IT Dept eases criminal prosecution norms for TDS, ITR filing defaults

New Delhi: The Central Board of Direct Taxes has eased some criminal prosecution norms relating to non-filing of income tax returns and deposit of tax deducted at source in the government exchequer.

Such cases, as well as attempts for wilful tax evasion, will not be ordinarily filed for criminal prosecution before a court by income tax authorities, a CBDT circular dated September 9 showed. The directive is being seen as a major move to cut down tax litigation and will save a number of assessees from legal proceedings.

CBDT has laid down a new criteria to ensure only “deserving cases get prosecuted”.

“Cases where non-payment of TDS is Rs 25 lakh or below, and the delay in deposit is less than 60 days from the due date, shall not be processed for prosecution in normal circumstances,” the taxman’s circular stated.

Finance minister Nirmala Sitharaman had tweeted last month: “I have instructed the revenue secretary to come up with measures to ensure that honest taxpayers are not harassed and those who commit minor or procedural violations are not subjected to disproportionate or excessive action”.

“In case of exceptional instances like habitual defaulters, based on particular facts and circumstances of each case, prosecution may be initiated only with the previous approval of the collegium of two chief commissioners or directors-general of income tax department.”

These instances are dealt under Section 276 (B) of the Income Tax Act, 1961.

Cases of “wilful” attempts at tax evasion, where the amount is Rs 25 lakh or less, will not be processed for prosecution, except with the previous administrative approval of collegium of two chief commissioners or directors general of the tax department.

These instances are prosecuted under Section 276 (C) (1) of the Income Tax Act, 1961.

Similarly, cases of non-filing of ITR, where the income tax incident is less than Rs 25 lakh, shall not be processed for prosecution, except with the previous administrative approval of the collegium of senior officers, the CBDT circular stated. These instances of failure to furnish ITRs are prosecuted under Section 276 (C)(C) of Income Tax Act.

The income tax norms as enumerated in the September 9 CBDT circular shall “come into effect immediately and shall apply to all the pending cases where a complaint is yet to be filed”.