Revised Standard Operating Procedure (SOP) for Prosecution in cases of TDS/TCS default - Income Tax - F.No. 285/51/2013-IT (Inv.V)/471

F.No. 285/51/2013-IT (Inv.V)/471 Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) E-2, ARA Centre, Jhandewalan Extn., New Delhi Date: 09.12.2016 To All Pr. CCIT (CCA)/CCIT/CCIT (TDS), all DGIT (Inv.) and all CCIT (Central) Madam/Sir, Sub : Revised Standard Operating Procedure (SOP) for Prosecution in cases of TDS/TCS default Kindly refer to this office latter F.No. 285/51/2013 (Inv.V)/386 dated 18.10.2016 Regarding withdrawal of Standard Operating Procedure(SOP) for Prosecution in the cases of TDS/TCS defaults dated 02.02.2015. 2. In this regard, the undersigned is directed to enclose herewith the Revised standard Operating Procedure (SOP) for prosecution in cases of TDS/TCS default with a request to circulate the same among all officers of your charge for information and guidance. Encl : as above Yours faithfully (Mamta Bansal) Director, Inv. V, CBDT, New Delhi STANDARD OPERATING PROCEDURE FOR PROSECUTION IN CASES OF TDS/TCS DEFAULT 1. Introduction 1.1 This SOP is issued for the use of the departmental officers with the objective to streamline the procedure for processing cases of TDS/TCS defaults for prosecution and make it more efficient. The SOP should be followed as far as possible and shall apply prospectively to all prosecution proceedings, for TDS/TCS defaults, which are pending at any stage in the office of the Commissioner/Chief Commissioner or its subordinate office (s) as on the date of issue of this SOP. In all cases the proposals should, henceforth, be submitted in the new prescribed proforma (Form T ) annexed with this SOP. However, prosecution proposals which have already been submitted by the AO to the CIT(TDS), need not be revised. 2. Identification of the cases 2.1 Vide revised guidelines issued by the CBDT in F. No. 285/90/2013-IT(Inv. V)/384 dated 18.10.2016, it has been decided that a list of cases shall be generated periodically by the Pr. DGIT(Systems) based on the criteria approved by member(Inv.) CBDT which shall be mandatorily processed for prosecution in addition to the recovery steps as may be necessary in such cases. It has been clarified in the guidelines that mandatory processing does not mean mandatory filing. It has also been reiterated in the revised guidelines that in addition to the cases selected on the basis of the approved criteria ( which are to be processed mandatorily), the CIT(TDS) may consider any other case for prosecution, based on information from sources such as survey/ spot verification/ grievances received. In such cases, the CIT(TDS) shall send intimation to the Pr. CCIT/CCIT(TDS) along with the reasons for selecting the said case. If any TDS/TCS default is detected during action u/s 132/132A of the I.T. Act (hereinafter referred to as the Act ) the processing ADIT/DDIT shall inform the Assessing Officer having jurisdiction over TDS about such defaults under intimation to the Range Head and CIT(TDS). While passing such information, he shall also forward copies of the relevant documents. 3. Proposal for Prosecution No Prosecution complaint u/s 276B/276BB of the Act can be filed without proper sanction from CIT(TDS) u/s 279 of the Act. The proposal for prosecution needs to be sent by the AO to the CIT(TDS) for obtaining sanction u/s 279(1) of the Act in From No. T , which is enclosed as Annexure-1 to this SOP. The AO should, therefore, carefully go through this proforma and prepare a complete and correct prosecution proposal, which is the foundation of any successful prosecution proceedings. 4. Procedure for processing of cases for Prosecution 4.1 After potential cases for prosecution are identified and uploaded on the AO Portal by the CPC-TDS, the AO shall initiate Prosecution proceedings by issuing notice to the deductor preferably within 30 days of uploading of list by CPS-TDS on the AO portal. 4.2 Such prosecution notices shall be generated through TRACES functionality in respect of all the cases whether identified by the CPC-TDS or by the CsIT(TDS). 4.3 For the cases identified by the CIT(TDS), the AO shall add the same in the prosecution functionality on TRACES Portal through option manually identified cases available under Enforcement Menu and issue the show cause notice preferably within 30 days of the case being identified. 4.4 In the case of a company/Firm/AOP/BOI, provisions of Sec. 278B are relevant in deciding the accused and co-accused(s) for the purposes of prosecution. The detailed protocol expected to be followed in this regarded is enclosed as Annexure-2. 4.5 The details of late payment defaults for each case identified for mandatory processing shall be generated by the CPC(TDS). These details shall include the section under which TDS was deducted, amount of TDS, date of deduction, due date of payment and actual date of payment. 