Tax notices + litigation · Income Tax Notice
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Prosecution under the IT Act is rare but real. Sec 276C (now Sec 478, Income-tax Act 2025): Willfully attempting to evade tax, imprisonment 3 months to 7 years + fine. Sec 276CC (now Sec 479): Failure to file ITR, imprisonment up to 7 years if tax evaded exceeds ₹25L. Sec 277: Submitting false statement or document, imprisonment 6 months to 7 years.
IT Act 1961, Sec 276C (now 478; tax evasion), Sec 276CC (now 479; non-filing), 277 (false statement)
Key distinction, wilful vs negligent: Prosecution requires wilful act. A genuine mistake or negligent omission is not sufficient for prosecution. If you can demonstrate no wilful intent, prosecution is difficult to sustain. Compounding available: Sec 279(2) allows compounding (settlement without trial) on payment of tax, interest, penalty + a compounding fee. Apply for compounding before charge-sheeted.
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