16 March 2009
for the non deduction of tax at source under chapter XVII-B penalty provisions prescribed under both section 221 and 271C. what is the need of two penalty sections for a default and what is the difference between these two sections (221 & 271C) which one will prevail? Thank you, Balakrishna
16 March 2009
Section 221 - When an assessee is in DEFAUT or is deemed to be in default in making a payment of tax, he shall in addition to the amount of the arrear of tax, interest u/s 220(2), by way of penalty, such amount as the AO may direct.
271C - If any person fails to deduct or fails to pay whole or any part of tax deducted at source, then such person shall be liable to pay penalty a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.
16 March 2009
Please note that penalty under both these sections can not be imposed at the same time. Difference between both these sections are as below:
1. Penalty u/s 221 is imposed by AO while by Joint Comm. u/s 271C.
2. Section 221 comes into play only when there is a defaul in payment while 271C comes into force both at the time of failure to deduct and payment.
3. penalty u/s 271C is automatic while u/s 221 is only at the direction of AO.
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