Section 276B — Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and heavily litigated. The principal TDS-default prosecution provision.
Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — new graded-threshold structure; coverage narrowed; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes failure to pay to the credit of the Central Government tax deducted at source under Chapter XVII-B (and certain Chapter XII-D / special-deduction payments). The offence is non-payment after deduction — not non-deduction.
Litigation profile: Very high — a large, recent High Court body on quashing, reasonable cause, principal-officer notice and compounding.
A. COMMENTARY
The gist — deduct and not deposit
Section 276B is the criminal sanction against a person who, having deducted tax at source under Chapter XVII-B (or who is liable to pay tax under the special provisions referred to — section 115-O(2) of Chapter XII-D, the provisos to sections 194B/194R/194S and section 194BA(2)), fails to pay that tax to the credit of the Central Government within the prescribed time. The vice is the retention of money that belongs to the exchequer — tax already deducted from a third party. It is crucial to distinguish non-payment of deducted tax (276B) from a failure to deduct at all: the Supreme Court in US Technologies has confirmed that the two attract different consequences.
Mens rea, reasonable cause and the safe-harbour proviso
Although the section does not use the word 'wilful', section 278AA provides a complete defence of 'reasonable cause', and section 278E raises a (rebuttable) presumption of culpable mental state. A genuine financial crunch, an accountant's bona fide error, or deposit (with interest under section 201(1A)) before sanction have repeatedly persuaded the courts to quash. The proviso (inserted by the Finance (No.2) Act, 2024, w.e.f. 1 October 2024) is a statutory safe harbour: no offence under clause (a) if the deducted tax is paid on or before the time prescribed for filing the section 200(3) statement.
Principal-officer notice and sanction
Where the deductor is a company, prosecution of its directors/officers proceeds via section 278B, but a person can be made the 'principal officer' liable under section 276B only after a notice under section 2(35)(b) expressing the department's intention to treat him as such. Sanction under section 279(1) and adherence to the CBDT prosecution and compounding instructions (notably the circulars of 28 May 1980 and 24 April 2008 and the compounding Guidelines) are essential; their neglect renders the launch an abuse of process.
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, sections 276B, 276BB, 276C, 276CC, 276CCC and 276D are wholly substituted with effect from 1 March 2026. For section 276B the new text (i) narrows the coverage of clause (b) to the proviso to section 194S(1) (consideration for transfer of a virtual digital asset, excluding consideration wholly in kind) and section 194BA(2) (online-game winnings, excluding winnings wholly in kind) — dropping the earlier references to section 115-O(2), the proviso to section 194B and the first proviso to section 194R(1); and (ii) replaces the old 'rigorous imprisonment not less than three months but up to seven years and with fine' with a graded structure: simple imprisonment up to two years, or fine, or both, where the tax exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The safe-harbour proviso (payment before the section 200(3) statement due date) is retained. The verbatim text in Part B is the pre-substitution (Finance Act, 2025) text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276B is wholly substituted (graded thresholds; simple imprisonment; narrowed clause (b)) — see the amendment note above.
Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
276B. If a person fails to,—
(a) pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) pay tax or ensure payment of tax to the credit of the Central Government, as required by or under—
he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine:
Provided that the provisions of this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement for such payment under sub-section (3) of section 200.
C. AUTHORITIES
The authorities are arranged by issue-cluster. The principles (mens rea, reasonable cause, abuse of process, principal-officer notice) carry over to the substituted provision.
Cluster 1 — The offence is non-payment of deducted tax (not non-deduction)
Madhumilan Syntex Ltd. v. Union of India (2007) 290 ITR 199 (SC)
Facts Tax was deducted at source but deposited beyond the prescribed time; the company and its directors (described in the show-cause notice as 'principal officers' under section 2(35)) were prosecuted under section 276B read with section 278B. The accused contended that late deposit, especially with interest under section 201(1A), was not an offence.
