INCOME TAX

Board's Circular No. 685, dated 20-6-1994--Non-initiation of proceedings for reopening of assessments in respect of employees--Regarding

Circular No. 686

Dated 12/8/1994

To

All Chief Commissioners of Income-tax.

All Directors-General of Income-tax.

Sir,

Reference is invited to Board's Circular No. 685, dated 20-6-1994* (F.  No. 275/69/94-ITB) providing for non-initiation of proceedings under section 221/276B/271C of the Income-tax Act, 1961, in respect of employers defaulting in deducting tax at source on the salaries and allowances paid abroad or perquisites provided abroad to their employees for services rendered in India. Doubts have been raised in some quarters as to whether, due to the disclosure of the excess salary payments by the employers, any consequential action will be taken in the hands of the employees.

2. The Board has considered the matter. The spirit behind the issue of Circular No. 685, dated 20-6-1994 (See [1994] 208 ITR (St.) 54) was to encourage immediate voluntary compliance on the part of the employers defaulting in tax deduction. In order that this intention is fully achieved, the Board has decided that the assessments of the employees, in respect of whom payments of short-deduction and interest thereon are made by the employers in pursuance of Circular No. 685, dated 20-6-1994 (See [1994] 208 ITR (St.) 54), will not be reopened or otherwise disturbed merely on account of the excess salary payments now disclosed by the employers.

This may be brought to the notice of all Assessing Officers in your region.

Yours faithfully,

(Sd.) G. Muthuramakrishnan,

Director-ITA. II,

Central Board of Direct Taxes.