Section 276b of the income tax act, 1961, providing for the prosecution provision in case of default in payment of tds under chapter xviib and chapter xiid, was inserted by the finance act, 1968, for the first time by the legislature. Prosecution under section 276b name appearing in traces. Sanction for prosecution of offences under chapter xii of the. Imposition of interests 234 a,b,c 2011a, 2202 imposition of penalties 270a 275 prosecutions 275a 280d the idea of undergoing imprisonment if convicted of offences can be a strong deterrent from brazen tax evasion and non compliance. As per rules, all sums deducted as income tax shall be paid to the. Prosecution norms eased for tds, income tax return filing. Taxmen slap prosecution notice on jet airways for tds. Mar 12, 2015 as per the rule, retention of the government dues beyond the scheduled payment date is an offence liable for prosecution under section 276b of the income tax act, 1961 and the defaulter, if convicted, can be sentenced to rigorous imprisonment for up to seven years.
The long and short form of the matter is, the whole process of granting a sanction in case of prosecution against a defaulter must be done very carefully taking into account every single matter of relevance and ousting every other irrelevant matters this can be found in the example of the supreme court s. Tds prosecution all you want to know complete tax solution. With effect from assessment year 202021, the finance no. Failure to deduct or pay tax prior to 01041989 failure to pay tax deducted at source under chapter xviib 01041989 to 30051997 failure to pay tds under chapter xviib or tax payable u s 115o or 2 nd proviso to sec 194b to the credit of c. Section 276b prosecution for delay in payment of tds. Standard operating procedure for prosecution in cases of. The section provides that the defaulter shall be punishable with rigorous imprisonment for a term that could be anything between three months to seen years. Failure to deduct or pay tax prior to 01041989 failure to pay tax deducted at source under chapter xviib 01041989 to 30051997 failure to pay tds under chapter xviib or tax payable us 115o or 2 nd proviso to sec 194b to the credit of c. The complaint for prosecution was filed before the criminal court ten years before the filing of the application for compounding by the taxpayer. Feb 03, 2015 ii cases, where the tax deducted is between rs. Subsection 2 of section 279 gives powers to the chief commissioner of income taxes or the director general to compound offences under chapter 22 of the income tax act, 1961. Income tax act 1961 rw rule 30 of the income tax rules, 1962 by failing without reasonable cause or excuse to pay the income tax so deducted to the credit of central government and said default amounts to an offence punishable u s. Cbdt guidelines for compounding of offences under direct. Penalty us 272a2k of the act is attracted to the late filing of tds returns.
Such retention of government dues beyond the due date is an offence liable for prosecution under section 276b of the income tax act, 1961. Jan 31, 2014 if the assessee fails to furnish return of income as mandated u s 91 and proviso to the same by the end of the relevant assessment year, the assessing officer could impose financial penalty of rs. Section 276b of the income tax act, 1961 lays down that if a person fails to pay to. Section 276b failure to pay tax to the credit of the. Cbdt lays down procedure for identification and processing of. Cbdt circulars on prosecution of offenses and compounding. Cbdt circulars on prosecution of offenses and compounding of. Prosecution us 276b is not controlled either by section. The income tax act, 1961 the act seeks to enforce tax compliance in a three fold manner. Jun 01, 2019 income tax act 1961 rw rule 30 of the income tax rules, 1962 by failing without reasonable cause or excuse to pay the income tax so deducted to the credit of central government and said default amounts to an offence punishable u s. No penalty or prosecution shall be made or launched against the assessee for. Prosecution under income tax act background section offence punishment 276a failure to comply with provisions of sections 1781or section 1783 by liquidator ofa company. Jul 09, 2014 consequences of noncompliance with tds provisions expenditure claimed disallowed as per section 40aia of the it act, the following expenditure will be disallowed from computation of business income of the deductor, if tds is not made or tax deducted has not been paid on or before the due date for filing return of income. Download cbdt guidelines for compounding of offences under.
Any application for compounding of offence us 276b276bb of the. Query on prosecution us 276b of it act, 1961 income tax. Tax audit report us 44ab of income tax act, 1961 1. Income tax department issues show cause notices for prosecution us 276b of the income tax act. Section 17, incometax act, 1961 2015 salary, perquisite and profits in lieu of salary defined. Cbdt lays down procedure for identification and processing. In the recent past it is observed that income tax department is issuing show cause notices for launching prosecution us 276b of the income tax act. Prosecution has been launched even in cases where amount of default is low and period of default is of few days.
