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Procucation u/s 276b of the income tax act

VISHAL SHAH (PROPRIETOR) (96 Points)

23 October 2013

GOVERNMENT ORGANISATION HAS DEDUCTED TDS BUT PAID INTO GOVERNMENT AFTER 15 MONTH.

RECENTLY WE HAVE RECEIVED THE SHOW CAUSE NOTICE FROM DEPARTMENT FOR PROCUCATION U/S 276B.

CAN DEPARTMENT CAN ISSUE SUCH TYPE OF SHOW CAUSE NOTICE WHEN TDS IS PAID BY PARTY VOLUNTARY BEFORE DEDUCTION BY DEPARTMENT?

HOW TO GIVE ANSWER IN ABOVE SITUATION?

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shanky budhiraja (will be decided) (96 Points)
Replied 24 October 2013

Hi Vishal,

On the basis of facts you have provided , understand there are two concerns you have . The questions revert would be as per my point of view supproting with relevant provision. please see reponse on each questioons one by one:

CAN DEPARTMENT CAN ISSUE SUCH TYPE OF SHOW CAUSE NOTICE WHEN TDS IS PAID BY PARTY VOLUNTARY BEFORE DEDUCTION BY DEPARTMENT?

As far as the department power is concern on issue of such type of notice, i would like to inform you that through section 276B of Income Tax Act ,department has duly provided such power.

"As per section 276B, if a person fails to pay TDS deducted to Govt in time and through procedure prescribed in law.He shall be punishable with imprisonment of Minimum 3 months or Maximum of 7yrs with fine."

In the section mentioned above would like to emphsized the words ,"fails to pay TDS deducted in time prescribed".

So on your question that Is department can issue such notice even person paid the tax voluantry later on? Please mark the words fails to pay in time prescribed. from there you can feel that in law there is no relaxation to person or there is no bar on department to issue such type of notice in case person paid the amont voluantry later on.

Hence notice issued by department is duly under the legal provision of Income Tax law.

HOW TO GIVE ANSWER IN ABOVE SITUATION?

As you mentioned in your fact that you have deposited TDS deducted after 15 months to the authority. you have also mentioned that you are a government institution. Please note here that TDS provision equally binding to Govt institution as well. So even govt institution who do not follow the provision of law would also laible for punishment.

So above reason could not be a excuse to drop the procucation proceeding.

In reply of above notice ,our plea to drop such proceeding or convert into fine penalty only , should be like that showing our reasonable excuse for such delay , proving that was not done intentionally only due to volumnious data mistakenly oversight and as we got to know that it has been underpaid, we VOLUNTARY paid the same along with interest & penalty.

So kindly drop such proceeding , we sincerly apologise for such delay.

CONCLUSION:

From the above you can see that there is a regirious punishment has been prescribed for this delay since government intention is that to penalised those person specially who have deducted the TDS but not deposited the same to authority.

Since in your case delay is of very long period but since you have voluntary paid the same , hoping would get some releif on the basis of that . Other depends upon the reasons you quote for such delay whether its sufficient to excuse or not .

Thanks

Shanky