Tds deducted by property buyer but not deposited

TDS 1091 views 4 replies

Naveen Kumar Jain

Chartered Accountant

641 Points Joined April 2008

Buyer of property deducted tds @ 1% from sale value of property in 2012-13, when TDS on property transactions was just introduced and procedures were not clear. The TDS deducted did not appear in AS26 of the seller and on enquiry it was found that deducted amount was deposited by the buyer in challan showing as self assessment tax for a.y 2013-14 and hence the seller did not get any credit for the same. The effect is that deducted amount did not get deposited as TDS on behalf of seller.

Now what is the remedy to seller, as buyer is not refunding the amount and CPC Bangaluru has raised a demand notice on seller.? The seller has approached his ITO with all documents, who has referred it to ITO on whose jurisdiction the buyer comes, but no action has been taken by him to recover the amount from buyer. Seller has also informed CIT-TDS apprising him that buyer has not deposited TDS amount deducted and requesting him to recover the amount fom the buyer, but he has simply forwarded the complaint to ITO of seller's jurisdiction and not initiated any recovery proceedings against the buyer of property, who comes under his jurisdiction as deductor.

Can some one suggest which authority to approach so that action u/s 276B can be initiated against the buyer to recover the amount?

Replies (4)

S. Shiroor

Others

1212 Points Joined July 2015

The agreement should contain this that buyer should payTDS . You have to ask buyer to pay urgently with interest.

Naveen Kumar Jain

Chartered Accountant

641 Points Joined April 2008

Buyer has deducted TDS but deposited the amount as advance tax paid by him, so he got the credit. That means he did not deposit TDS, which he deducted from the sale price and paid balance to the seller. Now he is not responding to demand of refunding the amount deducted, nor depositing with tax authorities as TDS. In effect this is a case of failure to deposit deducted tax (TDS) and should be covered u/s 276B . Which authority should be approached to initiate action of recovery from the buyer of property - i.e TDS Deductor? The ITO or CIT-TDS, in whose jurisdiction the buyer comes, are keeping silent and not doing any thing to recover the amount.

S. Shiroor

Others

1212 Points Joined July 2015

If the agreement contains that "TDS will be deducted and credited to seller's account" then the the deal is null and void. Always remember that TDS amt should be taken and you have to credit uur self with his PAN no but challan no being form 26QB.

You also write to his AO (both IT and TDS).

Keep on writing. He has commited a fraud with IT dept also.

S. Shiroor

Others

1212 Points Joined July 2015

Does the agreement mention full amt including 1% TDS. You have proof that you have received only99% of the agreement amt in Hand.

You write a letter by speed post to his AO and TDS AO with a copy to him and mention the clause as below.

Failure to pay the tax collected at source

"276BB. If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.".

The fact is he has commited two crimes.

1) First is he did not deposit TDS amt collected from you and u/s 276bb faces punishment.

2) Second he used ur money to pay his tax credits.

write him a seperate letter and to the Chairman of Society that he has commited two crimes. Write to him that he should realize his mistakes. Mention to him about consequences he faces if he does not comply with Law.

You have right to go to greivance.