Failure to File ITR Leads to Conviction of Directors
Firm directors are now facing criminal convictions for not filing income tax returns, as per provisions under the Income-tax Act.This case serves as a strong reminder for companies and LLPs to take their compliance obligations seriously.
What Does Section 276CC Say?
Key points:
- Conviction leads to:
- Minimum imprisonment: 3 months
- Maximum imprisonment: 7 years
- Plus fine
Case Summary: Directors Held Liable
In a recent case, the court held both directors of a firm criminally liable for non-filing of ITRs for multiple years, despite several reminders and notices from the Income Tax Department.
Court’s Observation:
“The directors cannot escape responsibility by blaming staff or accountants. They were in charge and responsible for the firm’s affairs.”
Conviction Highlights:
- Offence under: Section 276CC
- Tax default: Over ₹10 lakh
- Outcome: Both directors sentenced to rigorous imprisonment + fine
Legal Precedents: How Courts Interpret Section 276CC
| Case Name | Key Takeaway |
|---|---|
| Sasi Enterprises v. ACIT (SC, 2014) | Mens rea not essential once default is proven |
| ACIT v. V.K. Gupta (Del HC, 2020) | Directors liable if actively involved in affairs |
| ITO v. M/s R.L. Steels (ITAT, 2016) | Return filing is non-delegable duty |
Focus Keyphrase: Income Tax Returns Filing
Why timely income tax returns filing is critical
Avoiding ITR filing can land you in serious legal trouble. Here’s why you must comply:
- Prosecution risk if default is willful and tax is due
- Penalty of ₹5,000 to ₹10,000 under Section 234F
- No carry forward of losses without timely ITR
Expert Insight: Don’t Ignore Notices
Pro Tip from Efiletax Experts:
Always reply to tax notices within the deadline. Even if you missed original filing, respond, file belated return, or explain valid reasons to avoid prosecution.
How to Stay Compliant – Step-by-Step
- Track ITR due dates – Mark calendar for 31 July (individuals)
- Use Efiletax tools – Upload Form 16, books, or bank statements
- Verify notices on portal – Check e-proceedings tab regularly
- Respond promptly – Use our assisted filing or notice reply support
- Opt for condonation – If missed deadline, file with CBDT approval
- Keep directors informed – Partners/directors must not remain passive
Frequently Asked Questions
Q1. Can a director be jailed for non-filing of ITR of a company?
Yes, under Section 276CC, active directors can be prosecuted and even imprisoned.
Q2. Is there a way to avoid prosecution after notice is issued?
Timely compliance post-notice and proving genuine reasons may help, but there’s no guaranteed immunity.
Q3. Does this apply to LLPs and firms too?
Yes, any person, including partners or designated partners, can be held liable.
Summary
The law mandates imprisonment and fines for willful default. Business owners must ensure timely ITR filing to avoid prosecution.
Stay Safe, Stay Compliant with Efiletax
If you’re a director or partner, don’t take compliance lightly.
Let Efiletax handle your ITR filing, notices, and risk mitigation — so you focus on business, not court dates.