February 2019


Chetan Shah
Chartered Accountant

PROSECUTION – The word Prosecution makes every person’s blood run cold. The menace of black money, i.e., unaccounted money, and tax evasion have assumed gigantic proportions. The need to control the menace resulted in taking of drastic remedial measures by the Government. Prosecution and the resultant terror of imprisonment serve as a powerful deterrent. Under the Income Tax Act, 1961 there are various sections for Penalties and Provisions to ensure/enforce tax compliance, but the best and most effective measure is Prosecution. Assessment proceedings are civil proceedings while penalty proceedings are quasi-criminal and prosecution proceedings are criminal in nature. Prosecutions for offences committed by an assessee are tried by the Magistrates in the Criminal Courts of the country and the procedure thereof is governed by the provisions of the Indian Penal Code where attracted, as well as the rules in the Code of Criminal Procedure and the Indian Evidence Act. In simple words, we can say that the Income Tax Department has three ways to punish the assessee, i.e. Levy Interest, Levy Penalties and Prosecution if he does not follow provisions as prescribed by the Act. Monetary Punishment does not have that impact on the assessee that Prosecution proceedings have.


The roots of such harsh/rigorous provisions of Prosecution were found in the Wanchoo Committee Report. The final report by the said Committee states as follows:


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