Circulation No. 275/201/95-IT (B) dated 29/01/1997 declares that no demand visualized u/s 201(1) of the IT Act should be enforced after the tax deductor satisfied to Officer-in-Charge of TDS that taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest u/s 201(1A) of the act till the date of payment of taxes by the deductee assessee.
The expenses for which tax was not deducted has been added to the income u/s 40(a)(ia) and the income tax for that amount has been paid by the deductor.
In this case the deductee assessee has cleared his tax liability for the AY and the ITR of the deductee produced before the ITO and deductor has paid the interest U/s 201(1A).
In this case can the assessing officer impose penalty u/s 272C of the IT act 1961 for non deduction of TDS?
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