Income tax returns filing: Company director sent to 6 months jail for TDS default

Income tax returns filing: A court here has sentenced the director of a real estate firm to six months of rigorous imprisonment (RI) for allegedly failing to deposit over Rs 50 lakh TDS in time to the Income Tax Department.

A senior official of the department said the director of the firm, engaged in building construction services, has been convicted recently by the court as his firm "committed default in timely deposit of tax deducted at source (TDS) of Rs 50,61, 876".

"The company and its director have been asked to pay a fine of Rs 1 lakh each and the director has been sentenced to RI of six months," he said.

The official did not disclose the identity of the executive or his firm.

The man and the company have been charged under IT Act's sections 276B (failure to deduct and pay tax) along with section 278B (offences by companies). 

The court, the official said, observed that the offence under section 276B is "complete" when TDS is not deposited on time and a company cannot be allowed to take unfair advantage and use the tax amount so deducted for any other purposes.

In a similar case of TDS default, an executive of an advertising company based here has been sent to jail for non-compliance of the law, he said.

The tax department has, in the recent past, stepped up enforcement and prosecution action against TDS default cases as this category of revenue contributes to over 43 per cent of the total direct taxes collection in the country.

"In Delhi, the TDS wing of the department has launched more than 150 prosecution proceedings against defaulters during the April-July period. 

"We have, in this region, the highest number of compounding applications in India from the TDS defaulters who have opted to compound their offence by paying additional penalty in order to avoid impending prosecution proceedings," Principal Chief Commissioner S S Rathore said.

As per rules, the TDS has to be paid to the credit of the central government (IT Department) within seven days from the end of the month in which the deduction is made. 

The section 278B of the IT law allows for an imprisonment of the defaulter or the nominated TDS deducting officer for a maximum of 7 years.