Taxpayers can be prosecuted for non-filing of returns even if eligible for a refund: Delhi HC

Tax assessees beware! The Delhi High Court has ruled that *non-filing of income tax returns can lead to prosecution* even if the taxpayer was entitled for a refund had he filed a return. The recent ruling by the Delhi High Court came in the case of Karan Luthra against the Income Tax Department. The taxpayer had not filed his tax returns for the Assessment Years 2003-04, 2004-05 and 2005-06 and had *also paid excess taxes* during AY 2004-05 and 2005-06. Subsequently, the Income Tax Department *served notices* to him under section 142(1) (requiring a taxpayer to furnish tax return and certain other information) and section 148 (assessment proceedings) of the Income Tax Act, 1961. Since he did not respond, the department then initiated prosecution proceedings by filing criminal complaints for offences punishable under section 276 CC of the Act. For AY 2003-04, the High Court said that a later notice by the Income Tax Department cannot be seen to supersede an earlier notice, especially in order to have the effect of giving to the assessee an indefinite period for compliance. As a result, the Delhi High Court upheld the prosecution against the taxpayer even if he was *entitled to a refund or there was a shortcoming* in the subsequent notice by the Income Tax Department. Tax experts said while the Supreme Court had already spelt out the judgment in such cases, the Delhi High court ruling has said that a *taxpayer can be prosecuted for non-filing of returns even if he was eligible for a refund*

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