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Report No. 29

113. Existing provisions analysed.-The existing provisions relating to tax evasion have been listed separately1. Broadly speaking, provisions against evasion can be classified into

(i) provisions which enable the taxing authority to assess income, etc., which has escaped assessment;

(ii) provisions which empower such authority itself to impose a penalty; and

(iii) provisions which create offences for which a prosecution can be instituted in the criminal courts.

An example of the first2 is section 34 of the Income-tax Act, 1922, (now sections 147 to 153 of the Income-tax Act, 1961)3. An example of the second is section 273 of the Income-tax Act, 19614. Strictly speaking, we are concerned here only with the third class. But it will be necessary to refer to provisions of the second class, for purposes of comparison.

1. See Appendix 2.

2. For history of section 34, see Radheshyam v. Union of India, AIR 1960 Bom 353 (355), et seq.

3. The Income-tax Act, 1961 (43 of 1961).

4. The Income-tax Act, 1961 (43 of 1961).

114. Transfer of existing provisions not feasible.-We have considered the question whether the transfer of the provisions1 relating to evasion of tax to the Indian Penal Code would be advantageous. The laws, of which these provisions form part, constitute self-contained Code. In the first place, these provisions contain minute and detailed references to the other sections of the enactment of which they form part-e.g. the section under which a return is to be filed, or a stamp is to be fixed, or the like. They cannot be divorced from those sections. Secondly, if they are to be transferred to the Penal Code, then, whenever laws imposing new kinds of taxes are passed in the future, it may become necessary to amend Indian Penal Code also, and that might prove to be an inconvenient process. Thirdly, there are special procedural provisions2, which require the sanction of a particular authority for instituting a prosecution for an offence under the particular enactment, or which authorise the compounding of offences, and so on. If the penal provisions of the taxing enactments are transferred to the Indian Penal Code, then the relevant procedural provisions of the taxing enactments-which will then lose their justification for being retained in the taxing enactments will have to be transferred to the Code of Criminal Procedure, and that process also would be inconvenient.

1. Para. 113, supra.

2. E.g., section 279, Income-tax Act, 1961 (43 of 1961).



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