Apart from penalty for various defaults, the Income-Tax Act also contains provisions for launching prosecution proceedings against the taxpayers for various offences.
Section 132 (1)
Section 132 empowers the tax authorities to initiate search proceedings at the premises of the taxpayer. During the course of search the tax authorities are also empowered to seize money, bullion, jewellery or other valuable article or thing found from the taxpayer. Generally, the seized money, bullion, etc., is taken by the tax authorities in their custody (i.e., in the custody of the government) but in certain cases it may not be possible or practicable for the tax authorities to take physical possession of the same or to remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature.
In such a case, second proviso to section 132(1) empowers the tax authorities to seize the asset by keeping the asset at the place of the taxpayer only. In such case, the asset will be seized by the tax authorities without physically taking the assets with them. For this purpose, the authorised officer would serve an order on the owner or the person who is in immediate possession or control of the asset that he shall not remove, part with or otherwise deal with the asset, except with the previous permission of such authorised officer. This action of the authorised officer shall be deemed to be a seizure of such valuable article or thing under I-T Act.
Many times, during the course of search it may not be possible to seize any books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to Section 132(1) (as discussed above). In such cases, as per Section 132(3), the tax authorities may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such officer. Such officer may take such steps as may be necessary for ensuring compliance with the provisions of Section 132(3).
Section 275A provides for prosecution in the case of contravention of any of the above discussed provisions by the taxpayers. As per Section 275A, whoever contravenes any of the above provisions shall be punishable with rigorous imprisonment of upto a period of two years and shall also be liable for fine.
Failure to afford necessary facility to authorised officer to inspect books of account or other documents as is required under Section 132(1)(iib)
In a case where a search is conducted by the tax authorities, the tax authorities as per Section 132(1)(iib)may require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of Section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents. Person who fails to provide such facility shall be punishable with rigorous imprisonment of upto a period of two years and shall also be liable to fine.
If a taxpayer fails to discharge his tax liability, then the tax authority can recover the tax dues from him by attaching his movable and immovable property. If the taxpayer fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein , intending thereby to prevent that property or interest therein from being attached for recovery of tax, then prosecution proceedings can be initiated under Section 276.