Under section 201, a person is deemed to be an assessee in default if there is a failure to deduct tax at source or for failure to deposit the tax deducted at source after such tax has been deducted. The persons covered under the ambit of section 201 are:-
(i) person referred to in section 200;
(ii) the principal officer and the company of which he is the principal officer in the cases referred to in section 194 [relating to deduction of tax at source on dividends].
Sub-section (1) of section 200 provides that any person deducting any tax at source on payments other than salary shall pay the sum so deducted to the Central Government or as the Board directs within the prescribed time. A view has been expressed that the provisions of sub-section (1) of section 201 do not cover failure to deduct tax at source. Such an interpretation is contrary to the intent of the legislature.
In view of the above, the sub-section (1) of section 201 has been amended to clarify that where a person, including the principal officer of a company who is required to deduct any sum in accordance with the provisions of Income-tax Act does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under the Income-tax Act, he shall be deemed to be an assessee in default under section 201.
Applicability: The amendment to substitute sub-section (1) of section 201 has been made applicable with retrospective effect from 1st June, 2002.
A similar amendment has also been carried out in Explanation to section 191.
Applicability: The amendment to substitute Explanation to section 191 has been made applicable with retrospective effect from 1st June, 2003.
Note: Above is the Analysis of Amendment made by The Finance Act, 2008.
Please furnish the case law name and quoted ITR/CTR No. for Pune bench decision with Supreme Court details also.
R.K.Agrawal
Raipur