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Can you go to jail for not filing your income tax returns?

Delhi Court recently convicted and sentenced a woman to six months in jail for not filing a return on income of Rs 2 crores.

Additional chief metropolitan magistrate Mayank Mittal sentenced the woman, identified as Savitri, after hearing submissions and considering the facts of the case.

“The convict is awarded a sentence of simple imprisonment for six months with a fine of Rs 5,000 and, in default to undergo simple imprisonment for one month,” ACMM said in the order passed on 4 March, according to ANI.

Savitri’s lawyer argued that she is an uneducated widow and has no one in the family of convicts to take care of her. The court, therefore, granted her 30 days’ bail to challenge the order after considering her application.

Let’s take a closer look.

The caseThe case pertains to a complaint filed by the Income Tax Office (ITO), alleging that a tax deducted at source (TDS) amounting to Rs 2lakh was deducted against the receipt of Rs 2 crore made by the accused during the financial year 2013-14.

However, no return of income for the assessment year 2014–15 was filed by the assessee or accused.

Special public prosecutor (SPP) Arpit Batra submitted before the court that the purpose of the provision was deterrence among the persons liable to pay the tax to file their return of income in time and to pay the tax accordingly.

As per the news agency, he also submitted that a maximum amount of imprisonment should be awarded to the convict and a substantial amount of line should also be imposed.However, after the counsel for the convict submitted that the sentence should also consider the social circumstances of the victim, the court granted her 30 days’ bail to challenge the order.

While convicting Savitri on 28 February, the court noted that the complainant was able to prove beyond reasonable doubt that notices were issued to the accused owing to which she was bound to file a return of income which was admittedly not filed by the accused.

Failing to reply to notices

According to the prosecution, a letter on 11 September 2017, was issued by ITO to the convict for verification of data on whether an ITR was filed for the assessment year 2014-15 or not, however the accused failed to file a reply.

Later, a notice dated 10 January 2018, under Section 142(1) of The Income Tax Act, 1961 (IT Act) was issued to the accused with directions to furnish the return of the assessment year 2014-15. Again, no compliance was made by the assessee or accused.Therefore, ITO issued a notice on 22 January 2018, under Section 271F of the IT Act to the accused for non-filing of the return and further accused had not bothered to reply to the same.

Hence, by way of an order dated 9 February 2018, the accused was directed to pay a penalty of Rs 5,000.

A proposal for a grant of sanction was sent to the Principal Commissioner of Income Tax. Before the issuance of a sanction, a show cause notice under Section 276CC of the IT Act was issued to her. Thereafter a reply on behalf of the convict was filed by her authorised representative on 18 March 2018.

After considering the same and giving sufficient opportunities to the convict, the Principal Commissioner of Income Tax, New Delhi, passed a sanction order permitting the launching of prosecution against the accused and directed the Income Tax Officer, to file the present complaint u/s 276CC, read with 279 of IT Act.

About ITR

According to Hindustan Times, an income tax return is a document that taxpayers use to formally declare their income, claimed deductions, exemptions, and taxes paid. As a result, it computes the net income tax liability for a given fiscal year.

Every law-abiding citizen is required by the income tax regulations to file their ITRs on a yearly basis.

Taxpayers can use this process to obtain refunds for any excess taxes paid or withheld throughout the fiscal year in addition to meeting this obligation.

A person under 60 years of age is required to file tax returns if any portion of their income is taxable under the Income Tax Act of 1961.

If your income exceeds the basic exemption limit, you must file income tax returns.

Online and offline methods are available for completing income tax files.

What happens if you miss deadlines?

Taxpayers are given several chances to complete their income tax returns by the income tax department.

The Central Board of Direct Taxes (CBDT) may grant a taxpayer a pardon for delay under Section 119 of the Act if the taxpayer has a valid reason for missing the deadline for making a late return, according to Business Today.

The Income Tax Department provides an exception known as the “condonation of delay in filing ITR” to taxpayers who file or check their returns after the deadline. Taxpayers must use the e-filing system to submit a request for a pardon for the late ITR filing in order to benefit from this provision.

If the request for condonation is denied, the taxpayer may submit an updated income tax return.

The Centre launched the ITR-U, or Updated Income Tax Return, in the Union Budget 2022. Under this new form, taxpayers can amend their prior ITR and correct any errors or omissions.
After the relevant evaluation year ends, it can be filed within two years.

Penalties and jail term

According to Section 234 F of the IT Act, there will be a late filing penalty charged to people whose returns are not filed by the deadline. The penalty for taxpayers who file beyond the deadline of 31 July is Rs 5,000.

On the other hand, the penalty for people whose total income is less than Rs five lakh will be lowered to Rs 1,000.

Interest is also levied on belated files, the report said.

Taxpayers who file their returns after the deadline are subject to interest under section 234A, which is calculated at a rate of one per cent for each month or portion of a month on the amount of unpaid tax.

Depending on when you file the ITR-U, taxpayers filing updated returns will be required to pay an extra tax of either 25 per cent or 50 per cent of the tax amount.

As per Mint, for such income tax return violations, they may potentially be sentenced to prison, with a least of three years and a maximum of seven years.

Balwant Jain, a tax and investment expert based in Mumbai, said the outlet that the Indian government has the authority to bring charges against salaried individuals who fail to file their income tax returns by the deadline.

“It is not that the department can launch prosecution against you in each and every instance of failure to file the ITR. The income department can launch prosecution only in case the amount of tax sought to be avoided exceeds ₹10,000,” he said.

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