Penalty and Prosecution

Taxation and Revenue laws in India are highly regulated, complex and require strict compliance of various provisions thereunder. Failure to so comply or infringement thereof can result in significant monetary fines/penalties, administrative action (eg. search, seizures and surveys under the Income Tax Act 1961) and prosecution for serious offences.

MinusTax’ Taxation, Revenue and Company law professionals provide the complete spectrum of services (including via the e-medium i.e. email, skype, whatsapp etc) which include —

  • Legal Assessment of Penalty Notice/Prosecution Complaint etc.
  • Drafting Penalty Notice Reply/Objections
  • Legal Representation and Prosecution Defence before MM/Special (Criminal) Courts
  • Drafting Appeal against Penalty Order before CIT(A)
  • Drafting Stay Application against Demand Notice and other miscellaneous applications
  • Writ Remedies and Legal Representation before jurisdictional High Court


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Penalty Notice

The Income Tax Act 1961 (the Act) contains various provisions, the infringement of which may result in the imposition of different types of penalties. However, in accordance with the principles of natural justice and as a measure of protection against potential arbitrary action, a Penalty Notice is generally required to be sent/communicated to the concerned person/assessee before the imposition/demand of penalty under Income Tax Act 1961 (the Act) for the following purposes —

  • Quotes the relevant penalty provision(s) of the Act alleged to have been infringed
  • Details the grounds/reasons/facts/evidence relied upon by the concerned income tax authority for the purpose of imposing penalty
  • Provides a fair hearing/reasonable opportunity to the concerned person/assessee, to prove or establish to the contrary as otherwise alleged by the concerned income tax authority

Chapter XXI of the Act lists the most frequently imposed penalties (some of these penalties have been briefly mentioned below), the procedure to be followed and some defences/relief available against potential penalty action.

  • Penalty for under reporting and misreporting of income – section 270A
  • Failure to pay Self-Assessment Tax – section 140A(3) read with section 221(1)
  • Default in payment of income tax under Notice of Demand – section 156 read with section 221(1)
  • Failure to comply with notice issued under section 142(1) (inquiry before assessment) or 143(2) (scrutiny notice) or direction for audit under section 142(2A) – penalty under section 271(1)(b)
  • Penalty for concealment of income or furnishing inaccurate particulars of income – section 271(1)(c) > Read more
  • Penalty for failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA – section 271A
  • Penalty for failure to keep and maintain information and document etc.in respect of international transaction or specified domestic transaction – section 271AA
  • Penalty where search has been initiated under section 132 and undisclosed income unearthed – section 271AAA/B
  • Penalty for failure to deduct tax at source (TDS), wholly or partly – section 271C
  • Penalty for failure to collect tax at source (TCS) – section 271CA
  • Taking or accepting certain loans or deposits or specified sum in contravention of provisions of section 269SS – penalty under section 271D
  • Repaying loans or deposits or specified advance in contravention of provisions of section 269T – penalty under section 271E
  • Penalty for failure to furnish return of income – section 271F
  • Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.- section 272A
  • Failure to comply with provisions under section 139A relating to Permanent Account Number (PAN) – penalty under section 272B


Get Professional Help – Reply/Object to Income Tax Penalty Notice

To receive professional help and appropriately respond/object to the above (or any other) Income Tax Penalty Notice(s) so received —

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Income Tax Prosecution

Prosecution action may be undertaken for the alleged infringement of certain prescribed provisions of the Income Tax Act 1961 (the Act) which are considered relatively more serious violations or offences. Furthermore, the same set of alleged facts and evidence relied upon from prosecution under the Act may also provide the grounds to justify concurrent prosecution against the concerned person/assessee under other penal and economic offence laws, such as —

  • The Indian Penal Code 1860 (the Code)
  • The Prevention of Money Laundering Act 2002
  • The Prevention of Corruption Act 1988
  • The Benami Transactions (Prohibition) Amendment Act 2016
  • The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015
  • The Foreign Exchange Management Act 1999 etc.

Chapter XXII of the Act lists the various income tax offences (some of which are mentioned below) that can lead to criminal prosecution and potential imprisonment and/or fines for one or more of such offences. It is therefore highly prudent and advisable to seek professional legal help at the earliest, if allegations of such offences are made by the relevant income tax authority. Some of the offences that may lead to prosecution have been listed below.

