As per the Income Tax Act, all cases where TDS/TCS is deducted but not
deposited within the due date, as prescribed, are punishable u/s 276B/276BB or
278A.
CBDT has issued Standard Operating procedure
for prosecution in case of TDS or TCS defaults. The assesees / deductors are
advised to remove all TDS Defaults shown on TRACES Website otherwise show cause
notice for prosecution may be issued by TDS CPC. It is the time to rectify TDS
statements filed in earlier years and avoid consequent harsh action by TDS CPC.
CBDT has issued earlier two circulars for processing and recovery of
interest but now has issued standard operating procedure for prosecution in
cases of TDS and TCS defaults. The monetary
limits to be considered for prosecution as given by the CBDT are:
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Where amount of tax deducted
is Rs.1,00,000 or more and the same is not deposited by the due date
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Mandatorily be processed for
prosecution in addition to the recovery
|
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Where the tax deducted is
between Rs.25,000 and Rs.1,00,000 and the same is not deposited by the due
date
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May be processed for
prosecution depending upon the facts and circumstances of the case e.g
-Repeated defaults and
- Tax not been deposited till
detection.
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Identification of cases:
·
CPC-TDS/TRACES will generate a list of prosecutable
cases for mandatory processing for prosecution (List-A)
·
Such identification shall be done within one
month of the filing of the quarterly
TDS statement.
·
There
will be two parameters for identifying
prosecutable case for mandatory processing.
Ø Late Payment Interest had not been paid completely/not
paid at all till that date,
Ø Deduction had been made but no challan available in
the account of the deductor.
(Limit Rs.1,00,000/- for the cases of Late Payment
Interest and for Short Payment)
·
CPC-TDS will
generate another list of cases (List-B) for defaults of delay in payment of Rs.
25,000 to Rs. 1,00,000/- along with default sheets for the year as well as
preceding year and subsequent year within one month of the filing of the
quarterly TDS statement.
·
TDS cases dealt
by the International Taxation Division, with respect to payments made to
non-residents also required to be dealt with in the same manner.
·
CPC-TDS shall
generate the list of such non-filers within one month from due date and
communicate to the AO(TDS) for issue of notice and further pursuit.
Procedure for launching
prosecution
1)
CPC TDS
will identify and enter into prosecution register
In case of mandatory processing
or otherwise, CPC- TDS will identify the cases for prosecution and will enter
in the ‘Prosecution register’ and will report to the CIT (TDS) who shall also
maintain the prosecution register in Form–D. Till a specific module in CPC-TDS
is made functional for having control on prosecution proceedings, the entries
may be made in manual register.
2)
AO ( TDS)
will gather further information & issue show cause
AO(TDS) once the case is identified
for processing will collect the following information:
(a) Details of the company/ firm/ individual, Address, PAN
Number and TAN number
(b) Name of Directors/
partners/ Responsible person, their addresses, PAN and other particulars
(c)
Accounts of the deductor for the
relevant year showing late payments.
(d) Copies of the TDS statement filed by assessee
deductor.
(e)
Copies of challans of late deposit of
TDS by the assessee deductor.
(f)
Copies of the intimations showing
late payment interest for all the quarters of the relevant assessment year, if
it is available.
(g)
Copies of Audit report, if they show
default.
(h) While collecting above information, AO(TDS) may also
collect other details to check whether :
(i) the default was only in one year
(ii) the deductor has himself rectified
the mistake and deposited the tax
(iii) the same offence has been compounded
earlier and if yes, how many time etc.
The AO(TDS) shall issue show cause notices to the person responsible
for deduction, within 45 days of receipt of the list of prosecutable cases from
CPC-TDS end will ensure that the reply is furnished within 30 days of the issue
of the show cause notice.
In case no reply is furnished
within 30 days, it shall be presumed that the person responsible for deduction
has no cause to state and the matter may be pursued further.
The AO(TDS) shall examine the
reasons/reply for non-compliance and will enter Form ‘F’and send to the
CIT(TDS) The Form ‘F’ will indicate :
·
The facts of commissioning
of offence.
·
Events, primary
& secondary evidences to establish the offence with present stage of
the proceedings and list of documentary evidences including depositions,
submissions to prove the offence.
·
The offence is
second or subsequent offence in terms of Section 278A.
AO(TDS) will mandatorily refer
all the cases of TDS default exceeding Rs.1 lakh to CIT(TDS), cases of defaults
between Rs.25000-Rs.1lakh shall be referred to the CIT(TDS) only if he is
satisfied that it is a case fit for prosecution. The report to CIT(TDS) shall be submitted within 60 days of the
issue of show cause notice. Time granted to furnish the reply may be excluded
from this time limit.
Sanction by CIT TDS
The CIT(TDS) will accord
sanction u/s 279(1). He shall:
·
If considers the
case fit for prosecution will generate online a show cause notice(s) to all
proposed accused(s) u/s 276B/276BB/ 278B of the I.T. Act
·
After hearing the
assessee and after proper application of mind clearly enunciate a fair and
judicious view has been taken in view of the provisions of Section 278AA before
filing the complaint(s).
Compounding Application by the deductor
·
The assessee
deductor can file a compounding application under S.276B/276BB before the Chief
Commissioner of Income-tax.
·
The application
should be processed on priority basis and mandatorily be disposed off within
the time frame as prescribed by the Central Action Plan guidelines.
·
During the
pendency of the compounding application,
the CIT(TDS) shall keep the prosecution proposal pending. As soon as an
application for compounding is moved, an entry should be made in the
prosecution register & Entries of subsequent action on compounding
application shall also be made in such register.
Time frame from identification
to passing of order u/s 279(1)/279(2):
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S.No.
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Section
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Time limit for submitting
proposal for sanction u/s 279(1)
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Time limit for according
sanction u/s 279(1)
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Time limit for launching
Prosecution
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Authority to submit
proposal & launch prosecution
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1
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276B
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Within 90 days of generation
of list on CPC-TDS detection of offence or receipt of information from any
other source/ income tax authority
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Within 60 days of receipt of
information from the AO(TDS)
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Within 30 days of receiving
approval u/s 279(1)
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AO(TDS) having jurisdiction.
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2
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276BB
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( Same as above)
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( Same as above)
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( Same as above)
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( Same as above)
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