4.6 In respect of cases selected by CIT(TDS): a) Wherever corresponding TDS statements have already been filed, late payment details as per TDS statement, if any, shall be obtained by AO from AO portal on TRACES. b) In the case of a non-filer, AO will upload order passed under section 201(1)/201(1A) on the basis of default details obtained during the survey or otherwise. 4.7 The details of late payment defaults should be enclosed as annexure to the notice issued by the AO and preserved as they are the basis for initiating Prosecution. The purpose of enclosing these details with the notice is also to confront the deductor and require him to confirm these defaults. 4.8 In case, the deductor does not object to these details, the same will form part of Sr. No. 6 of Form T . In case the deductor objects to the details of defaults, the AO shall examine the relevant documents submitted by the deductor and prepare a statement of defaults on the basis of such verification and such statement of defaults will form part of Sr. No. 6 of Form T . The documents on the basis of which the statement of default has been prepared shall be preserved and made prosecution document to be used before court. 4.9 By way of this notice, the deductor shall also be asked to furnish his explanation as to why the prosecution proceedings u/s 276B/276BB of the Act should not be initiated against him. 4.10 Following information/ documents regarding the Deductor, as may be applicable, may also be collected from the Deductor and/or through other sources including from TRACES: a) Copies of the TDS statement (s) filed by the Deductor. b) Copies of challans of late deposit of TDS filed by the Deductor. c) Copies of the intimations u/s 200A of the Act showing late payment interest for all the quarters of the relevant assessment year, if they are available. d) Copies of Order u/s 201(1)/(1A) of the Act showing default of delayed payments, if any passed. e) Statement (s), of relevant person(s), if any, recorded in connection with the defaults. f) Certified copies of Audit report in Form 3 CD, if they show defaults, along with Balance sheet, Profit Loss A/C and Annual Reports. g) Copies of ledger of Deductees in whose case the TDS deducted has not been deposited in time. h) While collecting above information, AO(TDS) may also collect other details, such as, whether the deductor himself rectified the mistake and deposited the tax along with interest prior to issue of first notice relating to prosecution by the department. i) Whether the deductor has been convicted earlier u/s 276B/276BB of the Act for any other year, to find out the applicability of sec. 278A of the Act. The documents mentioned above are important prosecution documents, which are useful in establishing the offence before the Court and should be collected and preserved carefully by the AO. The original copies of prosecution documents mentioned in Sr. No. 13(e) of Form T should be kept safely in personal custody of the AO and an proper handling over of such documents should be done at the time of change of incumbent. 4.11 The AO may ensure, to the extent possible, that the reply is obtained normally within 30 days of the issue of the show cause notice. In case no reply is furnished within the prescribed time, it may be presumed that the person responsible for tax deduction and deposit has no explanation to offer and the matter may be pursued forward. It is also advisable for the AO to simultaneously make attempt to collect relevant details from other sources such as TAN/PAN records, assessment records, TRACES, website of Registar of Companies, so that non-compliance on the part of the deductor doesn t come in the way of proceeding further and /or filing prosecution complaint. 4.12 The AO(TDS) shall examine the reasons/reply for default and prepare the proposal in Form T . This form should be filled with due care ensuring that all details required are complete and correct and send the same to the CIT(TDS) through proper channel on TRACES. Detailed proposal has to be submitted offline. Separate proposal should be submitted for each assessment year. 4.13 The AO(TDS) shall refer all the cases falling in the list of TDS defaulters generated by CPC-TDS for mandatory processing to the CIT(TDS) through the Range Head. He may also refer any other case found fit for prosecution to the CIT(TDS), keeping in view CBDT revised guidelines issued in F. No.285/90/2013-IT (Inv.V)/384 dated 18.10.2016. The AO shall submit prosecution proposal to the CIT(TDS) preferably within 90 days of the issue of show cause notice by him. However, CIT(TDS) may extend the timeline for submission of prosecution proposal considering the facts and circumstances of each case. 4.14 The Range Head on receipt of Form T on TRACES shall examine the proposal received offline also. It is the responsibility of Range Head to ensure that the prosecution proposal is fit and complete before it is submitted to CIT (TDS). If there is any deficiency, he should send it back to the AO for removing the deficiency and re-submit the proposal at the earliest. After satisfying himself, he shall forward it to CIT(TDS) on TRACES as well as in the offline mode. Once, the Form T is forwarded to CIT(TDS) on TRACES, he may also download the proposal from TRACES. 