Held / ratio Delayed payment of the tax already deducted is itself the completed offence under section 276B; the offence is complete on failure to pay within the prescribed time, and payment of interest under section 201(1A) does not undo it. A section 2(35) intimation in the show-cause notice is sufficient to treat directors as principal officers, so their prosecution under section 278B was valid.
Significance The anchor authority: it both fixes the 'deduct-but-not-deposit' gravamen and validates the principal-officer route to director liability.
US Technologies International (P) Ltd. v. CIT (2023) 453 ITR 644 (SC)
Facts Tax was deducted but deposited late; the question was whether penalty under section 271C could be levied for the belated remittance.
Held / ratio Penalty under section 271C is confined to a failure to deduct tax at source; a mere belated payment or non-payment of tax already deducted is addressed by interest under section 201(1A) and by prosecution under section 276B — not by section 271C.
Significance Sharpens the boundary that section 276B bites on the failure to pay over deducted tax, not on a failure to deduct; useful in resisting an over-broad charge.
Cluster 2 — Reasonable cause (s.278AA) and quashing where TDS + interest paid
Sonali Autos (P) Ltd. v. State of Bihar (2017) 396 ITR 636 (Pat)
Citation (2017) 396 ITR 636 (Patna).
Facts TDS was deposited late; the delay was attributed to a bona fide oversight on the part of the company's accountant. Prosecution under section 276B was launched.
Held / ratio An accountant's bona fide oversight is a 'reasonable cause' within section 278AA; the test is whether the cause would prevent a man of ordinary prudence and average intelligence, acting reasonably, from complying. Reasonable cause being made out, the entire criminal proceedings were quashed.
Significance Leading articulation of the section 278AA standard in TDS prosecutions.
Aditya Institute of Technology & Management v. State of Andhra Pradesh (2024) 163 taxmann.com 738 (AP)
Facts An educational institution deducted TDS on contract payments for AYs 2014-15 to 2016-17 but remitted it late, attributing the delay to belated fee-reimbursement from the State Government. The Commissioner sanctioned prosecution.
Held / ratio The sanctioning authority had 'conveniently ignored' material showing reasonable cause under section 278AA; belated deposit attributable to a bona fide cause (here, the State's delayed reimbursement) does not warrant prosecution. The section 276B proceedings were quashed.
Significance A recent reasonable-cause quashing on facts of genuine fund-flow disruption.
Dev Multicom (P) Ltd. v. State of Jharkhand (2023) 454 ITR 48 (Jharkhand)
Citation (2023) 454 ITR 48 (Jharkhand).
Facts Prosecution under section 276B was launched after the TDS and the section 201(1A) interest had already been received by the department, and without reference to the CBDT Instruction dated 28 May 1980.
Held / ratio Launching prosecution after the tax and interest had been received, and in disregard of the binding CBDT instruction, was an abuse of process; the proceedings were quashed.
Significance Confirms the CBDT-instruction discipline on launching TDS prosecutions.
Hemant Mahipatray Shah v. Anand Upadhyay (2024:BHC-AS:32594) (Bom)
Citation Bombay High Court, 12 August 2024; neutral citation 2024:BHC-AS:32594.
Facts Hubtown Ltd. deposited FY 2019-20 TDS late but with interest under section 201(1A); the delay was attributed to market sluggishness, insolvency proceedings and COVID-19. The directors were prosecuted under section 276B read with section 278B.
Held / ratio Per the CBDT circulars of 28 May 1980 and 24 April 2008, prosecution ought not to be launched once TDS with interest is deposited and the amount/period is not substantial; and section 278B requires the offence to be shown to be with the consent, connivance or neglect of the specific director — absent which the process against directors fails. Process against the directors was quashed.
Significance A strong 2024 combination of the CBDT-circular, reasonable-cause and section 278B-averment grounds.
Cluster 3 — Principal-officer notice and corporate liability
CIT v. Delhi Iron Works (P) Ltd. (2011) 331 ITR 5 (Del)
Citation (2011) 331 ITR 5 (Delhi).
