Section 520 of the Income-tax Act, 2025 — Cognizance of Offences (Which Court Can Try a Tax Offence)

In plain language

What Section 520 actually says

Section 520 of the Income-tax Act, 2025 is a short but important procedural rule. In plain words it provides that no court inferior to that of a Judicial Magistrate of the first class shall try any offence under the Act. It does not create a new offence, a penalty or a tax. Instead, it fixes the minimum level of criminal court that is competent to hear and decide a prosecution launched by the Income-tax Department.

This section is the 2025 Act's successor to the old Section 292 (specifically Section 292(2)) of the Income-tax Act, 1961. The 1961 version referred to a "presidency magistrate or a magistrate of the first class"; the 2025 Act modernises this to the current terminology of a Judicial Magistrate of the first class, consistent with the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 that has replaced the old Code of Criminal Procedure, 1973.

Why this rule exists

• Seriousness of tax crime: Offences such as wilful attempt to evade tax or failure to deposit TDS can carry rigorous imprisonment. Parliament wants such matters heard by a magistrate of adequate standing, not the lowest tier of criminal courts.
• Protecting the taxpayer: By barring inferior courts, the section ensures the accused is tried before a judicial officer with the seniority and sentencing powers appropriate to the charge.
• Certainty of jurisdiction: It removes any doubt about which court is competent, reducing the chance of a conviction being set aside on a technical jurisdiction ground.

Who and what it applies to

Section 520 applies to every offence under the Income-tax Act, 2025 — that is, the criminal offences set out in the offences-and-prosecutions chapter, for example:

• Wilful attempt to evade tax (2025 Act successor to old Section 276C);
• Failure to furnish return of income (successor to old Section 276CC);
• Failure to pay tax deducted at source / tax collected at source (successors to old Sections 276B and 276BB);
• False statements in verification, falsification of books, and similar offences.

It applies to whoever is prosecuted — an individual, a partner, a director, a principal officer of a company, or the company itself. It is a rule for the court, so it binds the judiciary rather than the taxpayer directly, but every accused benefits from it.

How it fits with the Special Court framework

Section 520 must be read together with the neighbouring prosecution provisions of the 2025 Act:

• Special Courts: The Central Government, in consultation with the Chief Justice of the High Court, may designate one or more courts of a Judicial Magistrate of the first class as a Special Court to try tax offences. Because a Special Court is itself a first-class magistrate court, it satisfies the Section 520 floor.
• Offences triable by Special Court: Where a Special Court is designated, listed offences are tried there and it may take cognizance on a complaint by an authorised income-tax authority.
• BNSS procedure: The Bharatiya Nagarik Suraksha Sanhita, 2023 (including its rules on bail and bonds) governs the trial, and the officer conducting the prosecution is treated as a Public Prosecutor.
• Sanction to prosecute: A prosecution generally cannot start without the sanction of the prescribed senior income-tax authority (e.g., Principal Commissioner / Commissioner), a safeguard against arbitrary complaints.

Practical implications for taxpayers

• If you receive a prosecution complaint, check that it has been filed before a court that is at least a Judicial Magistrate of the first class (or a designated Special Court). A complaint tried by an inferior court would be without jurisdiction.
• Section 520 is procedural — it does not by itself decide guilt or the quantum of penalty; those flow from the specific offence section and the sentencing powers of the court.
• Prosecution is separate from penalty. You can face a monetary penalty under the penalty provisions and criminal prosecution under the offence provisions; Section 520 only governs the criminal side.
• Mens rea matters: Courts have held that mere delay in paying tax, without a wilful attempt or guilty mind, generally does not attract prosecution — but where prosecution is validly launched, Section 520 fixes the court.