4.15 The CIT(TDS) is the competent authority to accord sanction u/s 279(1) for filling of prosecution complaint. The CIT(TDS) shall follow the procedure as under: a) He should examine the proposal thoroughly and if he finds that the case is not fit for prosecution, then he may drop the proceedings and intimate the decision to the AO, who will make the entry of dropping the proceedings in the TRACES. The AO shall also intimate the decision to drop the proceedings to the deductor. b) If he is of the opinion that the case is prima facie fit for prosecution then, issue show cause notice(s) to all proposed accused(s) u/s 276B/276BB r.w.s. 278B of the Act, as to why sanction for launching of prosecution should not be accorded. The show cause notice should be generated from the online module on TRACES. In case he wants to add certain other details/issues, he can manually issue show cause also while the notice generated on CPC (TDS) may be downloaded and kept on record to ensure that necessary entry is made in the system. c) After examining the explanation of accused(s) along with the documents adduced for supporting the explanation and material relied upon by the AO in his proposal, the CIT(TDS) shall take a fair and judicious view to proceed further by either according sanction u/s 279(1) of the Act or dropping the proceedings, keeping in view the provisions of Sec. 278AA of the Act. d) There could be possible extraordinary circumstances or situations beyond the control of the deductor which may prevent of hinder timely compliance at his end. Vide F.No. 285/90/2013-IT(Inv.V)/384 dated 18.10.2016, clarification has been issued by the Board for interpretation of section 278AA to address genuine concerns of the deductors. The fact that the deductor has remitted the tax before filling of TDS statement and interest before receipt of notice from the AO (TDS) for prosecution, may be taken note of amongst other submissions of the deductor while considering his case for prosecution . Some of the other circumstances where section 278AA could be invoked, provided the deductor has remitted the money with interest are highlighted below: i) Payment of TDS by the deductor within 60 days of the due date on account of genuine hardship. ii) Deductor having filed application under BIFR or under the insolvency and Bankruptcy Code, 2016 during the relevant period which has been admitted. iii) Where only provision has been made in the books of account without actual payment to the Deductees due to financial constraints, court order, statutory obligations under various laws including under the Companies Act, 1956, pending legal proceedings, etc. iv) Cases of genuine financial hardship leading to closure of business. v) Sudden demise of person responsible for deposit to taxes in cases of defaults of payments of TDS for small period i.e. upto six months. vi) Lock out in the factory and / or office premises due to labour strike, court cases, natural disaster or calamity, law and order problem in the area, etc. Justifying the period of delay. The above enumerations are only suggestive and indicative in nature, and the CIT(TDS) is not bound by these and should take a judicious view based on facts and circumstances of each case. e) There is no statutory requirement for obtaining opinion of the legal counsel before granting sanction for prosecution. However, reference may be made in complex situations like identification of accused(s), etc to avoid legal infirmities in prosecution complaints. In such cases, it should be ensured that the opinion is obtained from the counsel within 30 days. f) If after examining the proposal received from the AO, the evidence and other material on record, explanation of the deductor along with evidence adduced to support the explanation and the opinion of the Counsel (wherever it is obtained), if the CIT(TDS) is satisfied that- (i) It is a fit case for prosecution, he shall pass a speaking order u/s 279(1) separately for each assessment year. The application of mind and fairness of decision should reflect in the order. In view of provisions of sec. 278AA of the Act, it is expected that the explanation given by the accused is properly rebutted. Further, brief reasons should also be given for