Levy us 234e of the income tax act, 1961 is a statutory levy and cannot be waived. Unpaid taxes us 115o sub section 2 and 194b second proviso the penalties when section 276b is invoked includes a fine as well as rigorous imprisonment between 3 months to 7 years. Deposit of tds with interest beyond stipulated period is not an alibi. No time limit prescribed by cbdt for filing of compounding. Cbdt guidelines for compounding of offences under direct tax. Income tax challan for paying compounding fee us 276b. For understanding the overall concept of income tax law in india, one should have to know the title or contents topics covered under sections 1 to 298 of income tax act, 1961 as amended by the. Prosecution and punishment under income tax enterslice. Incometax act, 1961 the act with the principal chief commissioner of incometax principal ccit. Prosecution us 276b of the act failure to pay tax to the credit of central government under chapter xiid or xviib involves rigorous imprisonment which shall not be less than 3 years but which may extend up to 7 years and with fine. Avoid last minute hassle of arranging rent receipts for claiming hra exemption us 10a of income tax act, 1961. Income tax challan for paying compounding fee us 276b abcaus.
As per the rule, retention of the government dues beyond the scheduled payment date is an offence liable for prosecution under section 276b of the income tax act, 1961 and the defaulter, if convicted, can be sentenced to rigorous imprisonment for up to seven years. Prosecution us 276b for defaults of tds caclubindia. All cases where tds is deducted but not deposited within the due date, are punishable us 276b276bb. Prosecution under section 276b name appearing in traces module would not make accountant a director or principal officer us 2 35 of income tax act. C 68252016 2 the competent authority shall pass the compounding order within 30 days.
Fails to set aside the amount specified u s 1783 3. Section 276b of the income tax act, 1961 provides for the prosecution of a person for defaults in payments related to tax deducted at source. Prosecution us 276b of the incometax act, 1961 need of. The defaulter, if convicted, can be sentenced to rigorous imprisonment ri for a term which can extend upto seven years. Income tax department issues over 850 prosecution notices cbdt chairman sushil chandra had recently written to the field offices of the department to step up action and check tds defaults by firms and employers. Prosecution u s 276b set aside as intention of company was to deposit tds, but due to bad financial condition the same was not deposited in time but later on. Aug 06, 20 such retention of government dues beyond the due date is an offence liable for prosecution under section 276b of the income tax act, 1961. The section 276b of the income tax act, 1961 deals with failure to pay taxes to the central government. Complete list of sections of income tax act, 19612019 aubsp. With a view to mitigate unintended hardship to taxpayers in deserving cases, and to reduce the pendency of existing prosecution cases before the courts, the cbdt in exercise of powers u s 119 of the income tax act, 1961 the act read with explanation below subsection 3 of section 279 of the act issues this circular. Jun 06, 2018 prosecution under section 276b name appearing in traces module would not make accountant a director or principal officer us 2 35 of income tax act. This was because section 276b provides for prosecution for a period between three months and seven years, irrespective of the period of delay. Failure to pay tax to the credit of central government under chapter xiid or xviib. Procedure in prosecution proceedings under income tax act.
Cases where nonpayment of tax deducted at source is rs. To invoke section 276b mere fact that accused was working in accounts department would not mean that he automatically becomes person liable for tds deposit default. Such notices are issued for defaults in payment of tds. In order to ensure correct payment of income tax by the commoners in india ruling out the chances of tax evasion, the income tax act, 1961 has certain structured sections, namely 275a, 275b, 276, 276a, 276b, 276bb, 276c, 276cc, 276d, 277, 277a or 278, which allows the income tax authorities to impose penalties or even exercise prosecution.
Income tax act section 276b judgments legalcrystal. Prosecution us 276b set aside as intention of company was to deposit tds, but due to bad financial condition the same was not deposited in time but later on. Aug 22, 2018 tax audit report us 44ab of income tax act, 1961 1. Cbdt issued procedure for identification and processing of. Apr 27, 2018 section 276b of the income tax act, 1961, providing for the prosecution provision in case of default in payment of tds under chapter xviib and chapter xiid, was inserted by the finance act, 1968, for the first time by the legislature. Standard operating procedure for prosecution in cases of tds. Notices from income tax department and how to deal with it. The assessee can be charged with interest and also punished by prosecution. In the recent past it is observed that income tax department is issuing show cause notices for launching prosecution u s 276b of the income tax act. These provisions, inter alia, deal with the constitution of special courts for conducting prosecution proceedings under the income tax. With a view to mitigate unintended hardship to taxpayers in deserving cases, and to reduce the pendency of existing prosecution cases before the courts, the cbdt in exercise of powers us 119 of the incometax act, 1961 the act read with explanation below subsection 3 of section 279 of the act issues this circular. Jan 28, 2018 this was clearly not the legislative intent behind insertion of prosecution provisions in the income tax act, 1961. Income tax act, 1961 latest guidelines sbs and co llp. Aug 07, 20 such retention of government dues beyond the due date is an offence liable for prosecution under section 276b of the income tax act, 1961.
If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this act, be punishable. As per incometax, interest is payable under the following two. If a person fails to pay to the credit of the central government within the prescribed time. The income tax department has issued over 850 prosecution notices to firms in the private and government domain in karnataka and goa on charges of delay in remitting tds funds to the exchequer.
