Government. This article will cover the legal provisions applicable in each case, the applicable penalties, and their implications.

Definitions

The following definitions are important in order to understand the subject of this article:

1. Tax: As per the Income Tax Act, “tax” includes any tax, fee, rate, impost, duty, cess or other charge (including capital gains tax) levied under the Act.

2. Taxpayer: This term includes any person (natural or artificial) who is liable to pay tax under the Act.

3. Central Government: This term includes both the Central Government and any local authority constituted by general or special law.

Provisions of Section 276B

Section 276B of the Income Tax Act 1961 provides that if any person, having invested or deposited money to the credit of Central Government, fails to pay or deposit the money so invested or deposited, then he or she shall, without prejudice to any other liability which he or she may have, be liable for prosecution and may be punished with a fine which may extend to a sum equal to three times the amount of the money so invested or deposited and in case of a continuing offence shall also be liable for a penalty for every day during which the offence continues.

It further provides that the offence shall be deemed, for the purposes of this section, to have been committed before the expiration of the period specified in any notice, if such notice was served on the person committing the offence and such person had failed to comply with such notice. Section 276B also allows the Central Government to extend, by notification in the official Gazette, the period of payment of any sum referred to in the section.

Liability of Taxpayer

Taxpayers who fail to pay or deposit their taxes to the credit of Central Government are liable under section 276B of the Income Tax Act. Any person who fails to pay the taxes after being served a notice by the Central Government is deemed to have committed the offence and shall be liable for prosecution.

Penalties for Failure to Pay Taxes

The penalty for failure to pay or deposit taxes to the credit of Central Government is as provided under section 276B of the Income Tax Act. As per this section, the offender shall be liable to pay a fine up to an amount equal to three times the amount of the money so invested or deposited. Further, if the offence continues to exist, he or she shall also be liable to pay a penalty for every day during which the offence continues.

Apart from the fine, in case of conviction of the offence, the court may also order the confiscation of any property or money owned by the offender. Moreover, if the fine imposed under the section is not paid, then the offender shall also be liable for imprisonment which shall not be less than three months for the first offence and shall extend up to three years for a repeated offence.

Implications

The implications of the provisions of Section 276B of the Income Tax Act are serious and have far-reaching consequences. A taxpayer can be booked for prosecution if he or she fails to pay or deposit a significant amount of tax to the credit of Central Government. This can be a major setback for the offender, as prosecution cases are complex and can involve a drawn-out process.

The penalties prescribed under section 276B make it an offence which should not be taken lightly. The offender can be subjected to a fine as well as confiscation of his property or money. Further, he can also be imprisoned for failure to pay the fine imposed by the court.

Grievance Redressal Mechanism under Chapter XII–D or XVII–B section 276B of Income Tax Act, 1961 is an important mechanism provided by law to the taxpayers in India for addressing their grievances or disputes related to any tax matter. It is a two–tier system which consists of an Internal and an External jurisdiction. The Internal jurisdiction of the I–T department comes under the Central Board of Direct Taxes (CBDT). The CBDT has set up local I–T offices with designated officers empowered to address grievances of the taxpayers who can approach these offices in person or through any other mode prescribed by the Act.

The External jurisdiction of IT department is the Income Tax Appellate Tribunal or ITAT, which is the highest level of appeal under the I–T Act. The ITAT is empowered to hear appeals against any order passed by any body or authority in the matter of income tax including the local I–T offices. The grievance redressal mechanism provided by the Income Tax Act has proven to be quite effective in ensuring quick and smooth resolution of tax disputes. This mechanism is especially beneficial for taxpayers who are unable to approach their jurisdictional I–T office in person and requires a faster response than is possible under the Internal jurisdiction.

The Grievance Redressal Mechanism provides the taxpayers with a fair and transparent platform to present their case before the ITAT. It also grants the taxpayers the right to appeal and stay any order passed by any authority or body in connection with the taxpayer’s tax matter until the matters are disposed of by the ITAT. Thus, the Grievance Redressal Mechanism under Chapter XII–D or XVII–B section 276B of Income Tax Act provides an efficient and effective platform to the taxpayers to address their grievances and resolve tax disputes in the most ease.

Conclusion

Overall, the liability of taxpayers under section 276B of the Income Tax Act is significant. Hence, taxpayers must take due care and caution while depositing taxes to the credit of Central Government so as to avoid any liability under the said section. Moreover, in case of any failure to pay or deposit taxes as required, the taxpayers should contact the tax administrator to avoid or reduce the penalty or any other adverse legal action which may follow from non-compliance with the statutory provisions.