Income tax arrears could come down sharply, with the department planning to tighten the prosecution procedures to deal with tax evaders.

With huge sums of the income tax demands being locked in litigation, the department now wants speedier trials for quick disposal of cases. An amendment to facilitate this may be brought in the forthcoming Budget including speedier trials, moving some categories of offences to civil courts from criminal courts and moving up the threshold for demanding imprisonment of defaulters.

In the normal process of litigation, tax cases often take nearly 12 years to conclude. But now the department wants to give more teeth to income tax law on prosecution as well as introduce special provisions to initiate speedier trials. At present, the economic offence like tax evasion is treated in the same manner as that of a criminal case.

The assessing officer when he makes an appeal has to file a complaint with a magistrate for issuing notices to the offending party. But, this means the case has to be tracked from a sessions court. These delays the trail as the case travels through many more layers, which the department now wants to cut down.

Though the concept of summary trial is present in income tax law, it can take place only if the sentence is more than 2 years. However, for tax evasion of Rs 1 lakh and above, sentence could range between 6 months to 7 years. But, with the growth in economy and rise in income levels, need has been felt to enhance the limit of Rs 1 lakh.

This would reduce the number of fresh cases. The department may also look bringing in procedure similar to civil cases wherein appeal can only be made in High Court.

At present, the tax laws are not very clear as to which is fit for prosecution and which is not. The government should look at making all income tax offences compoundable. Higher the tax amount higher should be the compounding. Though this is there at present, but it is not clearly laid down. This is something which they should look at, Ravi Prakash, principal consultant, PricewaterhouseCoopers said.

The demand for tightening the prosecution procedures has time and again been raised by the field formations. The Central Board of Direct Taxes set up a panel to examine the matter, after a recommendation from the annual conference of chief commissioners' in Jaipur.