Income Tax and TDS - Ambit of Legal Provisions Explained

Income Tax and TDS - Ambit of Legal Provisions Explained

It has been held that the relevant provision for fastening the liability for failure to deduct TDS are contained in section 199 and 201 of the Income-tax Act, 1961. 

The Explanation to the provision of section 191 fastens liability on the Deductors to pay tax in the event TDS, as required by the Act, is not deducted/deposited, and the assessee has also not paid the tax directly, whereas the provision of section 201 mandates that if income tax is not deducted at source (TDS), the person responsible for deducting or depositing TDS may be deemed an "assessee in default". The conjoint and harmonious reading of the Explanations to section 191 and 1st Proviso to section 201, the Deductor has to furnish a certificate under Rule 31ACB of the Income Tax Rules in Form 26A that the payee has paid the tax due on the income. 

Rao Khem Chand Vidya Vihar Samiti v ITO [2026] GCtR 146 (ITAT, Delhi)