Suppose in a incometax scrutiny or search and seizure if the assessing officer is of the view that the total sales is underreported... than what steps he will take would it impose the penalty and fine or he will decalre the will ful defaulter and start the prosecution against the tax payer? Would the tax payer is offered with any settlement of paying fine and avoid prosecution? Or if someone pays the penalty and fine than he is free of being prosecuted?
Prosecution is a very extreme stage, even if the income tax officer feels that sales have been underreported he will add it to the income of assessee and ask for tax on same and if he has some proof for same then he can ask for penalty otherwise there can't be any penalty on presumptive addition done to income of assessee.
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Dear Sir,
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As per Section 270A, if income is under-reported on account of misreporting of income then penalty shall be leviable at the rate of 200% of tax payable on under-reported income. However, if income is under-reported due to any other case, the penalty shall be 50% of tax payable on under-reported income.
Prodecution means the person is liable to jail even if e is ready to pay fine nd penalty..?so who is prosecuted..? Every one who has evaded tax?
Not everyone is prosecuted.
Only in the cases where the demand is high and the assessee is not paying it and his assets are not much to pay demand in that case practically prosecution is executed.
There are detailed steps and procedure before any prosecution proceedings begin. The Assessing officer has to issue notice and give opportunity to file return and declare income. HE can make additions to the income and levy tax, interest and penalty. There are possibility to attach bank and property if a person does not pay. Prosecution proceedings are rare event when the matter is of a different league.Ideally, a prosecution proceeding does not apply if the person has paid his liability.
However, the income tax act has provision to commence proceedings for failure to file return, Willful failure to produce accounts and documents, makes false statements etc. It would be prudent to file return and make tax returns within due date and pay appropriate tax to buy peace of mind.
Dear Sir,
If a person intentionally tries to evade any tax, penalty or interest, he shall be liable to a punishment of rigorous imprisonment of 6 months to 7 years and fine if the tax sought to be evaded exceeds Rs. 1,00,000 and 3 months to 3 years and fine if the amount of evasion is less than Rs. One lakh.
Hi,
Prosecution is very rarely exercises by the tax department. Generally, tax department levy interest and penalties for under reporting.
However, they have a right to initiate prosecution proceedings for certain types of default.
