Cosequences of non deduction of tds

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CA Sanjay Baheti (Querist)

21 January 2012 Dear Members,

One of my client being an Individual engaged in Service sector i.e. Provision of Advertisement Agency services. it is expected that the Turnover/Gross receipts likely to be exceeded the prescribed limit so far Tax Audit u/s 44AB of I.T. Act is concerned during the Current year i.e.2011-12.Moreover also he obtianed TAN at the end of June,2011 & there after he is deducting TDS on Contracts & Commission u/s 194C & 194H of I.T.Act respectively regularly & same is remitted to Govt.Dept. within time.
Now Query is so far period from April,2011 to June,2011 is concerned if certain payments were made without TDS Deductions as at that time Assesse is not having TAN.
What shall be consequences for such non deduction of TDS for the period from April,2011 to June,2011.

In my view as this is very first year of Tax Audit so the TDS provisions shall be applicable from Next year,hence there shall be no disallowable of expenses u/s 40 a (i) of I.T. Act for non deduction of TDS particularly for the above mentioned Period.

Please comments & reply immediately.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

21 January 2012 Your comments and views are correct as far as the question of liability to deduct tax will arise in the next year. In spite having no liability why he is deducting tax ? is not understandable.

The point to be kept in mind is that TDS deducted should be deposited within the prescribed time.

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