Tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2015 An organisation did not deduct TDS on the payments it made due to some confusion on the applicability of Income Tax Act. One of them was a consultant, who filed his return and deposited the tax.

Now the Tax department was tipped off and it carried out a TDS survey and demanded the Tax to be deducted alongwith interest. The organisation(semi-govt.) with undue pressure claimed the related amount from the Consultant ignoring the provision of the Income Tax Act that as the so-called deductee had filed return and deposited tax, it was not an assessee in default and need not deposit TDS & interest.

Now again, the department, hastily and for some reasons best known to them issued penalty u/s 271C and 272 A(2)K, which again the department is claiming from the so called deductee.

Please advice how this deductee can save himself from this hardship and from the threat & blackmail of this organisation. Also, if this amount is not deposited by him, will he be liable to some penal/legal action or has he got some legal recourse.

Also, the period for which the TDS is in question has long past and he could not file a revised return to claim this TDS, which is in Lacs. Please advice how to proceed in the matter so that the TDS can now be claimed. the matter pertains to 3 assessment years.

I would be grateful to all the learned experts if this problem can be solved.

Thanks in advance.....

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

20 April 2015 It is the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income.

CHANGES IN SECTION 201:

Finance Act, 2012 inserted proviso to Section 201(1) which provides that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

(i) has furnished his return of income under section 139;

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.

It is further provided that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax.

Inform the above provisions to the deductor and the Income tax dept and get relieved from the issue as you have complied with the provisions.

Citing the above the deductor can claim refund of the TDS amount and interest.