Income tax department can launch prosecution against you for non-filing of ITR
The tax laws prescribe minimum three years of imprisonment term and which can extent upto seven years
The Covid-19 has adversely affected us all in more than one ways. The government has been trying to provide relief in various ways including by providing more time for various time bound compliances. The deadline for filing of your Income Tax Returns (ITR) has also been extended from time to time, including ITR for financial year 2018-2019. Let us discuss the legal provisions for filing of the ITR and implications which will follow if you fail to adhere to the last deadline.
As per existing law, you cannot file your ITR for more than one year at a time. So for the 2019 due date for filing of ITR was 31st July 2019 for majority of the tax payers except those who are covered under mandatory audit provisions. The due date is not the last date for filing of your ITR and you could have filed ITR for 2019 by 31st March 2020 with payment of some late fee and interest in case the full liability of tax was not fully discharged by 31st March 2019.
Due to pandemic of Corona the last date for filing of ITR for 2019 was first extended from 31st March 2020 to 30th June 2020 and then to 31st July and finally to 30th September 2020 on 29th July 202 . In my opinion the government will not give any further extension since the unlock process has been initiated and is in its advanced stage with opening of almost all the activities. So in case you have not yet filed your old ITR please avail the benefit of extension now because in case the government does not extent the date any further, you will not be able t file this old ITR ever. Since you have already missed the due date of 31st July 2020, you will have to pay a late fee of Rs. 10,000/- while filing your old ITR unless your total income is below 5 lakhs in which case in which case the amount of penalty gets restricted to Rs. 1,000/-. In addition to the late fee as explained above, you also will have to pay interest for delay in payment of unpaid taxes as well as for delay in filing of your ITR in case the entire tax liability was not discharged before 31st March 2020 either by way of advance tax or through deduction of tax at source.
What if the government does not extend this date any further and you fail to meet the deadline?
Unless the government extends the date any further, 30th September 2020 is now or never as far as pending ITR of F. Y. 2018-2019 is concerned. With computerisation of transactions the government has in its possession data of your income without you filing your ITR. So in case you are liable to file your ITR but fail to meet the last deadline, very serious consequences will follow. For non filing of your ITR, the tax department can levy penalty a minimum penalty equal to 50% of the tax which would have been avoided by you, in addition to the liability to pay the interest till the date you ultimately file your ITR after receiving notices from tax department.
Moreover the income tax department can launch prosecution against you for non filing of ITR. The tax laws prescribe minimum three years of imprisonment term and which can extent upto seven years. However the department can not launch prosecution in case the amount of tax sought to be avoided does not exceed Rs. 10,000/-