Question And Answer
Subject: TdS and Prosecution
Querist: Deepali shah
Answered by:
Tags: ,
Date: December 24, 2021
Query asked by Deepali shah

Assesseee is private limited company. In addition to Remuneration to Directors , Incentive is paid to them on the basis of profit of the company after finalization of audited accounts and immediately Tax is deducted an paid in the month of June every year. Co is received show casue Notice as to why prosecution should not be made on the ground of not deduction tax on monthly basis and delay in payment of same.  Company take a stand that since the incentive is link with finalization of accounts , it can not determined the amount of incentive and therfore there is no delay in complying the provisions of TDS and no prosecution proceedings be made against the Co and directors.  Pl guide .

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Answer given by

The stand taken by the Company is justified . The Company has to justify the action of not deducting the tax at source on monthly basis . The company may have to file a detailed reply on facts and has to demonstrate that there was no failure on the part of the assessee to deduct tax at source . The assessee should also request for personal hearing . also As per section 278E the burden is on the accused to prove beyond reasonable doubt he had no culpable mental state . The Supreme Court in Madhumilan Syntex Ltd. v. UOI (2007) 290 ITR 199 / 160 Taxman 71 / 208 CTR 417 / 199 Taxation 259 (SC) / 11 SCC 297 held that even if the tax deducted has been deposited with the Central Government, but if there is a delay then the assessee would be liable under section 276B for penalty for non payment of the tax within the stipulated time. In ITO v. Anil Batra (2018) 409 ITR 428 (Delhi)(HC) the Court held that only the director in charge can be prosecuted and all the directors .

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