according sanction in the cases of Directors/Partners/Other responsible persons of offence committed by companies, Trusts, Firms, etc. Keeping in view provisions of sec.278B of the Act. (ii) It is not a fit case for prosecution, he may drop the proceedings after recording reasons for the same for internal purposes. The decision to drop the proceedings should be intimated to the deductor. g) An entry shall be made by the CIT(TDS) in the TRACES on passing of such orders as mentioned in para (f) above or as soon as the decision to drop proceedings is made. The CIT(TDS) shall complete the process and pass an order u/s 279(1) sanctioning prosecution or dropping the show cause notice preferably within 90days from receipt of proposal from the AO(TDS) through the Range Head excluding the additional time taken to dispose off compounding petition filed, if any. 4.16 The deductor can at any stage of the proceedings, file a compounding application before the Pr. Chief Commissioner of Income tax /Chief Commissioner of Income tax. Instruction vide F. No. 285/35/2013-IT(Inv. V)/108 dt. 23.12.2014 should be followed in dealing with the compounding application. If a person who has committed an offence (s) under S.276B/276BB files an application for compounding of the said offence(s), the application should be processed expeditiously and disposed of within the time frame prescribed in the Central Action Plan for the FY. During the pendency of the compounding application, the CIT(TDS) shall keep the prosecution proposal pending. As soon as an application for compounding is moved, an entry should be made in TRACES. Entries of subsequent action on compounding application should also be made on TRACES. 4.17 The CIT(TDS) after according sanction u/s 279(1) shall send back the record to the authority seeking sanction along with the sanction order in duplicate, one for filing in the Court with complaint and other for the record. 4.18 If the defaulter is a government servant, then as required u/s 197 of the Code of Criminal Procedure, 1973 (Cr.PC), the AO should seek approval of State Government or Central Government as the case may be. If no timely response is received from the government, the AO should continuously follow up with the Government so that the required sanction order is expedited. 4.19 Once the AO receives the sanction order u/s 279(1) of the Act he should get the prosecution complaint drafted by the departmental Prosecution Counsel and file it in the jurisdictional ( Economic Offences) Court within 30 days. 4.20 Brief guidelines for proper drafting of complaints The prosecution complaint should be drafted with due care to ensure that the ingredients of the offence are clearly brought out with the relevant facts. While drafting the complaints, the following points may be considered: a) The place of commission of the offence shall specifically be mentioned and accordingly the jurisdiction of the court should also be mentioned. b) The correct names and complete addresses of the accused should be specifically mentioned. This prevents delay in service of summons, etc, by the court. c) Before prosecution is filed, it is mandatory to obtain sanction for such prosecution u/s 279(1) of the Act. Therefore, the reference of order u/s 279(1) of the Act passed should invariably be mentioned in the complaint. d) Chronological events leading to the commission of offence should be spelt out. Why the explanation submitted by assessed is not acceptable, in view of provisions of sec.278AA, should be discussed. The reasons for filling complaint against all co accused(s) in terms of sec. 278B should also be mentioned. e) The following should be annexed to the complaint: i) Sanction order for prosecution ii) List of important documents/exhibits. iii) List of prosecution witnesses. iv) Sanction order u/s 197 of Cr.PC in case of a government servant. f) It may, however be noted, that prosecution can also furnish additional list of witnesses during trial [Section 204(2) of the Cr.PC]. 4.21 The CIT(TDS), Range Head the AO (TDS) shall make necessary entries in TRACES at various stages of processing prosecution. For procedural aspects of handling cases on TRACES, tutorials are also available on TRACES which may be referred to by all the authorities. 4.22 Similarly, If any such prosecutable offence come to light during the proceedings before the appellate authorities, revision authorities or any other proceedings, same shall also be treated at par with other prosecutable cases as enumerated under Chapter-XVII of the Income Tax Act,1961 and action shall be initiated in accordance with the procedure laid down in this SOP. 5. TIME FRAME 5.1 The time period for the entire process from identification to passing of order u/s 279(1) /279(2) is summarized as under: S. NO. Section Time limit for submitting proposal for sanction u/s 279(1) Time limit for according Sanction u/s 279(1) Time limit for filing prosecution complaint 1. 