Amendments proposed in the provisions of Sections 278A and 278AA relating to punishment with prosecution for failure to deposit TDS, so that same provisions apply in the case of TCS, vide Clauses 77, 79, 80, 82 and 83 of the Finance Bill 2022 (budget 2022-23), as part of alignment exercise in respect of provisions relating to Offences and Prosecutions of TDS with TCS under Chapter XXII of the Act:
1. Sections 269UC/ UE/ UL along with other provisions of Chapter XX-C have been made inapplicable with effect from 01.07.2002. Vide Finance Act, 2002, section 269UP was introduced providing that the provisions of the Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after 01.07.2002. Consequently, prosecution provisions u/s 276AB are not relevant, as launching prosecution against offences committed more than twenty years ago, that is prior to 2002 would be beyond reasonable time.
2. Since such cases involve transfer of immovable property, it is not improbable that prosecution cases launched previously while the relevant provisions were still in effect might be ongoing. Therefore, in order to take those cases to logical conclusion without any interpretational issue arising on applicability of the section or otherwise, it is proposed to amend section 276AB to align it with the provisions of the Act that have been made inapplicable, by providing a sunset clause. Hence, it is proposed that no fresh prosecution proceeding shall be initiated under this section on or after 1st April, 2022.
3. Section 276B provides for prosecution for a term ranging from three months to seven years with fine for failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. Under this section, a person shall be punishable for failure to,-
a) deduct the tax as required under the provisions of Chapter XVII-B which deals with deduction of tax at source, or
b) to pay the tax, as required by or under,-
(i) sub-section (2) of section 115-O or
(ii) the second proviso to section 194B.
Section 194B was amended vide Finance Act 1999 w.e.f. 01.04.2000 by which the first proviso to the section was omitted and the section currently has only one proviso. Therefore, to avoid ambiguity among the sections 276B and 194B, it is proposed to substitute the sub-clause (ii) of clause (b) of section 276B with “proviso to section 194B”.
Similar amendment is proposed in Section 271C.
4. Sections 278A and 278AA are related to punishment with prosecution against persons for failure to pay tax to the credit of Central Government under Chapter XVIIB for tax deducted at source. However, similar provisions for offence with respect to tax collected at source under Chapter XVII-BB, providing for punishment with prosecution against persons failing to pay tax collected at source is not there under sections 278A and 278AA.Therefore, it is proposed to include section 276BB under sections 278A and 278AA owing to the similar nature of offences that are punishable under section 276B and section 276BB.
5. These amendments will take effect from 1stApril, 2022.