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Lapses in certain Commissioners' charges by the Revenue Audit. - Income Tax - 1133/CBDTExtract INSTRUCTION NO. 1133/CBDT Dated : January 6, 1978 Section(s) Referred: 192 ,206 Statute: Income - Tax Act, 1961 In paras 49.44(i) and (ii) of Chapter III of the Report of the Comptroller Auditor General of India for the year 1975-76, the following main lapses have been noticed in certain Commissioners' charges by the Revenue Audit in connection with the enforcement of the provisions relating to deduction of tax at source from salaries:- (i) The Employers' monthly returns/certificates and the employers' annual returns under section 206 of the Income tax Act, 1961 were not being received in the Income-tax office in certain charges or they were being received beyond the time prescribed under the Income-tax Rules and that no action was being taken against such employers. (The monthly return/certificate is required to be sent forthwith after the end of the month and the annual return by the 30th April of the following financial year). (ii) In certain charges, the prescribed register for watching the receipt of these monthly returns/certificates (ITNS-118) was not maintained and where maintained, it was not in the prescribed form and manner. As such, a proper control was not exercised to ensure that the tax deductible at source had actually been deducted in all cases and that the amounts deducted had actually been credited to the Government account within the prescribed time. (iii) In some cases where there was no deduction or short deduction of tax at source from salaries, no action was taken against the employers. Similarly in certain cases no action was taken where tax was deducted but not deposited to the credit of the Central Government or deposited beyond the prescribed time. (iv) In Board's Instruction No.898 dated 26-11-75(F.No.275/77/75-ITJ), the CsIT were requested to have a review conducted of all cases where the ITOs, with the prior approval of the IACs granted permission under proviso to Rule 30(1)(b)(ii) of the I.T.Rules, 1962, to pay tax deducted at source under the head "Salaries" in quarterly instalments instead of every month. It was further stated therein that the concession of making quarterly payments already granted to employers whose monthly tax deduction exceeded say Rs.500 should be withdrawn. In 3 Commissioner's charges the Revenue Audit noticed that the permission granted earlier in certain big cases of tax deducted at source from salaries, was not withdrawn. (v) In some cases discrepancies were noticed in the amount of tax deducted at source as shown in the annual return in Form No.24 and the figures compiled from the challans. The action to reconcile the discrepancies was, however, not taken. 2. As you are aware, tax deductions at source in general and that from salaries in particular forms a significant part of the annual budget collections. Besides this is one of the few areas of the Department's work where the output in terms of tax collections have been compared to the input in terms of man hours. Instructions have been issued from time to time by the Board about the need for proper enforcement of the provisions of TDS including TDS from salaries. In this connection your attention is invited to late Shri. R.S.Chadda's D.O. letters F.NO.380/3/75-ITB, dated 5-9-77 wherein among others the need to enforce the provisions of TDS was stressed and forms of control rationalised. Besides, the Board had earmarked vide late Shri. R.S.Chadda's letter F.NO.A.11013/36/74-Ad.VII dated 9-6-75, 27 posts of ITOs together with complementary staff for attending exclusively to all matters relating to deduction of tax at source from salaries and performing certain administrative functions relating to tax deduction at source from other types of payments. In view of the fact that the work relating to tax deduction at source has been rationalised by the Board in recent years the persistence of certain types of lapses pointed out above have to be viewed with great concern. You are requested kindly to take urgent steps to ensure that the mistakes of the type mentioned above are not repeated in future and the various provisions relating to TDS more particularly from salaries, are enforced strictly. 3. It has also been decided by the Board that suitable arrangements should be made for giving guidance to the Accounts Officers of the companies etc. for ensuring that the work connected with the deduction of tax at source is done properly. This objective can be achieved by the ITOs(TDS) and/or ITOs Salary Circles visiting these undertakings and explaining to the persons dealing with tax deduction, the provisions in the I.T.Act and Rules pertaining to- (i) the computation of income under the head "Salaries" with special reference to the taxation of perquisites; and (ii)deduction of tax, the procedure for payment of tax deducted to the credit of the Central Government and the manner in which the monthly annual returns etc. have to be prepared and submitted. Groups of such persons can also be invited to the IT.Offices and the provisions of the I.T.Act and Rules explained to them. For this purpose, the ITOs incharge of TDS/Salary Circles may be asked to get in touch with the Chief Accounts Officers of the undertakings and make necessary arrangements for providing such guidance.
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