Tax Offences, Failure to Pay TDS up to Rs 25L Not Be Prosecuted by Taxman

New Delhi: Instances of wilful attempt to evade tax, failure to furnish return of income and not remitting TDS in the government exchequer up to the limit of Rs 25 lakh will not be ordinarily filed for criminal prosecution before a court by the taxman, a latest CBDT circular said.

The directive is being seen as a major move to cut down tax litigation and will save a number of assessees from legal proceedings.

A September 9 CBDT circular accessed by PTI said prosecution is a criminal proceeding based upon evidence gathered and the offence of tax evasion has to be "proven beyond reasonable doubt".

To ensure that only "deserving cases get prosecuted", the Central Board of Direct Taxes has laid down the new criteria, it said.

"Cases where non-payment of tax deducted at source (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.

"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," it said. These instances are dealt under section 276B of the I-T Act.

Cases of "wilful" attempt to evade case, where the amount sought to evaded or tax on under-reported income is Rs 25 lakh or below, shall not be processed for prosecution except with the previous administrative approval of collegium of two Chief Commissioners or Directors General of the tax department, the CBDT said. These instances are prosecuted under section 276C(1) of the I-T Act.

Similarly, cases where the amount of tax, which would have been evaded if the failure had not been discovered, is Rs 25 lakh or below shall not be processed for prosecution except with the previous administrative approval of the collegium of senior officers, it said.

These instances of failure to furnish returns of income are prosecuted under section 276CC of the I-T Act.

The CBDT that frames policy for the I-T department said the circular shall "come into effect immediately and shall apply to all the pending cases where complaint is yet to be filed".

Prosecution in other tax offences like failure to afford necessary facility to authorised officer to inspect books of account; removal, concealment, transfer or delivery of property to thwart tax recovery; false statement in verification or delivery of false account or statement and abetment of false return, account, statement or declaration relating to any income or fringe benefits chargeable to tax, will also be conducted as per the new directive, it said.