The board says news regarding en masse issue of prosecution notices to small companies for TDS default are completely misleading and full of factual inaccuracies.
Rejecting the reports of mass harassment by income tax department, the Central Board of Direct Taxes has said that so far in the financial year only 1,400 prosecutions notices have been sent to assessees out of over 60 million returns filed.
The board in a media statement issued on Monday said that news items in a section of media regarding en masse issue of prosecution notices to small companies for TDS default are completely misleading and full of factual inaccuracies.
"Some defaulter companies and vested interests are deliberately misleading the media to thwart action against themselves," said the statement.
It clarified that Mumbai Income Tax TDS office has issued prosecution show cause notices only in a limited number of big cases where more than Rs 5 lakh of tax was collected as TDS from employees etc. and yet the same was not deposited with the Income Tax Department in time.
CBDT stated in the statement that in last one month, only in 50 big cases prosecution notices have been issued by Mumbai IT TDS office. It said that out of the 50 cases, in 80 per cent of the cases the TDS tax default is above Rs 10 lakh and in 10 per cent cases, TDS default is between Rs 5 to Rs 10 lakh. In the remaining 10 per cent cases, TDS default is of more than Rs 1 crore as detected in the survey.
Prosecutions have also recently been launched against four big business houses where more than Rs 50 crore of tax was collected by them from the tax payers and yet not deposited with the government in time.
CBDT expresses regret that "such legal and rightful action is being unfortunately projected in the media by vested interests as if the department is going overboard to harass small employers."
However, tax experts are saying that that the department has become aggressive and the prosecution notices are pressure tactics to make assessees litigating against certain tax demands to pay the outstanding tax. Though tax experts agree that the department can send prosecution notices asking the assessees litigating against tax demands to ask them to pay unless they get a stay order against such demands.