very urgent friends

Venkata Krishna J (Service) (85 Points)

14 January 2010  

During the recently concluded CS-Final exams, the follog, 2 questions were asked as part of Direct-Taxes paper.  a) Comp. X recd. share application money from unknwon sources. The I T Deptt wants to treat it as undisclosed income because the applicant is found out to be fictitious. 

b) TDS was not effected which should have been, but the payee says he paid the tax on behalf of the payer. Is it acceptable?  Whether the payer attracts liability u/s 234B/234C till the TDS is remitted to the Deptt by him ? The payer may later request for refund?  

Very grateful friends for kind clarification.. regards,