276B. Preferably within 90 days from issue of SCN by AO TDS[CIT(TDS) may extend the timeline for submission of prosecution proposal considering the facts and circumstances of each case](Refer Para 4.13) Preferably within 90 days of receipt of proposal from the AO(TDS) through Range Head (excluding the additional time taken to dispose off compounding application filed, if any) [Refer Para 4.15(g)] Preferably within 30 days of receiving approval u/s 279(1) (Refer Para 4.19) 2. 276BB -do- -do- -do- 5.2 The time lines given above should be followed as far as possible. However, any deviation from the time lines shall not render prosecution proceedings barred by limitation. The Pr.CCIT/CCIT (TDS) should monitor progress of the cases identified for processing for prosecution, particularly cases in which the timelines have not been followed. 6 . ROLES OF DIFFERENT TDS AUTHORITIES IN ADDRESSINGS THE ISSUE OF PROSECUTION AND COMPOUNDING OF TDS/TCS CASES 6.1 Role of principal CCIT/CCIT(TDS) (i) Taking quarterly review meeting with CIT(TDS), CIT(International Taxation) CIT(LTU) monitoring progress in cases identified for prosecution for TDS/TCS defaults and timelines laid down. (ii) Apprising the Zonal Member of the progress made/outcome achieved during the month in the monthly DO. Copy of such progress shall also be sent to Pr. DGIT(Admn.), New Delhi for information. (iii) Disposing all compounding petitions expeditiously and within the time period prescribed in the Central Action Plan for the FY. While disposing off compounding petitions, speaking orders are expected to contain those facts based on which a fair and judicious view has been taken in accordance with relevant provisions of the Act. 6.2 Role of CIT(TDS) (i) Ensuring that fair distribution of work relating to prosecution among officers of his charge, is done. (ii) Monitoring on a regular basis the progress of processing the cases for prosecution flagged by CPS-TDS. (iii) Guiding AO (TDS) to shortlist the cases for processing of prosecution on the basis of information received from sources such as survey/spot verification/grievances received and monitoring timely action being taken thereon. (iv) Ensuring entries of various action undertaken by the AO, Range Head and his own office on the TRACES (v) Processing all the proposal received by him. If he is of the opinion that the case is prima facie fit for prosecution, issue show cause notices to the defaulter (s) u/s 276B/276BB r.w.s 278B or 278C as to why sanction for launching of prosecution should not be accorded. (vi) Seeking opinion of the Prosecution of Legal Counsel, if need is felt in view of the complexity of facts involved and ensuring that the opinion is obtained from the Counsel within 30 days. (vii) Examining the replies to the SCN, other material and the opinion of the legal Counsel where ever it is obtained, and on satisfaction that it is a fit case for prosecution, passing speaking order u/s 279(1) in the case of defaulter(s) for each assessment year separately. In case he is satisfied with the submissions of the deductor, he shall drop the proceedings after recording the reasons in writing with an intimation to the deductor. (viii) Completing the process and passing an order u/s 279(1) sanctioning prosecution or dropping the show cause notice expeditiously, preferably within 90 days of receipt of the proposal from the AO(TDS) through Range Head. (ix) Ensuring an entry for the following events in TRACES: (a) On issue of show cause notice to the accused/ co-accused. (b) Reference of legal opinion sought/ received. (c) On passing of sanction order u/s 279/(1) or on dropping of the proceedings as the case may be. (d) On receipt of compounding application/report on the compounding application. (e) On filing of prosecution complaint before the competent court. (f) On receipt of order of competent Court. (g) On appeal, if any appeal is filed by the accused or by the Department. (x) Ensuring that the guidelines for compounding of offences under Direct Tax Laws issued vide F.No 285/35/2013-IT (Inv.V)/108 dated 23.12.2014 are adhered to. (xi) Providing feedback regarding quality of cases selected for mandatory processing in the previous year to Director Inv-V, CBDT. 6.3. Role of Addl. /Joint CIT(TDS) (i) Monitoring timely action in all the cases involving mandatory processing for prosecution or cases identified otherwise and to report the progress to the CIT(TDS) in the monthly DO. (ii) Discussing cases prepared on the basis of information received from sources such as survey/spot verification/grievances received with AO (TDS) and also guiding them in short listing the cases fit for prosecution. (iii) Ensuring