Prosecutions in the case of TDS/ TCS

Prosecution Provision applicable in the case of TDS/ TCS

Chapter XXII – Offences and Prosecutions of Income Tax Act, 1961

Sr No	Section	Particulars
1	Section 276B	Failure to Pay tax to the credit of Central Government
2	Section 276BB	Failure to pay the tax collected at source
3	Section 276C	Wilful attempt to evade tax, etc.
4	Section 277	False statement in verification, etc.
5	Section 278	Abetment of false return, etc
6	Section 278A	Punishment for Second and subsequent Offences
7	Section 278AA	Punishment not to be imposed in certain cases

Failure to Pay tax to the credit of Central Government under Chapter XII-D or XVII-B

Section 276B: If a person fails to pay to the credit of the Central Government,—

a) the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or

b) the tax payable by him, as required by or under—

i. sub-section (2) of section 115-O; or

ii. the second proviso to section 194B,

he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.

Failure to pay the tax collected at source

Section 276BB: If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine

Wilful attempt to evade tax, etc.

  

Section 276C (1)

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:

i. in a case where the amount sought to be evaded exceeds Rs. 25,00,000/-, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine;

ii.in any other case, with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine.

Wilful attempt to evade tax, etc.

Section 276C (2)

If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest 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 with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and shall, in the discretion of the court, also be liable to fine.

Section 276C

Explanation-For the purposes of this section, a wilful attempt to evade an tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person—

i. has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or

ii. makes or causes to be made any false entry or statement in such books of account or other documents; or

iii. wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or

iv. causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.

False statement in verification, etc.

Section 277: If a person makes a statement in any verification under this Act or under any rule made there under, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable:

(i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds Rs. 25,00,000/-, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine.

Abetment of false return, etc.

Section 278: If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income or any fringe benefits chargeable to tax which is false and which he either knows to be false or does not believe to be true or to commit an offence u/s 276C(1), he shall be punishable,—

(i) in a case where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true, or which is willfully attempted to be evaded, exceeds Rs. 25,00,000/-, with rigorous imprisonment for a term

which shall not be less than 6 months but which may extend to 7 years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine.

Punishment for Second and subsequent offences

Section 278A: If any person convicted of an offence u/s 276B or sub-section (1) of section 276C or section 277 or section 278 is again convicted of an offence under any of

the aforesaid provisions, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.

Punishment not to be imposed in certain cases

Notwithstanding anything contained in the provisions of Section 276B, no person shall be punishable for any failure referred to in the said provision if he proves that there

was reasonable cause for such failure [Section 278AA].

Q: Proceedings Pending u/s 201(1) and 201(1A) is a bar to institution criminal prosecution?

Kingfisher Airlines Ltd. v. Income Tax Department [2014] 43 taxmann.com 201 (Karnataka)

• Failure to pay tax on distributed profits of domestic companies/deducted at source.

• The pendency of proceedings u/s 201(1) and 201(1A) cannot act as a bar to institution and continuance of criminal prosecution for offences punishable u/s 276B.

Q:Can the Person incharge of affairs of company, be prosecuted for offences committed by company?

Homi Phiroze Ranina v. State of Maharashtra[2003] 131 TAXMAN 100 (BOM.)

• In brief, the Company had deducted tax payable by contractors while making payment to contractors but failed to remit tax deducted to treasury within stipulated time. The Complaint was filed against director as well as company and also against chairman and managing director of company, charging them u/s 276BB r.w. Sec. 278B.

• In the absence of any material in complaint which prima facie showed that director etc. were in fact in charge of affairs of company and responsible for conduct of its day-to-day affairs, applicant could not be prosecuted for offences committed by company.