Section 201(A)

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Rakesh Bhalotia (Querist)
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21 July 2011 We have a mines and we have hired dumpers and giving some work to sub contractors. The subcontractors raised bill to us quarterly in date of quarter end i.e. 30.06.2008. But we have got the bill after 15th of next month i.e. 15.07.2008. So that we could not deposit the TDS on due time. I want to know that in this case Sec. 201(1A) is applicable in F.Y. 2008-09.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 July 2011 In case of TDS the date of crediting bill in your accounts will create one point of time and the date of payment to the party will create another point of time.

TDS liability arises on the basis of " which ever is earlier."

You will not be suffered by S. 201(1A) if you have deducted TDS as and when you have credited the bill in your a/c. I assume that payment is generally made after receiving the bill. If You have credited the bill on 15/07/ and deposited TDS in the corresponding quarter, it can not be said that any contravention has been made.

Rakesh Bhalotia

Rakesh Bhalotia (Querist)
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22 July 2011 we have received the bill dt.30.06.2008 after 15th of next month but we have credited the bill on 30.06.2008 and on that day we have deducted the TDS too. The same process applied in quarterly TDS return too. The AO has issued a showcause u/s. 221(1) of the I.T. Act 1961. I want to to know that there is any way out and if possible give me the details of this act completely.

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Rakesh Bhalotia

Rakesh Bhalotia (Querist)
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25 July 2011 please suggest me that the what grounds will satisfy AO regarding the above matter. if possible please give me some case laws which is similar and in my favour.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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25 July 2011 Penalty Provisions U/s 221 can be invoked in the following situations where any person who is required to deduct TDS-

1. Does not deduct ,or,
2. Does not pay, or,
3. After deducting tax fails to deposit the whole or part of the tax
4. Deduction and deposit should be made as required by or under the Act.

First 3 points are "Action" points. Which you have complied with.

4th point is a subjective point and can be cleared by submitting the proper cause of late deposition of the tax amount. The ITO has to satisfy himself, if you have complied the provisions ...I mean to say if your Action points are OK, either he may not impose penalty or penalty imposed by him will not sustain in the appeal.

So, you can reply the notice clarifying the practical aspect of the problem, as you did here.

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