that the prosecution proposal submitted by AO(TDS) is fit and complete and in case of any deficiency. He should get it rectified from the AO(TDS) at the earliest. (iv) Monitoring the AO for making entries in TRACES for the following events: (a) On issue of show cause notice to the accused/co-accused. (b) On receipt of compounding application/report on the compounding application. (c) On filling of prosecution complaint before the competent court. (d) On receipt of order of competent Court. (e) On appeal, if any appeal is filed by the accused or by the Department (v) Ensuring timely submissions of reposts on compounding applications by the Assessing officer and Range office for timely disposal of the applications 6.4. Role of AO (TDS) (i) Monitoring list of cases identified by CPS-TDS for mandatory processing and ensuring action in all such cases. (ii) Examining cases of TDS default other than those already identified by CPS-TDS based on survey/spot verification/grievances received and shortlist cases fit for prosecution after discussion with Range Head and CIT(TDS). (iii) Issuing show cause notice to the defaulters giving due opportunity to them once the cases are identified by CPC(TDS) or otherwise and collect information in accordance with the procedure laid down in this SOP. (iv) Sending the proposal prepared in Form T on TRACES along with other details/ documents to the CIT(TDS) through proper channel. (v) Making entries for all the events associated with prosecution and compounding on TRACES. (vi) Timely submissions of reports on compounding applications for disposal of the applications. (vii) Submission of reports along with records to the CIT(TDS) through proper channel in all cases where notice is issued by AO along with comments either recommending or dropping prosecution. 6.5. Role of CIT (CPC-TDS), Ghaziabad (i) Providing analysis of the data with respect to TDS statements filed during the previous F.Y. to the Director, (Inv-V), CBDT immediately after 15th July of the relevant Financial Year. (ii) Generating list of TDS/TCS defaulters along with their statement of defaults for mandatory processing of cases for prosecution based on the parameters approved by the member (Investigation), CBDT and make it available to AO (TDS) as well as the CIT (TDS) in the second quarter of every F.Y. preferably by 31st July of the relevant Financial Year. (iii) Providing monthly disposal status of prosecution and compounding of TDS/TCS defaults to Pr. CCIT/CCIT (TDS), CIT(TDS), Directorate of TDS, Member (Revenue), and Member (Inv.). ANNEXURE-1 FORM-T Proforma for submitting proposal for prosecution u/s. 276B, 277 278 of the I.T. Act,1961 1 . Details of deductor (accused): (i) Name (ii) TAN (iii) Address (iv) PAN (v) Status 2 . Details of proposed co-accused (if any) u/s 278B of the I.T. Act i.e. partners, directors, karta, principal officer etc who are proposed to be prosecuted, if the deductor is firm, company, HUF, AOP or BOI and DDO in the case of Government deductor. Name of the director/ Partner/ Principal Officer/ DDO, etc Date of Birth PAN. No. Financial year Residential address of the persons 3 . The date of sanction order u/s 197 of Cr. PC from Government, in the case of a government deductor: 4 . Financial years/ Assessment years involved: Financial year Assessment Year 5. Details of TDS statements of the quarters in which defaults have been committed. Form No. and quarter Due date of filing of Statement Date of filing of statement Total amount of TDS paid for the quarter Tax paid after due date (s) 6 . Details of default in payment of TDS: (a) Details of Defaults under Chapter XVII except section 194B: Section Under Which TDS is Deducted Amount of deduction Date of Deduction of TDS Due date for payment to the credit of Govt. Actual date of payment to government Period of delay Outstanding Payment, If any Date of service of first notice relating to prosecution Or (b) Details of default in payment of TDS under proviso to section 194B: Total value of Winning (including winning in kind) Amount of Liability of TDS Date of release of winning Due date for payment to Govt. Actual date of payment to Govt, if any Period of delay Or (c) Details of default in payment of Dividend Distribution Tax (DDT) referred to in section 115-O: Total Amount of distributed profit Amount of DDT payable Date of declaration/ payment/ distribution of dividend, whichever is earlier Due date for payment to the credit of Govt. Actual date of payment To Govt. Period of default 7. Details of late payment interest (LPI): Form No. quarter Amount of LPI Chargeable u/s 201(1A) Amount of LPI paid before filling of statement LPI demand generated in order u/s. 201(1A) or 200 Date of payment of Demand Outstanding amount of LPI 8. Details of late filing fee u/s 234E: Form No. quarter Amount of late filling fee levied Amount of late fee paid Date of payment of late fee Whether appeal filed Status of appeal 9. Details of penalty u/s 221(1) of the I.T. Act for relevant A.Y. If imposed: Date of order u/s 221(1) of I.T Act Amount of penalty Levied Amount of penalty paid Date of appeal before CIT (A), If filed Status of further appeal,if any 10 . Please specify the other section of Income Tax Act and other laws such as IPC, which are also proposed for simultaneous prosecution. 