CBDT goes for SOP for Prosecution in cases of TDS/TCS Default
CBDT has released a Standard Operating Procedure for Prosecution in Cases of TDS/TCS Default.
As per the Income Tax Act, all cases where TDS/TCS is deducted but not deposited within the due date, as prescribed, are punishable u/s 276B/276BB or 278A. The present Instructions envisage two categories of cases for prosecution in TDS related offences; the first category is cases which are mandatorily to be processed (TDS of more than Rs. 1,00,000 deducted but not deposited before due date) and the second category is defaults between Rs. 25,000/- to 1,00,000/- which may be processed depending upon facts and circumstances of the cases.
CPC-TDS/TRACES will generate lists of prosecutable cases in accordance with the criteria laid down by the CBDT.
In cases of default in furnishing the quarterly TDS statement, CPC-TDS shall generate the list of such non-filers within one month from due date and communicate to the AO(TDS) for issue of notice and further pursuit.
Procedure for launching prosecution
The AO(TDS) shall issue show cause notices to the person responsible for deduction (directors/principal officers/partners/members/ karta), within 45 days of receipt of the list of prosecutable cases from CPC-TDS in accordance with Sections 278B/278C r.w.s. 276B/276BB of the Income-tax Act, 1961.
In case no reply is furnished within 30 days, it shall be presumed that the person responsible for deduction has no cause to state and the matter may be pursued further.
The AO(TDS) shall examine the reasons/reply for non-compliance and will prepare the proposal in Form ‘F' (as prescribed in Prosecution Manual) and send it to the CIT(TDS) through proper channel.
While the AO(TDS) will mandatorily refer all the cases of TDS default exceeding Rs.1 lakh to CIT(TDS), cases of defaults between Rs.25000-Rs.1lakh shall be referred to the CIT(TDS) only if he is satisfied that it is a case fit for prosecution.
The CIT(TDS) is the competent authority to accord sanction u/s 279(1).
There is no statutory requirement for obtaining opinion of the Counsel before granting sanction for prosecution. However, given the fact that TDS offences are technical in nature, such reference could be made in complex situations like identification of accused(s) etc to avoid legal infirmities in prosecution proposals/complaints.
The assessee deductor can at any stage of the proceedings, file a compounding application before the Pr. Chief Commissioner of Income-tax/Chief Commissioner of Income- tax. Instruction vide F.No.(Inv.V)/108 dt. 23.12.2014 should be followed in dealing with the compounding applications.
The CIT(TDS) after according sanction u/s 279(1) shall send back the records to the authority seeking sanction with sanction order in duplicate, one for filing in the Court with complaint and other for the record.
The AO(TDS) shall, after entering receipt of the sanction order in the prosecution register maintained by him, ensure that the complaint is launched in the competent Court having jurisdiction over the place where the offence is committed.
CBDT seems to be serious about pursuing prosecution of those who deduct TDS and don't pay it to the Government.