New Income Tax Bill 2025: Section 276CCC Decriminalized!:

New Income Tax Bill 2025: Section 276CCC Decriminalized! Income Tax Bill 2025 has proposed that a person who does not file an Income Tax Return (ITR) after a search operation will not be prosecuted under clause 480 without the authority of higher tax authorities. Previously, there was no such mandate under the Income Tax Act 1961. They did not require such sanction previously under the Income Tax Act of 1961. The new Income Tax Bill 2025 categorically states that Clause 480, which is equivalent to Section 276CCC of the Income Tax Act, 1961, is a non-cognizable offence. This implies that the authorities cannot arrest an individual without court permission. Previously, the 1961 Act did not specify this. In other words, a cognizable offence enables authorities to arrest an individual without a court order, while a non-cognizable offence necessitates a court order prior to making any arrest.

In What Situation the Section 276CCC or Clause 480 come into effect in the New Tax Bill 2025?

If the tax department has enough information about income that was not reported, they can search your home or office for evidence. After they conduct the search, they issue a notice under Section 158BC, requesting you to submit an income tax return (ITR). Failing to submit the ITR within 60 days of receiving the notice may result in legal action against you under Section 276CCC (Clause 480 of the new Income Tax Bill 2025).

What does the New Income Tax Bill 2025 state regarding Section 276CCC?

The 2025 Tax Bill states that no action can be taken under Section 480, which corresponds to Section 276CCC, without approval from senior tax officials. The new Income Tax Bill 2025 explains prosecution for not filing an ITR after a search in Clause 480. Clause 491 dictates how prosecution starts whereas Clause 485 addresses punishments for habitual offences. Section 480 of the New Tax Bill 2025 provides: If a taxpayer fails to file his or her income tax return within the time specified in this section after notice under Section 294(1)(a), he or she can be imprisoned for a period not less than three months, extendable to three years, and also penalized. Clause 485 of the New Tax Bill 2025 Provides: If an individual is convicted of an offence under sections 476, 477, 478(1), 479, 480, 482, or 484 and subsequently convicted again under any of these sections, they will be punished more severely. For the second and subsequent offences, they will be sentenced to a minimum of six months of rigorous imprisonment, extendable to seven years, along with a fine. Clause 491 of the New Tax Bill 2025 Provides: That an individual shall not be proceeded against under sections 473 to 484 except with the previous sanction of the Principal Commissioner, Commissioner, Joint Commissioner (Appeals), or Commissioner (Appeals).

Is this a Positive Change for Taxpayers?

Clause 480 (Section 276CCC) applies when a taxpayer does not file their ITR after a search operation. Tax officials used to initiate prosecution without requiring approval beforehand. But if the current changes in the Income Tax Bill 2025 become law, they will require approval before they can proceed. This may be welcome news for taxpayers, as this might lower the likelihood of automatic legal proceedings.