The default was years ago. Can the department still launch a s.276B prosecution now?
Under the Income-tax Act 1961, yes. The bar in s.468 of the Code of Criminal Procedure applies only to offences punishable with fine only, with imprisonment up to one year, or with imprisonment of more than one but not more than three years. Section 276B is punishable with rigorous imprisonment of not less than three months and up to seven years, so it falls outside s.468 altogether and no period of limitation runs against the complaint. What does have to be obtained is the previous sanction of the Commissioner under s.279(1), and that is a condition, not a clock. There is a second and more fundamental reason, and it is the one that actually decides the question: the Economic Offences (Inapplicability of Limitation) Act, 1974 takes offences under the Income-tax Act, 1961 out of that Chapter of the Code altogether, its Schedule including the 1961 Act, and the Madras High Court has applied it to reject a limitation plea three times. Section 476 of the Income-tax Act 2025, as substituted with effect from 1 April 2026, reduces the punishment for the same default to at most two years - but that does not by itself open a limitation defence, because whether the 1974 Act reaches the new Act is not established.
**Where the limitation actually comes from.** Nothing in the Income-tax Act fixes a time limit for launching a prosecution. The limitation, if any, comes from the criminal procedure code. Section 468 CrPC: "(1) Except as otherwise provided elsewhere in this Code, no Court, shall take cognizance of an offence of the category specified in Sub-Section (2), after the expiry of the period of limitation. (2) The period of limitation shall be— six months, if the offence is punishable with fine only; one year, if the offence is punishable with imprisonment for a term not exceeding one year; three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years. (3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment."
The list stops at three years. An offence punishable with imprisonment for a term exceeding three years is simply not "of the category specified in Sub-Section (2)", so s.468 does not bar cognizance of it at any point.
**But the Chapter does not reach an Income-tax Act offence at all.** Before any of that arithmetic matters there is a prior point, and it decides the whole question. The Economic Offences (Inapplicability of Limitation) Act, 1974 disapplies the limitation Chapter of the Code to offences under the enactments listed in its Schedule, and the Income-tax Act, 1961 is one of them. The Madras High Court has said so three times. In Sayarmull Surana v. ITO (2019) 260 Taxman 397 / 173 DTR 338 / 306 CTR 354 (Mad.)(HC): the "law of limitation under section 468 Cr. P.C. for criminal prosecution was excluded by Economic Offences (Inapplicability of Limitation) Act, 1974". In Srinidhi Karti Chidambaram v. Dy. DCIT (2020) 424 ITR 30 / 193 DTR 217 / 316 CTR 502 (Mad.)(HC), where the assessees argued that the complaints were "barred by limitation as they were launched after the prescribed period for reassessment", the Court held they "were not bound by limitation and were not barred by limitation" because "The Schedule to the Economic Offences (Inapplicability of Limitation) Act, 1974 included the 1961 Act". And in K. M. Mammen v. Dy. CIT (2022) 445 ITR 220 (Mad.)(HC): "under the Economic Offences (Inapplicability of Limitation) Act, 1974, there was no limitation for launching such type of cases". So the answer for s.276B under the 1961 Act is not only that the seven-year maximum puts the offence outside the third category. It is that no category reaches the offence in the first place. The seven-year point is a second reason, not the reason, and it should not be advanced on its own, because it invites the reply that a lower-punishment offence under the same Act would be inside the bar - which is wrong.
**Applying that to s.276B.** Section 276B of the 1961 Act, as substituted by the Finance Act 1997: a person who fails to pay to the credit of the Central Government the tax deducted at source by him as required by or under Chapter XVII-B, or tax payable under s.115-O(2) or the second proviso to s.194B, "shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine." Seven years is well outside s.468(2). On the plain reading, no limitation runs.
