Section 478 — Wilful attempt to evade tax, etc. Successor to s.276C of the 1961 Act.
Section 478 is in Chapter XXII — Offences and Prosecutions, which runs from section 473 to section 498.
Sub-sections (1) and (2) as they now stand were substituted by Act No. 4 of 2026 with effect from 1 April 2026.
Sub-section (1) punishes a person who wilfully attempts in any manner to evade any tax, penalty or interest chargeable or imposable under the Act, or who under-reports his income, on a scale graded by amount: simple imprisonment up to two years, or fine, or both, where the amount sought to be evaded or the tax on under-reported income exceeds fifty lakh rupees; simple imprisonment up to six months, or fine, or both, where it exceeds ten lakh rupees but does not exceed fifty lakh rupees; and fine, in any other case. Sub-section (2) punishes a person who wilfully attempts in any manner to evade payment of any tax, penalty or interest, on the same three-tier scale.
Sub-section (3) provides that the punishment is without prejudice to any penalty imposable under any other provision. Sub-section (4) defines what a wilful attempt to evade includes: possession or control of books of account or other documents relevant to a proceeding containing a false entry or statement; making or causing to be made a false entry or statement in them; wilfully omitting or causing to be omitted any relevant entry or statement; or causing any other circumstance to exist which will have the effect of enabling the person to evade the tax, penalty or interest or its payment.
The section makes evasion a criminal offence in addition to a taxable and penalisable one, and sub-section (4) is what makes it prosecutable — it converts the abstract idea of a wilful attempt into four identifiable acts centred on the books of account. The graded scale ties severity to the amount involved, and sub-section (3) makes clear the criminal charge is additional to, not in substitution for, the civil penalty.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Punishment where the amount evaded or the tax on under-reported income exceeds fifty lakh rupees | Simple imprisonment for a term up to two years, or fine, or both | Substituted by Act No. 4 of 2026 w.e.f. 1-4-2026; applies alike under sub-sections (1) and (2) | Sub-sections (1)(a) and (2)(a) |
| Punishment where that amount exceeds ten lakh rupees but does not exceed fifty lakh rupees | Simple imprisonment for a term up to six months, or fine, or both | Substituted by Act No. 4 of 2026 w.e.f. 1-4-2026; applies alike under sub-sections (1) and (2) | Sub-sections (1)(b) and (2)(b) |
| Punishment in any other case | Fine | Where the amount sought to be evaded or the tax on under-reported income does not exceed ten lakh rupees | Sub-sections (1)(c) and (2)(c) |
Three features of the substituted text change how the offence works. The imprisonment is simple, not rigorous; there is no minimum term, only a maximum, so the court's discretion runs from nothing upward; and the lowest tier carries no imprisonment at all. The thresholds of ten lakh and fifty lakh rupees are measured on the amount sought to be evaded or the tax on the under-reported income, not on the income itself. Sub-sections (1) and (2) cover different conduct — evading tax that is chargeable or imposable, and evading payment of tax already fixed — so concealment and defeating recovery both fall within the section on the same scale. Sub-section (4) is inclusive: mere possession or control of books containing a false entry, without any showing that the person made it, is within the definition.
A firm omits sales of Rs. 3 crore from its books, on which the tax works out to Rs. 90 lakh. Because that exceeds fifty lakh rupees, sub-section (1)(a) applies and the punishment may extend to simple imprisonment for two years, or fine, or both. Had the tax been Rs. 20 lakh, clause (b) would apply with a maximum of six months; below ten lakh rupees, clause (c) leaves only a fine. Under sub-section (3) the firm remains exposed to any penalty imposable under other provisions.
This is the charge in a criminal complaint filed against a taxpayer before the court trying offences under the Act, usually following an assessment or penalty proceeding in which under-reporting or a false entry was found. It does not appear in an assessment order itself.
with simple imprisonment for a term up to two years, or with fine, or with both, where the amount sought to be evaded or tax on under-reported income exceeds fifty lakh rupees
has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the notifications index.
