CBDT Adopts Zero-Tolerance Policy, Sends TDS Defaulter To Tihar Jail

The CBDT has made it clear that it will no longer tolerate defiance of the law by unscrupulous taxpayers. Offenders will be dealt with harshly and sent to Jail for non-compliance. In the latest development, a person who deducted TDS but did not pay it over to the Government has been sent to Tihar Jail

CBDT on warpath against defaulters

The CBDT has earlier sent the chilling warning to all taxpayers that it has launched aggressive prosecution against wilful attempt to evade tax or payment of any tax; wilful failure in filing returns of income; false statement in verification and failure to deposit the tax deducted/collected at source etc (see Press Release).

Not empty threats, defaulter sent to Tihar Jail by Tis Hazari Court

Now, in the latest development, a Delhi based Real Estate and IT Solution Company which deducted TDS but did not deposit the sum in the Government account, has faced the wrath of the Income-tax department.

No doubt, this action of not depositing the statutory dues of TDS caused harassment to many innocent persons because they were denied credit for the TDS in their income-tax assessments.

The department prosecuted the defaulter under sections 278B read with 276B of the Income-tax Act, 1961, and had him sent to Tihar Jail.

High Court also signals stern stance against tax evaders

It may be recalled that in Ambience Hospitality Pvt. Ltd vs. DCIT (Delhi High Court), the Delhi High Court was not impressed with the submission of the assessee that his wrongful claim of depreciation on land was a “mere clerical error” and that there was no “mens rea”.

The Court upheld the prosecution of the assessee under sections 276C and 277 of the Act on the basis that the defense of a “mere accounting mistake” is not available to case where the return is scrutinized by the directors and the auditors.

Press release issued by the Finance Ministry on prosecution

Press Information Bureau
Government of India
Ministry of Finance

20-January-2018 16:32 IST

Defaulter of Income Tax TDS arrested and sent to jail by the Tis Hazari Court

Tis Hazari Court has ordered judicial custody of the Director of a Delhi based Real Estate and IT Solution Company for non-compliance in Income Tax TDS Default case. It was found during investigations that the company had deducted TDS but had not deposited in the Government account despite there being a statutory obligation by the Income Tax Act. This also led to harassment of many innocent persons whose TDS had been deducted but the TDS returns had not been filed by the Real Estate Company. It was found that during FY 2013-14, FY 2014-15 and FY 2015-16, amounts of Rs. 45,68,990/-, Rs. 35,45,290/- and Rs. 33,36,970/- were deducted by the assessee company. The assessee company was found to be defaulting on filing of TDS return statements.

Taking into account all defaults, show cause notices were served upon the Director to explain why sanction for prosecution should not be granted under section 278B read with 276B of Income Tax Act for not complying with the provisions of the law in respect of non -deposition of the Income Tax deducted at source. However, during the proceedings, the assessee asked for repeated adjournments, instead of giving reasonable explanations for the defaults during the proceedings. Hence, it was concluded that there is no justifiable reason for the delay in depositing the TDS. This clearly showed the non-serious behaviour of the assessee towards the provisions of deduction and depositions of tax at source. Therefore, TDS Wing in exercise of powers under Section 279(1) of Income Tax Act sanctioned the filing of criminal complaint against the company as well as the Director under Section 276B read with 278B, 278E and 279 of the Act for FY 2013-14, FY 2014-15 and FY 2015-16 in 2017.

Non-bailable warrant was issued against the Director in December 2017 for non-compliance with the case proceedings. The Non-bailable warrants returned to the court unexecuted with the report that accused is avoiding execution of the warrants. Hence, on 19 Jan 2018 accused was taken into custody and was remanded to judicial custody. The accused has been sent to Tihar Jail for the same.

The Principle Chief Commissioner of Income Tax – Delhi, Shri. S. S. Rathore stated that the Department is very serious about timely depositing of the TDS deducted by the employers. It is reiterated that the TDS is Government money which has to be deposited in Treasury on timely basis. Failure to deposit the tax deducted will lead to criminal prosecution with imprisonment from 3 months to 7 years. This year the Principal Chief Commissionerate – New Delhi has sanctioned prosecution in approximately 240 cases which clearly shows the strict attitude of Income Tax Department towards the defaulters. The Principal Chief Commissioner – Income Tax – New Delhi has given a strong message to non-compliant tax payers that tax defaulters will find it difficult to escape from penalties and prosecutions from vigilant and proactive Income Tax Department and at the same time ensuring Best Taxpayer Friendly Services for the honest and compliant taxpayers.”



3 comments on “CBDT Adopts Zero-Tolerance Policy, Sends TDS Defaulter To Tihar Jail

    The TDS deductor is being sent to jail but whose tax has been deducted would get his refund. The case is of property sale. the buyer has deducted the Tax and has not deposited in Govt. A/c. on the other hand the seller whose tax has been deducted file a return of income and claimed refund of such amount. How the seller would get his refund?

  2. S PRAKASH says:

    How many persons will be sent to jail? the policies should be applicable both to the assessee and the officers. Attitude of the officers to the limited Scrutiny has not changed till date. The E assessment concept has not still materialized.Survey of the non filers and stop filers has to take a shape

  3. Shashikant G Parasramka says:

    The govt. should also prosecute its officers who delay refunds to taxpayers and show its sincereity. If the govt. is serious about collection and sincere in its approach, then the opposite part of sending its officers to jail who sit over refunds and/or delay them for non-rectification, pending appeal effects etc.

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