Prosecution for Default of Interest & Late Fees on TDS

[VARDHMAN DOOGAR]

Dear Experts,

Require your guidance on the subject topic in title.

Is there prosecution for of default of Interest on TDS & late fees as Section 276B states that prosecution for non payment of TDS, however in present case, TDS has been paid in each quarter with 2 months delay & there is demand of interest & late fees outstanding.

The amount of fees & interest not paid is Rs. 70 Lakhs which has accumulated from 7-8 Years & pertains to AY 2010-11 & further.

Kindly guide if there is any section for prosecution of such demand & compounding solutions if any?

[Padmanathan KV]

Section 276B deals with prosecution:-

276B. If a person fails to,-

(a) pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) pay tax or ensure payment of tax to the credit of the Central Government, as required by or under—

(i) sub-section (2) of section 115-O;

(ii) the proviso to section 194B;

(iii) the first proviso to sub-section (1) of section 194R;

(iv) the proviso to sub-section (1) of section 194S; or

(v) sub-section (2) of section 194BA,

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.

On bare reading, prosecution can be invoked only on failure to pay any TDS which has been deducted by the assessee. Thus, prosecution cannot be invoked for interest & late fee.

It is a trait law that penal provisions have to be strictly construed and no person can be punished unless he is expressly covered under the provision.

AI Summary

Prosecution Not Applicable for TDS Interest and Late Fees Under Section 276B; Only Unpaid TDS Can Trigger Action. An individual sought guidance on whether prosecution applies for default of interest and late fees on Tax Deducted at Source (TDS) under Section 276B, given that TDS was paid with a two-month delay, resulting in an outstanding interest and late fees of Rs. 70 Lakhs accumulated over several years. An expert clarified that Section 276B pertains to prosecution for failure to pay TDS, not for interest and late fees. Prosecution is applicable only if TDS itself is not paid, as penal provisions must be strictly interpreted, and no prosecution can occur unless explicitly covered by the law.