Penalty for delay in remittance of TDS

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Shyam Lal Naik (Querist)
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09 December 2009 Dear Members,

Please reply with reference to statutory provisions and judicial pronouncement.

Whether a deductor can be treated as an assessee in default u/s 201 for delay in remittance of TDS? In this case, the amount which remain to be paid is interest only.

If the answer to above is in affirmative, whether the deductor can be subjected to penal provisions u/s 221(1)?

Whether the case law, "Shreeniwas And Sons Versus Income-Tax Officer, 'B' Ward, Asansol, And Others.[1974] 96 ITR 562, will come to the rescue of the deductor?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 December 2009 Calcutta High Court decision Cited by u can be relied upon.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 December 2009 Section 201
CONSEQUENCES OF FAILURE TO DEDUCT OR PAY.
(1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax :
Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Assessing Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.
(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at eighteen per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid.
(2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1).
Related Judgements
TUTICORIN VEGETABLE MARKETING CO. (P) LTD. v. INCOME-TAX OFFICER & ANR.
MITTAL STEEL LTD. v. ASSISTANT COMMISSIONER OF INCOME-TAX & ANR.

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