Re: Prosecution – Tax deduction at source-S.276B

A Declaration filed by the assessee under the scheme for settlement of tax arrear arising out of the assessment of income under an order passed u/s 143(3) is rejected by the authorities on the ground that he was prevented from filing such a declaration under the scheme by virtue of clause (ii) of s.9(a) which disentitles an assessee where a prosecution is initiated u/s 276B for violation of TDS provisions for the said assessment year. Please advise

An assessee is disentitled under clause (ii) of s.9(a) to file a declaration where a prosecution is initiated on or  before the date of declaration. On an apparent reading of the clause(ii) in isolation nto in the context one would agree with the authorities however, on a closer reading  of s.9 one would gather that it is only where the prosecution is in relation to a tax arrear relating to an assessment year that an assesseee is prohibited from opting for the scheme. In the facts of the case, the prosecution is not launched in relation to an assessment year for which the tax arrear are in dispute under the appeal before the appellate forum. The assessee is well within his rights to file a declaration under the scheme and settle the dispute and seek relief. 

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