In its order last week, The Times of India said the country's Supreme Court (SC) upholds its provision for taxpayers who miss filing their income tax returns by the statutory deadline. The Indian SC will reportedly begin to prosecute individuals or company officials who fail to file income tax returns on the given deadline. Moreover, the Times of India said that taxpayers charged of failure to file their income tax returns will need to prove the circumstances of their inability to file the income tax return on time. Also, guilty individuals or the officials of the firm who are responsible for the company's daily business conduct could face fines and a jail sentence from a minimum three-month term to up to seven years.
The decision of the Indian SC top clarify the prosecution provisions of the Income Tax Act were spurred from a court case against Chennai-based partnership firm Sasi Enterprises. According to the report on Times of India, Sasi failed to file their income tax returns for two fiscal years beginning 1990, and that the company failed to act upon the notices sent by the state tax department.
The report said Sasi argued that the Indian SC should not prosecute its partners on the basis that the firm's appeal to the original court case was still pending. The Indian SC also said that despite the fact that the partners of Sasi was able to file their individual returns, albeit belated, the partners are not exempted from the law simple because they have attempted a strategy to face potential prosecution.
PDS legal partner Tarun Gulati, whose firm specializes in tax litigation, explained the Indian SC's decision and said, "Such relief from prosecution is not available in case of a failure to file I-T returns in response to a notice sent by the tax authorities. As there is no protection available against prosecution, even if substantial taxes have been paid either as advance taxes or tax deducted at source, notices from the tax department calling for filing of I-T returns must be attended to promptly. Partners and directors of business entities who are in charge of day-to-day operations must also ensure due diligence in this regard, else they too could be prosecuted."
The Times of India said the Indian SC hence gave the criminal court to complete the trial involving Sasi within the next four months.
