Section 276C of ITA, 1961 : Section 276C: Wilful Attempt To Evade Tax, Etc

Explanation using Example

Imagine a business owner, Mr. Kumar, who runs a chain of restaurants. For the financial year, his restaurants earned significant profits, but when filing his income tax returns, Mr. Kumar deliberately underreported his income by ₹3,000,000 to reduce his tax liability. This act of underreporting qualifies as an attempt to evade tax as per Section 276C of the Income-tax Act, 1961.

Upon investigation by the Income Tax Department, it was found that Mr. Kumar had falsified entries in his books of account to support his underreported income. The authorities charged him with willfully attempting to evade tax. As the amount of tax on the underreported income exceeded ₹2,500,000, Mr. Kumar faced the prospect of rigorous imprisonment for a term not less than six months and which could extend up to seven years, along with a fine, as per the provisions of Section 276C(1)(i).