**The related provisions that do matter.** Section 469 fixes when the period begins where it runs at all — on the date of the offence, or when it came to the knowledge of the aggrieved person or the police officer, whichever is earlier. Section 470 excludes periods, including time spent prosecuting another proceeding with due diligence, time when the prosecution was stayed, and time spent obtaining the sanction of the Government — which matters here because s.279(1) requires the previous sanction of the Commissioner. Section 472 provides that in the case of a continuing offence a fresh period runs at every moment during which the offence continues. Section 473 lets a court take cognizance after expiry where the delay is properly explained or it is necessary in the interests of justice.
**The BNSS.** The Code of Criminal Procedure has been replaced by the Bharatiya Nagarik Suraksha Sanhita, 2023. Section 514 BNSS reproduces the bar — "Bar to taking cognizance after lapse of period of limitation. (1) Except as otherwise provided in this Sanhita, no Court shall take..." — with the same three categories, so the analysis is unchanged in substance for proceedings governed by the new Sanhita.
**The sanction, which is not a limitation.** Section 279(1): "A person shall not be proceeded against for an offence under section 275A, section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D, section 277 or section 278 except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority". No sanction, no prosecution — but the section fixes no time within which the sanction must be given.
**The escape route that does exist.** For a default on or after 1 October 2024 there is a statutory bar on prosecution where the deducted tax reaches the Government in time for the quarterly statement. The successor provision states it plainly: s.476(2) of the Income-tax Act 2025 provides that "The provisions of this section shall not apply if the payment referred to in sub-section (1)(a) has been made to the credit of the Central Government on or before the time prescribed for filing the statement under section 397(3)(b) in respect of such payment." Commentary on the corresponding 1961 Act amendment records the same relief operating from 1 October 2024: prosecution cannot be initiated if the TDS is deposited before the due date for the TDS statement.
**What changes on 1 April 2026, and why it matters.** Section 476 of the Income-tax Act 2025 as enacted mirrored s.276B — rigorous imprisonment of three months to seven years and fine. The department's own section page records that sub-section (1) was substituted by Act No. 4 of 2026 with effect from 1 April 2026, and that the punishment is now graduated: "(i) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of such tax exceeds fifty lakh rupees; or (ii) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of such tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; or (iii) with fine, in any other case." The parallel TCS offence in s.477 has been substituted in identical terms, with a note that it previously carried rigorous imprisonment of three months to seven years.
If that is the operative text, the punishment does fall inside the three categories in s.514 of the Sanhita: two years inside the three-year category, six months inside the one-year category, and a fine-only default inside the six-month category. That is not enough to open a limitation defence. The categories mean nothing unless the Chapter applies to the enactment, and the Schedule to the 1974 Act, as described in the decisions above, names the Income-tax Act, 1961. Whether that Schedule has been amended to name the Income-tax Act, 2025, and whether the 1974 Act itself continues to operate now that the Code of Criminal Procedure has been replaced by the Sanhita, could not be established here. Until both are answered, do not advise that the reduced punishment in s.476 makes an old default unprosecutable, and do not plead limitation on it.
Practitioners assume, from the general criminal law, that an old default must be too old to prosecute. Under the 1961 Act that assumption is wrong, and it is wrong for the specific reason that the offence carries a seven-year maximum. Advising a client that a 2018 default is safe because eight years have passed is the sort of advice that ends in a summons. If the substituted s.476 is the operative text from 1 April 2026, the opposite becomes true for the first time and the date of the offence becomes worth pleading.
My contract is only for loading bags, not a works contract, and much of what I pay is reimbursement of the contractor's wage bill. Must I still deduct under section 194C on the whole sum?
The Tribunal cancelled my concealment penalty. Can the 276C prosecution still continue?
I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
The complaint under s.276C and s.277 was filed while my reassessment is still running. Is it premature?
I missed the due date but I did file the return under s.139(4) before the assessment. Doesn't that mean I filed 'in due time' and cannot be prosecuted under s.276CC?
The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
You deducted the TDS but paid it late. Is penalty under s.271C leviable?
The Settlement Commission accepted my disclosure. Can the department still prosecute me for evasion?
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