In the Delhi High Court, it has been recently given an approval to initiate prosecution against individuals not filing ITR as well as not responding to notices sent to the concerned taxpayer.
It has been held that the prosecution proceedings against such a person can be attempted even if assessment has not been finalized. The proceedings can be undertaken as per Section 276CC of the Income Tax Act, 1961. The decision for prosecution has been upheld even though taxpayer he submitted that for years under question there are no tax dues payable by the person and in fact there was due a tax refund amount for two of the years.
So, as per tax experts, the scenario can result in dire consequences for taxpayers who default on filing ITR for whatever reason.
In the case under which the Delhi High Court held the given order, the person failed to file return for 3 consecutive AYs and also did not responded to notices sent by the department. The IT officer initiated prosecution by filing criminal complaints on the taxpayer.
The taxpayer then submitted that his response to the show cause notice has not been adequately construed as per the Tax Alert by Grant Thomton.