If you are yet to file your income tax returns within statutory deadline or within the time period available after a notice is issued by the I-T department, this may eventually lead to your prosecution, stated the Supreme Court in an order last week.
In the event a firm or a company finds itself in the same scenario, the person responsible for the daily conduct of the business – for example, directors or partners – could be subject to prosecution.
The Supreme Court also held that if the prosecution proceedings are started, taxpayers will have to prove the specific circumstances that stopped them from filing the income tax returns. This essentially means that the onus will be on the taxpayer to prove that the failure to file the return was not intentional.
Apart from penal interest, the Income Tax Act also have provision for prosecution and rigorous imprisonment of three months to seven years as well as a fine.
Prosecution proceeding are to be initiated when the income tax return is not fined by the statutory due date or within the time-period granted by the concerned tax authority. There are certain provision in the Section 276CC of the I-T Act that may provide some relief in certain cases.
“However, such relief from prosecution is not available in case of a failure to file I-T returns in response to a notice sent by the tax authorities,” explains Tarun Gulati, partner, PDS legal, law firm specializing in tax litigation, Times of India reports,
“As there is no protection available against prosecution, even if substantial taxes have been paid either as advance taxes or tax deducted at source, notices from the tax department calling for filing of I-T returns must be attended to promptly. Partners and directors of business entities who are in charge of day-to-day operations must also ensure due diligence in this regard, else they too could be prosecuted,” he adds