Failure to pay tax deducted or collected at source or to pay dividend or income distribution tax.
240. (1) If a person fails to pay to the credit of the Central Government,—
(a) the tax deducted, or collected, at source by him as required by, or under, the provisions of Sub-chapter A or Sub-chapter B of Chapter XII;
(b) the dividend distribution tax under section 109; or
(c) the tax on distributed income under section 110, he shall be punishable—
(i) with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years; and
(ii) with fine to be determined at the rate of three per cent. of the tax for each month of default, for the period commencing from the date on which the amount was required to be paid to the credit of the Central Government and ending with the date of payment or the date of conviction, whichever is earlier.
(2) No person shall be punishable for any failure referred to in clause (a) of subsection (1), if he proves that there was reasonable cause for such failure.
