Short Overview: Since the material placed on record prima facie disclosed that assessee had deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, assessee could not escape from the rigour of section 276B and appeal of assessee was dismissed.

During the course of survey, Department observed that assessee had deducted tax at source but had failed to remit the same to Central Government account. Assessee admitting default sought time to remit the admitted TDS liability, but remitted tax amount partially and failed to discharge the entire liability. It was found that assessee had remitted Tax deducted by it after considerable delay of more than one year, that too, in consequence of repeated reminders. For delay in remitting the TDS, assessee had not paid any interest which is mandatory under section 201(1A). Thus, assessee was prosecuted for the offence punishable under section 276B read with section 278B.

It is held that the provision makes it clear that in order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for assessee to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. Since the material placed on record prima facie discloses that assessee have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, assessee cannot escape from the rigour of section 276B. Thus, appeal of assessee was dismissed.

Decision: Against the assessee