11 . Whether the provisions of sec. 278A are applicable i.e. whether the defaulter has been convicted of an offence u/s 276B of the I.T Act earlier? 12 . Details of compounding applications filed, if any: (a) Whether compounding application for this year or any other year was filled : yes/ No (b) If yes: Sr. No The year(s) for which compounding application(s) were filed status 13. Detailed note justifying the proposal for prosecution: (a) The details of defaults in terms of frequency and quantum. (b) Present state of demand and short note on efforts for recovery. Status (c) Brief explanation for the defaults submitted by the accused and observation of AO on factual accuracy of the same. (d) The reasons for proposing name of different co-accused at Sr. No .2, If any, for prosecution. (e) The details of prosecution documents on the basis of which offence is sought to be proven before Court. (i) Details of relevant TDS statement (s) (ii) The copies of challan of late deposit of TDS. (iii) The audit report in form No. 3CD. (iv) The minute book. (v) Copies of ledgers of deductee in whose cases the TDS deducted has not been deposited in time (vi) Statements of any person recorded in connection with the default. (vii) The copies of order u/s. 201(1)/(1A) of the I`.T. Act, if passed. (viii) The sanction order of the government u/s. 197 of Cr PC in the case of government deductor. (ix) Any other document which may be relevant to establish the offence or the role of accused and co-accused(s). 14. List of proposed prosecution witnesses: 15. Details of the Assessing Officer passing order u/s 201(1)/(1A) of the I.T. Act, details of his present posting/address may also be given. (i) Name (ii) Present designation (iii) Present posting (iv) Employee code, if available (v) Permanent address, if available Date : _________________ Signature :_____________ Name of Officer : _____________ Submitting proposal : _____________ Employee Code : _____________ Designation : _____________ Permanent Address : _____________ Instructions for filling up this Form : (i) No column of the Form should be left blank. If the column is not applicable, the same shall be clearly mentioned. (ii) At Sr. No. 2 the details of the co-accused to be filled in on the basis of details gathered as per procedure laid down in Annexure-2 of SOP. (iii) At Sr. No. 5, the details of only those quarters shall be given in which defaults of delayed payments are there. (iv) At Sr. No. 6(a), details of defaults generated by CPC should be enclosed if they are not contested by the defaulter. If contested, the details shall be prepared on the basis of verification of documents submitted by the defaulter. (v) For preparing details in Sr. No. 13(e), the minutes book, signatures on audit report, balance sheet, etc., may also be relevant along with other material, as they throw light on role of various directors/partners, etc in controlling the business and their responsibility in accordance with sec 278B of the I.T. Act. (vi) The original copies of prosecution documents mentioned in Sr. No. 13(e) should be kept safely in personal custody of the AO and a proper handing over such documents should be done at the time of change of incumbent. (vii) This proforma shall also be used for submitting prosecution proposals u/s 276BB with relevant changes as applicable. ANNEXURE -2 Procedure for launching prosecution in the case of a Company/Firm/AOP/BOI 1. The Companies/Firm/AOP/BOI, etc. are artificial entities. Though such entities can also be convicted, but they cannot be imprisoned. Moreover, it is always the persons in control of the business who are responsible for commission and omission of various acts. It is, therefore, necessary to carefully identify the persons who are responsible for offence committed by the Company/Firm/AOP/BOI etc., so that they also can be prosecuted. 2. In the case of Company/Firm/AOP/BOI, provisions of Sec. 278B are relevant in deciding the accused and co-accused. As per Sec. 278B(1) of the I.T. Act, 1961 where any offence is committed by a Company, every person who, at the time the offence was committed, was in charge of, and was responsible to the Company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly, unless he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence . The company include Firm/BOI/AOP for the purpose of this section. 