Falsification of books of account or document, etc.
483(1)
If any person (herein referred to as the first person) wilfully and with intent to enable any other person (herein referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under this Act in the circumstances referred to in sub-section (2), the first person shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine.
483(2)
The circumstances referred to in sub-section (1) shall be, where the first person makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe to be true, in any books of account or other document relevant to or useful in any proceedings against the first person or the second person, under this Act.
483(3)
For the purposes of establishing the charge under this section, it shall not be necessary to prove that the second person has actually evaded any tax, penalty or interest chargeable or imposable under this Act.
Section Summary:
This section addresses the falsification of books of account or documents with the intent to help another person evade tax, interest, or penalties under the Income Tax Act. It imposes strict penalties, including imprisonment and fines, on individuals who knowingly create or allow false entries or statements in financial records.
Key Changes:
- New Provision: This section introduces a specific penalty for individuals who wilfully falsify records to aid tax evasion by another person. Previously, such actions might have been covered under broader provisions, but this section explicitly targets this behavior.
- Focus on Intent: The law emphasizes the intent to enable tax evasion, even if the evasion does not ultimately occur.
Practical Implications:
- For Individuals and Businesses: Taxpayers and professionals handling financial records must ensure accuracy and honesty in documentation. Any deliberate falsification to assist another party in evading taxes can lead to severe consequences.
- For Tax Authorities: This provision strengthens the enforcement framework by making it easier to prosecute individuals involved in facilitating tax evasion, even if the evasion itself is not proven.
Critical Concepts:
- Wilful Intent: The law targets actions taken deliberately to enable tax evasion, not accidental errors or omissions.
- False Entry or Statement: This refers to any incorrect information entered into books of account or documents, knowingly or without belief in its truth.
- No Need for Actual Evasion: Prosecution under this section does not require proof that tax evasion actually occurred, only that the falsification was intended to enable it.
Compliance Steps:
- Maintain Accurate Records: Ensure all financial records and documents are truthful and accurate.
- Avoid Facilitating Evasion: Do not knowingly assist others in falsifying records or documents.
- Internal Audits: Regularly review financial records to identify and correct any discrepancies.
- Training: Educate employees and stakeholders about the legal consequences of falsifying records.
Examples:
- Scenario 1: A business owner (first person) intentionally inflates expenses in their books to help a friend (second person) reduce their taxable income. Even if the friend’s tax liability remains unchanged, the business owner can be prosecuted under this section.
- Scenario 2: An accountant knowingly creates false invoices to help a client underreport income. The accountant can face imprisonment and fines, regardless of whether the client’s tax evasion is proven.
This section underscores the importance of integrity in financial reporting and imposes strict penalties for those who undermine the tax system.