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Prosecution notice under section 279

Where, the assessee has committed defaults in complying with different provisions of the law / Act, than the person is deemed to be assessee in default and liable to be prosecuted under the provisions of the Income tax Act, 1961. However, before granting sanction for launching prosecution proceedings against the person, show cause notice under section 279 of the Income Tax Act, 1961 was issued to show the reason as to why the necessary sanction of launching prosecution proceedings be not granted.

If the said notice is not complied with then the Income tax Officer may grant sanction for launching prosecution proceedings which will increases the burden of the person and may lead to imprisonment along with fines. Defaults for which prosecution proceedings may be launched are laid down as under in brief:

  • Failure to make payment or deliver returns or statements or allow inspection.
  • Failure to pay tax deducted at source or tax payable under section 115 —0 or 2nd proviso to section 194B to the credit of the Central Government
  • Failure to pay the tax collected at source
  • Failure to comply with the provisions of section 269SS (accepting loan exceeding Rs 20000 otherwise than by account payee cheque / account payee bank draft)
  • Failure to comply with the provisions of section 269 T (repayment of loan exceeding Rs 20000 otherwise than by account payee cheque / account payee bank draft)
  • False statement in verification etc.
  • Abetment of false return etc.
  • Contravention of order made u/s 132 in case of search and seizure
  • Failure to comply with the provisions of Section 132(1)(iib) related to search and seizure
  • Removal, concealment, transfer or delivery of property to thwart tax recovery
  • Failure to comply with the provision of sections 178 (1) and 178 (3) in relation to company in liquidation
  • Failure to comply with the provisions of section 269 AB in relation to registration of certain transactions or section 269 I in relation to Vesting of Property in Central Government.
  • Failure to comply with the provisions of sections 269UC, 269UE and 269UL in relation to transfer of Immovable property.
  • Wilful attempt to evade tax etc.
  • Wilful attempt to evade payment of taxes etc.
  • Failure to furnish returns of Income.
  • Failure to furnish returns of income in search cases in block assessment scheme.
  • Failure to produce accounts and documents.
  • False statement in verification etc.
  • Falsification of books of account or documents etc.
  • Abetment of false return etc.
  • Failure to comply with the provision of sections 178 (1) and 178 (3) in relation to company in liquidation
  • Failure to comply with the provisions of section 269 AB in relation to registration of certain transactions or section 269 I in relation to Vesting of Property in Central Government .
  • Failure to comply with the provisions of sections 269UC, 269UE and 269UL in relation to transfer of Immovable property
  • Wilful attempt to evade tax etc
  • Wilful attempt to evade payment of taxes etc
  • Failure to furnish returns of Income
  • Failure to furnish returns of income in search cases in block assessment scheme
  • Failure to produce accounts and documents
  • False statement in verification etc.
  • Falsification of books of account or documents etc.
  • Abetment of false return etc.

Frequently Asked Questions

A prosecution notice under Section 279 is issued before launching criminal prosecution for income tax offences, giving the taxpayer a chance to explain why prosecution should not be initiated.

Prosecution is initiated when there is willful default such as tax evasion, false statements, failure to file returns, non-payment of tax, or non-compliance with statutory provisions.

Yes, prior sanction from the competent income tax authority is mandatory before initiating prosecution proceedings under Section 279 of the Income Tax Act.

Ignoring a prosecution notice may result in criminal proceedings, which can lead to imprisonment, monetary fines, or both, depending on the nature of the offence.

Offences include willful tax evasion, false verification, failure to furnish returns, falsification of accounts, non-payment of TDS/TCS, and obstruction of tax recovery.
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