3. Further, u/s 278B(2) of the I.T. Act, 1961 where an offence is committed by a Company/ AOP/BOP and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, partner, manager, secretary or other officer of the company/AOP/BOI, such director, partner, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 4. For the purposes of section 278B (a) company means a body corporate, and includes (i) a firm; and (ii) an association of persons or a body of individuals whether incorporated or not; and (b) director , in relation to (i) a firm, means a partner in the firm; (ii) any association of persons or a body of individuals, means any member controlling the affairs thereof. 5. In this regard, it is important to mention that Hon ble Supreme Court in the case of Madhumilan Syntex Ltd. Vs. Union of India (2007), 290 ITR 199(SC) has also held that from the statutory provisions, it is clear that to hold a person responsible under the Act, it must be shown that he/she is a principal officer under section 2(35) of the Act or is incharge of and responsible for the business of the company or firm. Thus, the persons who are held Principal Officer u/s 2(35) of the I.T. Act, 1961 or the persons in charge of and responsible for business of the company or the Firm are also liable to prosecution besides the person (s) with whose consent, connivance or because of whose neglect the offence has been committed. The AO, therefore, should keep these provisions in mind while collecting the details and evidences and preparation of prosecution proposals while proposing the names of the accused and co-accused (s). 6. The following details may therefore be collected in the case of Companies through the Show Cause Notice to the defaulter and/or through other sources: (i) Details of the Company: Address (present) Other address(s), if any PAN Number Date of incorporation Contact numbers (ii) Details of Directors (From 1st April of relevant F.Y. till date): Name Date of Birth PAN Residential address Mobile Numbers Whether Active or not Responsibilities handled * Date of appointment In support copies of relevant resolution or other relevant documents can be sought. (iii) Details of person responsible for payment on which TDS is deducted (From 1st April of relevant F.Y. till date): Name and designation Date of Birth PAN Residential address Mobile Number Designation Other Responsibilities handled ** Date of appointment (**) In support copies of relevant resolution or other relevant documents can be sought. These persons are prima facie covered under section 278B of the I.T. Act. These persons are also prima facie responsible and liable for prosecution under section 278B of the I.T. Act, unless they prove that the offence was committed without their knowledge or that they exercised all due diligence to prevent commission of such offence. (iv) Details of every person (including Directors) who was in charge of and was responsible to the company for conduct of business of the company (From 1st April of relevant F.Y. till date): Name and designation Date of Birth PAN Residential address Mobile Number Designation Responsibilities handled *** Date of appointment (***) In support copies of relevant resolution or other relevant documents can be sought. (v) Duly certified copy of Minutes book showing minutes of the meeting of the Board of Directors. From these details the facts about the role of various persons in conduct of business and their control can be gathered. The minutes will also be helpful in verification of veracity of details provided at Sr. No. (III) (IV) above along with audit reports and annual reports. 7. Appropriate changes in above format can be made to collect information in respect of Firm/AOP/BOI, etc. 8. The AO may issue a notice to the Principal Officer of Company confronting him with the defaults and seek explanation for the default and to show cause as to why the prosecution proceedings u/s. 276B of the I.T. Act shall not be initiated. Through the same notice, the persons who were in-charge of and were responsible to the Company/Firm/AOP/BOI at the time of commission of offence may also be required to submit their explanation as to why he/she should not be treated as principal officer and co-accused along with the Company/Firm/AOP/BOI and be prosecuted against u/s 276B/276BB r.w.s. 278B of the I.T. Act, 1961. Further, the persons who were responsible for payment on which tax is deducted may also be asked through the same notice to show cause as to why the provisions of Sec. 278B of the I.T. Act are not applicable to them. 9. The above details will be helpful to the AO for identification of other accused in terms of section 278B of the I.T. Act, 1961. The show cause notice being generated by the TRACES has been designed keeping above in view.