Addressing genuine concerns of assesses while processing cases for TDS/TCS related prosecution under Direct Tax Laws - Income Tax - F. No. 285/90/2013-IT(Inv. V)/112

F. No. 285/90/2013-IT(Inv. V)/112 Government of India Ministry of finance Department of Revenue Central Board of Direct Taxes ARA Centre, Jhandewalan Extn. New Delhi- 110055, Dated 27.12.2014 To All the Principal Chief Commissioners of Income Tax All the Chief Commissioners of Income Tax All the Directors General of Income Tax Sir/Madam, Sub : Addressing genuine concerns of assesses while processing cases for TDS/TCS related prosecution under Direct Tax Laws I am directed refer to the guidelines/procedure for identification and processing of prosecution cases u/s 276B and 276BB of the Act issued vide F.No. 285/90/2013-IT(Inv.)/05 dated 07.02.2013. It inter-alia provides that cases having TDS/TCS of Rs. 1 lakh or more not deposited by the due date shall be processed for prosecution mandatorily . 2. In view of the above guidelines, list of cases of TDS/TCS defaults where the tax deducted exceeded Rs. 5 Lakhs and was not paid to the credit of the Central Government beyond one year for three F.Y.s 2009-10, 2010-11 and 2011-12 were collated with the help of Directorate of Systems and disseminated to the field formations during the F.Y. 2013 14. During the current F.Y. i.e. 2014-15, the Directorate of Systems has also separately identified such instances for F.Ys. 2008-09 to 2011-12 where though the taxes deducted were not paid to the credit of the Central Government at all, in addition to the defaults under the category of Tax deducted but deposited beyond the due date prescribed in the Act. 3. A number of representations have been received from various trade bodies, chambers, associations etc. that prosecution proceedings under section 276B/276BB are being initiated indiscriminately without appreciating the reasons for default. 4. Considering the representations and with a view to address genuine concerns of the assesses in such matters, the following clarifications vis- -vis the guidelines dated 07.02.2013 are issued: (i) Section 278AA of the Act provides that for the purposes of section 276B, no person shall be punishable for any failure referred to in the said provision if he proves that there was a reasonable cause for such failure. The fact that the deductor has remitted the money with interest before detection may be taken note of amongst other submission of the defaulter while deciding to launch prosecution. While processing the cases for prosecution u/s 276 B/ 276BB a fair and judicious view should be taken in view of the provisions of section 278AA before filing of complaints. (ii) If a person who has committed an offence(s) under section 276B/276BB files application for compounding of the said offence(s), the compounding application should be processed on a priority basis and mandatorily disposed off within the time frame prescribed by the CAP guidelines. 5. The PCCsIT/CCsIT and DGsIT are requested to ensure wide dissemination of these clarifications w.r.t. guidelines among all officers of their region. They are also requested to ensure a close monitoring of these processes to ensure that both prosecutions and compounding are effectuated in a timely and judicious manner. Yours faithfully, (Rajat Mittal) Under Secretary (Inv. V) CBDT