Tds-penalty

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2012 1)I had an Overdraft account in a listed NBFC Company.I paid interest other than interest on securites (RS 200000)to the company on 5th june 2010,5 th July 2010 ,and 5th august 2010 ; but did not deduct any tax(TDS).Later on 15 Dec 2011, I deposited TDS amount with interest(@12 p.a or 1 p.m) to government by way of challan.On 15 th Jan 2012,the company reimbursed me with the TDS amount.

2)Now assessing officer is trying tp prosecute me u/s 276 of the IT act for delay of more than 12 months for depositing the tax.Can he do so?

3)Background: I am an Investor and Trader (in securities) and my accounts are audited(since turnover from trading activity exceeds 80 laks).But i have utilized the borrowed capital for investment activity(for capital gains )for which deduction of interest is not allowed; and for which I was not liable to deduct TDS (in the first place) . However, my CA suggested me to deduct tax for "safety" since the assessing officer for IT could treat this investment activity as trading(business);and consequently at a later date i may have to pay this TDS amt with interest and penalty. On his advice, I immediately applied for TAN and paid the TDS amount with interest.(i have only 1 deductee to whom i pay interest other than interest on securites)
Now i am stuck with Prosecution notice.What should i do? do i have any legal recourse.

4)Will I have to pay penalty?

CA Rahul Jain

CA Rahul Jain (Expert)
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28 July 2012 As per the above information, AO Can't proceed with the prosecution u/s 276B because there was no delay in depositing the tax.
However, there was delay in deducting the tax but as soon as the tax was deducted, it was deposited. Other consequences remains...

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