TaxTMI 
TaxTMI 
Consequences of failure to deduct or pay or, collect or pay - Section 398 (New) / Section 201, 206C(6A) (Old)
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....ct,1961. Section 398 prescribes the consequences of failure to deduct or collect tax, or after deduction or collection, failure to deposit such tax with the Central Government. It also provides relief in specified cases, liability to interest, limitation for passing orders and conditions for levy of penalty. Section 398(1) - Assessee in Default Section 398(1) provides that where a person ....
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.... or buyer, licensee or lessee has- • furnished the return of income; • taken the relevant amount into account while computing income; • paid the tax due on such income; and • the deductor or collector furnishes a certificate from an accountant in the prescribed form. Accordingly, the liability as an assessee in default is avoided where the pre....
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.... an assessee in default under sub-section (2), interest at 1% shall be payable only up to the date of furnishing of the return of income by the payee or buyer, licensee or lessee from the date on which TDS/TCS should have been levied. Section 398(3) Clause (d): Interest Pursuant to Assessment Order Where an order is passed under sub-section (1), the interest determined therein shall be payab....
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....itation period specified in sub-section (5). Section 398(7) - Penalty No penalty under section 412 shall be levied unless the Assessing Officer is satisfied that the person has without good and sufficient reasons failed to deduct or collect and pay the tax. Accordingly, penalty is not automatic and requires the Assessing Officer to record satisfaction regarding the absence of good and suf....