SECTION 201 – CONSEQUENCE OF FAILURE TO DEDUCT OR PAY
Non-initiation of penalty and prosecution proceedings in certain cases of defaulters under Chapter XVII-B
Reference is invited to Board’s Circular No. 685, dated 20-6-1994 (File No. 275/69/94-ITB) providing for non-initiation of proceedings under section 221/276B/271C of the Income-tax Act, 1961 in respect of employers defaulting in deducting tax at source on the salaries and allowances paid abroad or perquisites provided abroad to their employees for services rendered in India. Doubts have been raised in some quarters as to whether, due to the disclosure of the excess salary payments by the employers, any consequential action will be taken in the hands of the employees.
2. The Board has considered the matter. The spirit behind issue of Circular No. 685 dated 20-6-1994 was to encourage immediate voluntary compliance on the part of the employers defaulting in tax deduction. In order that this intention is fully achieved.Accordingly the Board has decided that the assessments of the employees, in respect of whom payments of short-deduction and interest thereon are made by the employers in pursuance of Circular No. 685 dated 20-6-1994, will not be reopened or otherwise disturbed merely on account of the excess salary payments now disclosed by the employers.
Circular : No. 686, dated 12-8-1994.
