276B PROSECUTION

[VENKATESWARA RAO RAVURI]

SIR, WE HAVE DEDUCTED TDS AND PAID WITH INTEREST AT THE TIME OF FILING OF RETURNS FOR THE AY 12-13. NOW THE COMMISSIONER ISSUED SHOWCASE NOTICE FOR PROSECUTION OR PAYING PENALTY OF 5% PER MONTH. IF WE ARE NOT PAYING PENALTY AND IF HE PROSECUTES US, CAN WE WIN THIS CASE. PLEASE ADVISE US.

[CAGOPALJI AGRAWAL]

There is a CBDT instruction that prosecution should not normally be proposed when amount involved and the period of default is not substantial (Instruction dated 28/05/1980. You may seek the relief under this circular otherwise the precedences are against you as per apex court also.

290 ITR 199 (SC)

AI Summary

Prosecution risk for TDS defaults: administrative instruction limits prosecutions where defaults are insubstantial, relief may be sought. Administrative guidance advises that prosecution for TDS defaults should not ordinarily be initiated where the amount involved and period of default are not substantial; taxpayers who have paid withheld tax with interest when filing returns may seek relief under that instruction, but reported precedents have often been unfavourable to taxpayers, so demonstrating prompt payment and applying the circular are the primary regulatory responses to prosecution notices.