TaxTMI 
TaxTMI 
Evolution of Statutory Offences Against Tax Recovery in India : Clause 475 of the Income Tax Bill, 2025 Vs. Section 276 of the Income Tax Act, 1961
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....e intent to prevent the property or its interest from being seized in execution of a recovery certificate. This provision is a direct successor to Section 276 of the Income Tax Act, 1961, which governs similar conduct and prescribes analogous penalties. The significance of such provisions lies in their deterrent effect, ensuring that taxpayers do not frustrate the lawful process of tax recovery. The legislative intent is to preserve the efficacy of the tax administration and to uphold the integrity of the state's revenue collection mechanisms. This commentary provides a detailed analysis of Clause 475, its objectives, structure, and practical implications, followed by a comparative evaluation with Section 276 of the Income Tax Act, 196....
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....Intent: * The clause requires the act to be done "fraudulently" and "with the intent" to prevent the property or interest from being taken in execution. This introduces a clear mens rea requirement, distinguishing inadvertent or innocuous transfers from those motivated by a deliberate design to defeat tax recovery. * "Fraudulently" implies elements of deceit, bad faith, or dishonest intent, which must be established beyond reasonable doubt in any prosecution under this clause. * Acts Prohibited - Removal, Concealment, Transfer, Delivery: * The provision is broadly worded to cover various modes of asset dissipation: physical removal, concealment (including non-physical forms such as layering through transactions), transfer (legal or ....
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....nterpretational disputes. Courts may rely on judicial precedents interpreting "fraud" in both civil and criminal contexts, but the lack of statutory definition could result in litigation on the threshold of intent. * Linkage to Execution Proceedings: The requirement that the act must be to prevent execution of a certificate introduces a factual inquiry-was the act contemporaneous with or in anticipation of such proceedings? This may complicate prosecutions where the timing and knowledge of impending recovery are in dispute. * Overlap with Other Offences: The provision may overlap with offences under other statutes (e.g., the Prevention of Money Laundering Act, Benami Transactions (Prohibition) Act), raising questions about concurrent pr....
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....fically mentions "Second Schedule" Scope Potentially broader if "as prescribed" encompasses wider or differently structured recovery mechanisms Limited to certificates under the Second Schedule of the 1961 Act Analysis of Differences and Similarities * Substantive Parity: Both provisions criminalize identical conduct-fraudulent removal, concealment, transfer, or delivery of property or any interest therein to prevent tax recovery. The core elements of the offence and the prescribed punishment are unchanged. * Terminological Variation: The only material change is the substitution of "under the provisions of the Second Schedule" in Section 276 with "as prescribed" in Clause 475. This reflects a drafting adjustment, possibly to alig....
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....ttempts to dissipate assets in anticipation of recovery proceedings. Taxpayers facing recovery actions must exercise caution and ensure transparency in their dealings with property or interests. 2. Impact on Third Parties Professionals, relatives, and business associates who participate in or facilitate the removal or transfer of assets could face prosecution if found complicit. Due diligence is required in transactions involving taxpayers under investigation or recovery proceedings. 3. Compliance Requirements Businesses and individuals must maintain accurate records of asset transfers and ensure that such transfers are bona fide and not intended to defeat tax recovery. Legal and accounting professionals advising such clients must be aw....