Employers tax liability when income tax paid by employee himself

Though interest over short deduction may required to be paid but penalty may not be charged.

Several high Court judgements have held that if the assessee has himself paid the tax on the income on which tax was required to be deducted then taxing authorities can not once again recover that amount from the deductor.

Therefore there should be no requirement to deduct tax, there is also a case wherein penalty u/s 271C was also removed by the court for short deduction

Also see Tej Quebecor Printing Ltd V JCIT 2003 84 ITD 685 Del

Hindustan Coca Cola Beverages P Ltd. V CIT 2007 SC
 

Refer: https://abcaus.in/incometax/assessee-in-default/ca-certificate-27ba-26a-failure-to-deduct-collect-pay.H T M L