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Chartered Accountant Certificate Form 27BA, 26A-When assessee not treated in default for failure to deduct collect or pay income tax u/s 201 or 260C

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ABCAUS Excel for Chartered Accountants

Excel for
Chartered Accountants

As per section 201 of the Income Tax Act, 1961 where any person including the principle officer of a company who was responsible for the deduction of tax at source under the provisions of Chapter XVII, commits a default and either;

(a) does not deduct tax at source while making a payment
(b) after deducting the tax fails to pay whole or any part thereof to the credit of the government

Then such person shall be deemed to be the assessee in default. Being declared as assessee in default exposes the defaulters to many penal consequences. Read more Click Here >>

Similar provisions are contained in sub-section (6) of section 206C of the Income tax Act, 1961 related to defaults in collecting or payment of Tax Collected at Source.

However both section 201 and 206C contains proviso which provide for relief from being declared as assessee in default on production of a certificate from a chartered accountant in the prescribed format. There are three conditions which are required to be certified by the chartered accountant.

The relevant provisos along with three prescribed conditions are as under:

Section

Prescribed conditions

Section-201(1)

Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident-

 

 

 

 

 

(i)    has furnished his return of income under section 139;

(ii)   has taken into account such sum for computing income in such return of income; and

(iii)   has paid the tax due on the income declared by him in such return of income

 

Section-206C(6A)

Provided that any person, other than a person referred to in sub-section (1D), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee-


The said certificate from chartered accountants should be in prescribed form as under:

Section

Prescribed Form

Download Forms


201(1)


Form No 26A (Rule 31ACB)


Download Form Click Here >>


206C(6A)


Form 27BA (Rule 37J)


Download Form Click Here >>

Amount not dedcutible u/s 40(a)(ia) Please Note that if compliance is made in accordance with the provisio of section 201(1) as above, then for the purpose of section 40(a)(ia) also, it is deemed that the assessee has deducted and paid the tax on the date of furnishing or ITR.  

Also Read: Defaults and consequences related to Tax Deducted at Source (TDS) under Chapter XVII-B of Income Tax Act, 1961 Click Here >>

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