Belated Income Tax TDS Remittance: Madras HC Orders Dept to Review Taxpayer’s Response to Determine Prosecution Viability [Read Order]

While dismissing the petition, the Madras High Court ordered the Income Tax Department to review the replies filed by the petitioner-assessee to determine the prosecution viability on the belated remittance of TDS ( Tax deduction at source ).

A Writ Petition was filed by  Absolute Homes Pvt. Ltd. challenging Show Cause Notice issued by the department to the petitioner. The petitioner sought to quash this notice and prevent prosecution under Sections 276B and 276BB of the Income Tax Act, 1961, for delays in TDS remittance.

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The petitioner’s counsel, Mr. Suhrith Parthasarathy, argued that the petitioner had indeed remitted the TDS, albeit late, and had paid the required penalty and interest. Despite this, the department issued a show cause notice demanding an explanation for why prosecution should not be initiated.

The petitioner had responded to the show cause notice with detailed replies on 06.10.2023 and 27.10.2023, explaining the delay and requesting reconsideration. However, the department reissued the notice without addressing these replies. Consequently, the petitioner challenged the notice on grounds of limitation and the claim that the delay had been rectified.

Dr. B.Ramasamy, the Senior Standing Counsel for the respondent, countered that the show cause notice was merely procedural. He submitted that the petitioner’s replies would be reviewed before any further action, arguing that dismissal of the petition was appropriate.

Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here

Justice Krishnan Ramasamy noted that the petitioner had been issued a show cause notice dated 05.01.2024, challenging its validity based on a 12-year delay since the original issue of TDS payment from FY 2012-13. It noted the submission of the petitioner that prosecution should not be initiated as the TDS, along with interest and penalty, had been paid, albeit late. Despite detailed replies to the notice, the department had not considered them before reissuing the notice.

The Court ruled that it was up to the department to review the replies and decide on prosecution. It directed the department to determine the prosecution viability by considering the replies. Consequently, the Writ Petition was dismissed.

To Read the full text of the Order CLICK HERE

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