Launching of Prosecution in Search & Seizure cases - Income Tax - F.No. 286/57/2002-IT(Inv.II)

F.No. 286/57/2002-IT(Inv.II) Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, the 21st June, 2002 To All the Directors General of income Tax (Inv.) (by name) The Chief Commissioner of Income Tax (Central), Mumbai (by name). Sub: Launching of Prosecution in Search Seizure cases . Please refer o the deliberations in the All India Annual Conference of DGs (Inv.) and Central charges of Income Tax held in April, 2002 at Delhi on the subject of Searches as Effective Deterrence . It has been noted that even after searches, there is lack of effective deterrence on tax evaders because of the fact that not many prosecutions are launched and the assesses approach the Settlement Commission for immunity from prosecutions. Chapter XXII of the Income Tax Act contains the provisions for launching of prosecutions. Such provisions are contained in Section 275A (contravention of the order made under sub-Section (3) of Section 132), Section 275B (failure to comply with the provisions of clause (ii)(b) of sub-Section (1) of Section 132), Section 276CCC (failure to furnish return of income), in search cases) Section 276D (failure to produce accounts and documents), Section 277 (false statement in verification, etc.). Section 278 (abetment of false returns, etc.),. Further, there are the provisions contained in IPC for criminal prosecutions which can be attracted in search cases also. These criminal prosecutions can be invoked against a a person for refusing to answer any question demanded by a public servant in the exercise of his legal powers (Section 179), or for refusing to sign any statement made by such person before the public servant (Section 180), or for making a false statement by such person before the public servant although such person knows or believes that such statement is false or not true (Section 381), or for obstructing a public servant in the discharge of his public functions (Section 186). As regards prosecution invokable under Section 276C (willful attempt to evade taxes) read with Section 277 in search cases after 1.7.1995, the matter is under examination by the Board. In absence of timely launching of prosecution, the assesses searched prefer to move their petitions before the Settlement Commission for getting immunity of prosecution under Section 245 H. If the Department can expeditiously launch prosecution in appropriate cases for various offences as stated above before the submission of the application under Section 245 C(1), the assessee is denied the benefit of any immunity from prosecution and penalty under the proviso to Section 245H (1) of the Income Tax Act. In view of above, I would like you to give your personal attention to this important aspect of work so that prosecution complaints are filed in appropriate cases expeditiously. Please note that your performance in the area of this work will be judged on the basis of quality and number of cases initiated during the year. Progress in this Held is to be reported in your monthly D.O. letter. Please acknowledge the receipt of this letter. (RAJ NARAIN) Member (Inv.)