  • Contravention of order made under section 132(1) (Second Proviso) or under section 132(3) in case of search and seizure – prosecution under section 275A
  • Failure to afford necessary facility to authorised officer to inspect books of account or other documents as is required under section 132(1)(iib) – prosecution under section 275B
  • Removal, concealment, transfer or delivery of property to thwart tax recovery – prosecution under section 276
  • Failure to comply with provisions of section 178(1) and (3) dealing with Company-in-Liquidation – prosecution under section 276A
  • Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B – prosecution under section 276B
  • Failure to pay the tax collected under the provisions of section 206C – prosecution under section 276BB
  • Wilful attempt to evade tax, penalty or interest – prosecution under section 276C
  • Wilful failure to furnish return of income – prosecution under section 276CC
  • Wilful failure to produce accounts and documents under section 142(1) or to comply with a direction issued under section 142(2A) – prosecution under section 276D
  • False statement in verification or delivery of false account, etc. – prosecution under section 277
  • Falsification of books of account or document, etc., to enable any other person to evade any tax, penalty or interest chargeable/leviable under the Act – prosecution under section 277A
  • Abetment of false return, etc. – prosecution under section 278
  • Second and subsequent offences under sections 276B, 276C(1), 276CC, 277 or 278 – prosecution under section 278A


Get Professional Help – Setup Legal Defence against Income Tax Prosecution

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Where an offence under the Income Tax Act 1961 (the Act) has been committed by a Company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the Company for the conduct of the business of the Company as well as the Company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

It shall however be a valid defence for any such person found liable if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

Notwithstanding anything above contained, where an offence under this Act has been committed by a Company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the Company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.


Setup Legal Defence against Income Tax Prosecution

To receive professional legal help, interim relief from investigating/judicial authorities and setup a legal defence against prosecution action —

  • Click the “MinusTax Professionals” red banner below
  • Upload prosecution order(s)/notice(s) and other relevant documents (eg. Income Tax (Criminal) Complaint, Chargesheet/Challan etc.) (if any)
  • Fill-up/Submit the pop-up form
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As per section 278AA no person is punishable for any failure under section 276A and 276B if he proves that there was reasonable cause for such failure.


Immunity from prosecution

As per section 278AB, a person may apply to the Principal Commissioner or Commissioner of Income Tax for granting immunity from prosecution, if he has applied for settlement under section 245C and the proceedings have abated under section 245HA. However, the application for immunity shall not be made after institution of prosecution proceedings.


Setup Legal Defence against Income Tax Prosecution

To receive professional legal help, interim relief from investigating/judicial authorities and setup a legal defence against prosecution action —

  • Click the “MinusTax Professionals” red banner below
  • Upload prosecution order(s)/notice(s) and other relevant documents (eg. Income Tax (Criminal) Complaint, Chargesheet/Challan etc.) (if any)
  • Fill-up/Submit the pop-up form
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Where during the course of any search made under section 132 of the Income Tax Act 1961 (the Act), any money, bullion, jewellery or other valuable article or thing (collectively the assets) or any books of account or other documents has or have been found in the possession or control of any person and such assets or books of account or other documents are tendered by the prosecution in evidence against such person or against such person and the person referred to in section 278 for an offence under this Act, the provisions of sub-section (4A) of section 132 shall, so far as may be, apply in relation to such assets or books of account or other documents.


Presumption as to culpable mental state – section 278E

In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

“Culpable mental state” includes intention, motive or knowledge of a fact or belief in, or reason to believe, a fact.

For the above said purposes, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.


Get Professional Help – Setup Legal Defence against Income Tax Prosecution

To receive professional legal help, interim relief from investigating/judicial authorities and setup a legal defence against prosecution action —

  • Click the “MinusTax Professionals” red banner below
  • Upload prosecution order(s)/notice(s) and other relevant documents (eg. Income Tax (Criminal) Complaint, Chargesheet/Challan etc.) (if any)
  • Fill-up/Submit the pop-up form
Need Tax Help?

 


Administrative Help

For administrative assistance and general queries, please feel free to contact via —
Telephone: +91 8800 38 1950
Email: contact@minustax.com

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