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May 22, 2023

TV producers get three months in jail for delaying TDS payment under Income Tax

TV producers get three months in jail for delaying TDS payment under Income Tax

A metropolitan magistrate court has convicted a television production company and its directors Yash Patnaik and Mamta Patnaik for not submitting ₹8.37 crore TDS on time. The court has sentenced the directors to three months imprisonment in three cases filed by the Income Tax department and imposed a fine of ₹5,000 in each three cases.

While holding them guilty, the court said, “If the payment is made at a belated stage, then it will be treated as default and appropriate action can be taken under the Act (Income Tax Act). It is also clear that depositing TDS with delay does not absolve criminal liability.”

The Income Tax department had filed three complaints against the firm and its directors which are engaged in making several known TV series. The special public prosecutor Amit Munde argued that the firm deducted the tax at the source and collected money from the clients but failed to deposit the same with the department in time.

In its defence, the firm and its directors had pleaded that when the department issued notice they had responded to the same. It was contended that the firm did not deposit the money due to financial difficulties which was explained to the officer.

The court, however, discarded the defence and observed that “The accused failed to deduct TDS amount within the stipulated time. The accused might have paid the tax with interest and penalty but after a stipulated period. The sanctioning authority also granted sanction after considering the documents and applying its mind. However, for want of defence of the accused about the reasonable cause, it can safely gather that the accused have defaulted to pay the TDS within the stipulated time.”

Lesson : Never default on TDS liability without adequate reasons. Further Company Directors are also Individually liable by lifting corporate veil when there is non compliance of Tax provisions

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