Pros­e­cu­tion norms eased for TDS, I-T re­turn fil­ing de­faults

CBDT Sets `25L & 60-Day Limits For TDS Cases

The Times of India (Mumbai edition) - - FRONT PAGE - Lubna.Kably @times­

Mum­bai: The Cen­tral Board of Di­rect Taxes (CBDT) has re­laxed some norms re­lat­ing to pros­e­cu­tion of in­come-tax de­fault­ers for de­lay in de­posit­ing TDS (tax de­ducted at source), un­der-re­port­ing of in- come in the tax re­turn or non­fil­ing of the I-T re­tur n.

CBDT’s cir­cu­lar, is­sued on Septem­ber 9, sets down the limit and time pe­riod for pro­ceed­ing with pros­e­cu­tion in re­spect of TDS de­faults. It states: Cases where non-pay­ment of TDS is Rs 25 lakh or be­low and de­lay in de­posit is less

than 60 days from the due date, shall not be processed for pros­e­cu­tion in nor­mal cir­cum­stances. How­ever, ir­re­spec­tive of this, re­course will con­tinue to lie against ha­bit­ual de­fault­ers, with the ap­proval of a ‘collegium’ com­pris­ing of two se­nior rank­ing of­fi­cers.

Fi­nance min­is­ter Nir­mala

Sithara­man had tweeted last month: “I have in­structed the rev­enue sec­re­tary to come up with mea­sures to en­sure that hon­est tax­pay­ers are not ha­rassed and those who com­mit mi­nor or pro­ce­dural vi­o­la­tions are not sub­jected to dis­pro­por­tion­ate or ex­ces­sive ac­tion.”

It may be re­called that Bol­ly­wood producer Firoz Na­di­ad­wala had hit the head­lines in May, when Mum­bai’s mag­is­trate court sen­tenced him to rig­or­ous im­pris­on­ment of three months for de­lay in de­posit­ing TDS of Rs 8.56 lakh.

This was be­cause sec­tion 276B pro­vides for pros­e­cu­tion for a pe­riod be­tween 3 months to seven years, ir­re­spec­tive of the pe­riod of de­lay or the quantum of TDS not de­posited in time. Across In­dia, sev­eral such sen­tences have been is­sued by the mag­is­trate courts.

Ameet Pa­tel, chair­per­son of the tax­a­tion com­mit­tee at Bom­bay Char­tered Ac­coun­tants’ So­ci­ety, says: “While CBDT’s cir­cu­lar dated May 28, 1980 had in­structed I-T of­fi­cials not to launch pros­e­cu­tion in cases where the de­lay

in de­posit­ing TDS is less than one year, this in­struc­tion was with­drawn in Au­gust 2013. Now, a lee­way of two months has been pro­vided and it is a step in the right di­rec­tion. Above all set­ting a thresh­old of above Rs 25 lakh for ini­ti­at­ing pros­e­cu­tion pro­ceed­ings will help sev­eral tax­pay­ers, es­pe­cially small-medium en­trepreneur­s.”

CBDT has also re­laxed pros­e­cu­tion norms for of­fences re­lat­ing to un­der-re­port­ing (con­ceal­ing one’s in­come) in the I-T re­turn. Where the amount sought to be evaded or the tax on the un­der-re­ported in­come is Rs 25 lakh or be­low, a safety net has been built in. In such in­stances, the case shall not be taken up for pros­e­cu­tion only af­ter ap­proval of the collegium. For such of­fences, the im­pris­on­ment term can be up to seven years.

In cases of non-fil­ing of I-T re­turn, if the amount of tax, which would have been evaded by not fil­ing is Rs 25 lakh or less, ap­proval of the collegium is re­quired for ini­ti­at­ing the pros­e­cu­tion process. The I-T Act had pro­vided a low thresh­old of Rs 10,000 for launch­ing pros­e­cu­tion for non-fil­ing of the I-T re­turn. Non-fil­ing can re­sult in rig­or­ous im­pris­on­ment of up to seven years.

This cir­cu­lar will come into ef­fect im­me­di­ately and shall ap­ply to all pend­ing cases, where the pros­e­cu­tion com­plaint is yet to be filed by the tax au­thor­i­ties. Tarun Ku­mar Sing­hal, a Mum­bai-based char­tered ac­coun­tant, says, “Ide­ally, pros­e­cu­tion process al­ready launched, but not in ac­cor­dance with this new cir­cu­lar, also needs to be dropped suo motu.” In yet an­other cir­cu­lar, CBDT has re­laxed the 12-month time for fil­ing of a com­pound­ing ap­pli­ca­tion.

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