Declaration for Investment from employee

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biren thakkar (Querist)
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08 April 2008 Respected sir,

my firm is having a policy to employees that they should declare thier investment in april for that financial year without any supportings. in that case one employee had given us the wrong declaration by giving more amou nt as investement, but he had not invested the same .
Now his liability is coming Very high at the end of the year.
with the above case i wanted to know that.
1) The declaration given by employee can be a proof that, the declaration given by him is the base for lesser deduction???
2) if he fail to invest the same, that it is the liability of the company to pay the tds at the end of the year with interest on lesser deduction???
3) is there are any Penalty or interest than please specify???
4) with that if i charge the penalty & interest & the deduct the same from the employees salary than is it void in law, if i produce the proof of wrong declaration by him???

Please clarify the same with example if possible.