False statement in verification, etc.
482
If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,—
- (a) in a case, where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds twenty-five lakh rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and shall also be liable to fine;
- (b) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and shall also be liable to fine.
Section Summary:
Section 482 of the Income Tax Act deals with penalties for making false statements or submitting false accounts or statements during verification processes under the Act or its rules. The purpose of this section is to deter taxpayers from providing incorrect or misleading information that could lead to tax evasion. It imposes strict penalties, including imprisonment and fines, depending on the severity of the offense.
Key Changes:
This section is part of the existing Income Tax Act and has not been amended recently. However, it is critical to note that the penalties for false statements are severe, especially in cases involving significant tax evasion (exceeding ₹25 lakh). The section reinforces the importance of accuracy and honesty in tax filings.
Practical Implications:
- For Taxpayers: Taxpayers must ensure that all statements, accounts, and verifications submitted to the tax authorities are accurate and truthful. Any intentional or negligent misrepresentation can lead to serious consequences, including imprisonment and fines.
- For Businesses: Businesses must maintain proper documentation and ensure that their financial statements and tax filings are accurate. Misreporting income or expenses can attract penalties under this section.
- For Compliance Processes: Tax authorities may scrutinize filings more closely, especially in cases where discrepancies are detected. This section acts as a deterrent against tax evasion and fraudulent practices.
Critical Concepts:
- False Statement: Any statement, account, or verification that is knowingly or negligently incorrect. This includes underreporting income, overclaiming deductions, or providing false information.
- Rigorous Imprisonment: A form of imprisonment with hard labor, which is more severe than simple imprisonment.
- Tax Evasion: The illegal avoidance of paying taxes by underreporting income, inflating deductions, or other fraudulent means.
Compliance Steps:
- Accurate Reporting: Ensure all income, deductions, and credits are reported accurately in tax returns.
- Documentation: Maintain proper records and supporting documents for all financial transactions and claims made in tax filings.
- Verification: Double-check all statements and accounts before submission to avoid unintentional errors.
- Internal Audits: Businesses should conduct regular internal audits to ensure compliance with tax laws.
Examples:
- Scenario 1: A taxpayer underreports their income by ₹30 lakh in their tax return. If the tax authorities discover this, the taxpayer could face rigorous imprisonment for a minimum of six months, up to seven years, and a fine.
- Scenario 2: A small business owner mistakenly claims a deduction of ₹10 lakh that they are not entitled to. If the error is detected, the owner could face imprisonment for a minimum of three months, up to two years, and a fine.
This section underscores the importance of honesty and accuracy in tax filings to avoid severe legal consequences.