Section 276CC of Income tax Act provides for period of rigorous imprisonment and fine in case of willful failure to file return of income under section 139/148/153A or in response to Notice u/s 142(1). The Prosecution is as follows –
1. If amount of tax sought to be evaded is Rs 25 Lakh or less :
2. If amount of tax sought to be evaded is more than Rs 25 Lakh :
No Limit for Quantum of fine specified.
Section 139(1) provides for Obligation to file return of Income for Every person (a) being a company or a firm or (b) being a person other than company or a firm, if his total income exceeded the maximum amount which is not chargeable to tax.
Maximum amount which is not chargeable to tax as provided by Finance Act 2018 in case of Individuals are as follows :
1. In case of Individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the Previous year : Rs 3,00,000
2. In case of Individual, being a resident in India, who is of the age 80 years or more at any time during the previous year: Rs 5,00,000
3. In case of Individuals other than referred above or in case of HUF : Rs 2,50,000
Sixth Proviso to Section 139(1) provides that the above Total Income shall be Calculated before giving effect to the Provisions of Chapter VI-A i.e. Section 80C to 80U
For example: If an Individual has Salary Income of Rs 3,50,000 and Deduction u/s 80C of Rs 1,50,000, the Total Income will be Rs 2,00,000 but still as per sixth proviso to Section 139(1) his total Income will be considered without giving effect to Section 80C 1,50,000 deduction and he will be required to file return of income.
Time limit to file return of Income u/s 139(1) are –
Section 142(1): if the assessee has not furnished the return of income within the time prescribed u/s 139(1), then the Assessing Officer may issue a Notice requiring him to furnish the return of Income within the time specified in the notice.
Section 148 provides for Notice to file return of Income where Income has escaped assessment under section 147
Section 153A provides for Notice to furnish return of income for assessment in case of Search.
Now, Prosecution for failure to file return of income will be there as under :
♦ Failure to file Return of Income (ROI) within time allowed in a notice under section 142(1)/148/153A
♦ Failure to file ROI within the time allowed under section 139(1),
In order to prevent abuse of the said section by shell companies, the provisions are amended by Finance Act 2018 to prosecute companies for not filing return of income even if there is no tax payable.
Section 139(4) : If a person has not furnished return of Income within the time allowed under section 139(1) then he may furnish the return of income at any time before the end of the relevant assessment Year.
Therefore, For Previous Year 2017-18, the assessment year will be 2018-19 and the return can be filed upto 31.03.2019 in order to avoid Prosecution u/s 276CC.
But filing return beyond the time limit prescribed u/s 139(1) shall attract the late fees provided under section 234F.
Section 234F : Fee for Default in furnishing Return of Income
Proviso: If Total Income of the person does not exceed Rs 5 Lakh, the Fee payable under the section shall not exceed Rs 1,000.