All about compounding of offences under the income tax act. Sanction for prosecution of offences under chapter xii of. Sections 280a, 280b, 280c and 280d have been introduced by the finance act, 2012 w. This waiver for prosecution is termed as compounding of offences.
Any person wilfully failing to furnish return of income u s. The author is a senior litigator with 30 years of experience in court trials and deals with cases relating to prosecution under the income tax act, 1961, the black money undisclosed foreign income and assets and imposition of tax act, 2015, money laundering act, economic offences and white collar crimes. Dec 26, 2014 even before issue of this circular, in faridabad large number of tax deductors have received notice for penalty us 2211 and 276 b for financial years 200809 onward for nominal late payment of tds for which interest us 2011a was paid before filing of tds returns. Cases where the sanction of prosecution under income tax act was declared perverse. Unpaid taxes u s 115o sub section 2 and 194b second proviso the penalties when section 276b is invoked includes a fine as well as rigorous imprisonment between 3 months to 7 years. The text of section 276b as inserted by the finance act, 1968 is reproduced as under. Tds provisions income tax act, 1961 linkedin slideshare. If the assessee fails to furnish return of income as mandated us 91 and proviso to the same by the end of the relevant assessment year, the assessing officer could impose financial penalty of rs. Steps for filing rectification request on receipt of demand notice due to mismatch of income tax.
A complete guide on tax deducted at source tds hostbooks. Further, in addition to advancetax and tds, the selfassessment tax and tcs shall also be considered while determining the tax payable on the total income. It is a perquisite provided to the employee by the employer where in the employer pays for the expenditure actually incurred by the employee for purposes such as medical treatment of the employee or any of his family member, travel and stay abroad of one attendant who accompanies the patient in connection with such treatment. It can be done either before or after the initiation of prosecution proceedings. More fatal than any interest or penalty provisions, nondeductibility of tax at source on certain expenses will not allow you to claim such expenses in computing your business income. Sep 09, 2019 prosecution u s 276b set aside as intention of company was to deposit tds, but due to bad financial condition the same was not deposited in time but later on. These provisions deal with the procedure in prosecution proceedings under the income tax act, 1961. Acmmtrial court u s 276b of the income tax act, 1961. Prosecution 29 section nature of default prosecution 276b failure to pay tax deducted at source punishable with rigorous imprisonment for minimum 3 months. Prosecution and penalties under income tax act, 1961.
Income tax act 1961 rw rule 30 of the income tax rules, 1962 by failing without reasonable cause or excuse to pay the income tax so deducted to the credit of central government and said default amounts to an offence punishable us. Prosecution under section 276b name appearing in traces module. The long and short form of the matter is, the whole process of granting a sanction in case of prosecution against a defaulter must be done very carefully taking into account every single matter of relevance and ousting every other irrelevant matters this can be found in the example of the. Interest on late deduction deposit of tax at source. The central board of direct taxes has been issuing guidelines from time to time for streamlining the procedure of identifying and examining the cases for initiating prosecution for offences under direct tax laws. Prosecution us 276b set aside, intention of company was. Deposit of tds with interest beyond stipulated period is not an. Section 276b of the income tax act, 1961, deals with the cases wherein individuals have.
Section 276b invariably provides for prosecution for delay in. Procedure for identification and processing of cases for prosecution under direct tax lawsreg. Section 197 of the income tax act, 1961 provides for the facility of nil or lower tax rate deduction of tds or tds exemption. This was clearly not the legislative intent behind insertion of prosecution provisions in the income tax act, 1961.
All air prevention and control of pollution act, 1981 apprentices act, 1961 arbitration and conciliation act, 1996 banking cash transaction tax black money undisclosed foreign income and assets and imposition of tax act, 2015 central boards of revenue act, 1963 charitable and religious trusts act, 1920 charitable endowments act, 1890. Noncompliance of tds might discontinue your business. Prosecution us 276b set aside, intention of company was to. A senior official said notices where the tax department files court cases for default in tax deducted at source tds payments have been issued to. Further, in addition to advance tax and tds, the selfassessment tax and tcs shall also be considered while determining the tax payable on the total income. Surprisingly and shockingly, the current legal provisions and the cbdt guidelines, w. Belated filing of tds under section 276 b of the income tax act, 1961. Partswith any of the properties of the company in contravention of section 1783. May 23, 2016 sections 280a, 280b, 280c and 280d have been introduced by the finance act, 2012 w. Section 276b failure to pay tax to the credit of central government. Applicability of these guidelincs to prosecutions under ipc prosecution. Prosecution has been launched against the petitioners by the income tax department for the alleged offences punishable under sections 276b read with section 278b of the income tax act, 1961 hereinafter referred to as the act. Income tax act 1961 section 276b judgments legalcrystal.
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