INCOME TAX

INSTRUCTION NO. 1968/1999

 Dated: June 8, 1999

Section(s) Referred: 271C ,274 ,276B ,278AA

Statute: Income - Tax Act, 1961

Sub :- TDS Defaults - Action Thereon :- Reg.

Attention of the Board has been drawn to the issue of applicablity of penalty and prosecution provisions for TDS defaults committed by various assessees. The matter has been considered and examined and this Instruction issues with the approval of Central Government.

2. So far as the levy of penalty u/s 271C is concerned, the penalty u/s 271C is to be levied in cases where there is a failure to deduct the whole or any part of tax as required by or under the provisions of Chapter XVII B. However, as per Section 274 of I.T. Act, the assessee must be heard or given a reasonable opportunity of being heard and also the conditions as laid down in Section 273B of IT Act must be kept in mind in such cases.

3. As regards initiation of prosecution proceedings u/s 277 of I.T. Act for false verification of TDS return, it needs to be examined in each case as to whether revised TDS return has been filed voluntarily or otherwise. In such case, it may also be verified as to whether taxes together with penal interest u/s 201(1A) have been paid or not.

4. Prosecution proceedings u/s 276B of IT ACT may be initiated subject to Section 278AA of IT Act in all cases where there is a failure to pay to the credit of the Central Government the tax deducted at source as required by or under the provisions of Chapter XVII B.

F.No.275/94/98-II(B)

(NAROTTAM MISHRA)
Deputy Secretary (Budget)