Facts A director was prosecuted under section 276B without a prior notice under section 2(35)(b) conveying the department's intention to treat him as the 'principal officer'.
Held / ratio A section 2(35)(b) notice is a condition precedent to prosecuting a director as principal officer; absent such notice the director's acquittal followed, and on the facts extended to the company.
Significance The standard authority on the principal-officer notice as a jurisdictional pre-condition.
Homi Phiroze Ranina v. State of Maharashtra (2003) 263 ITR 636 (Bom)
Citation (2003) 263 ITR 636 (Bombay).
Facts Directors were sought to be prosecuted under section 276B read with section 278B on a complaint that did not specifically disclose their responsibility for the day-to-day conduct of the company's business.
Held / ratio A complaint must prima facie disclose that the director was responsible for the day-to-day conduct of the company's business; a bald averment is insufficient to issue process.
Significance A check on the indiscriminate arraignment of directors in TDS prosecutions.
Facts Vicarious-liability question (under section 141 of the Negotiable Instruments Act, the analogue of section 278B): whether a director can be prosecuted where the company itself has not been arraigned as an accused.
Held / ratio Arraignment of the company is an imperative; for maintaining a prosecution under a vicarious-liability provision, the company must be made an accused — its non-impleadment is fatal to proceedings against the directors.
Significance Applied to section 278B, it requires the deductor-company itself to be arraigned before its directors can be prosecuted.
Cluster 4 — Sanction and compounding
Indo Arya Central Transport Ltd. v. CIT (TDS) (2018) 405 ITR 64 (Del)
Facts Challenge to a section 276B prosecution on the ground that the sanction under section 279(1) was granted without considering the reasonable-cause defence and the CBDT instructions.
Held / ratio Lays down the principles governing a valid sanction: the sanctioning authority must apply its mind to the section 278AA reasonable-cause defence and the CBDT instructions before according sanction.
Significance The leading recent statement on sanction validity in TDS prosecutions.
Vikram Singh v. Union of India (2017) 394 ITR 746 (Del)
Citation (2017) 394 ITR 746 (Delhi).
Facts Challenge to the rejection of a compounding application and to features of the CBDT compounding Guidelines.
Held / ratio There is no limitation period for filing a compounding application under section 279(2); the CBDT cannot reject merely for delay nor impose conditions contrary to the section. The Court examined the vires and proportionality of the compounding framework.
Significance Frames the compounding route, the practical exit from a TDS prosecution.
Cluster 5 — Tribunal (ITAT) dimension
The Tribunal has no jurisdiction over a section 276B prosecution; its relevance is collateral. Where the quantum/penalty appeal results in a finding that no tax was, in law, deductible by the assessee (so that there was no 'failure' to pay), that finding undermines the foundation of the charge. Unlike the concealment offences, however, the 276B offence is one of fact (deduction followed by non-deposit), so the linkage operates only where the deduction liability itself is negated.
Facts A short-deduction case where the recipient had already paid tax on the income; the Tribunal had held the deductor not liable to pay the tax over again (Circular No. 275/201/95-IT applied).
Held / ratio Where the payee has paid the tax, the deductor cannot be called upon to pay the same tax again (though interest and other consequences may follow). A Tribunal finding to this effect removes the substratum of a 'failure to pay' charge.
Significance Illustrates how a favourable Tribunal finding on the deduction/payment liability can defeat the foundation of a 276B prosecution.
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 276B — Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and heavily litigated. The principal TDS-default prosecution provision.
Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — new graded-threshold structure; coverage narrowed; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes failure to pay to the credit of the Central Government tax deducted at source under Chapter XVII-B (and certain Chapter XII-D / special-deduction payments). The offence is non-payment after deduction — not non-deduction.
Litigation profile: Very high — a large, recent High Court body on quashing, reasonable cause, principal-officer notice and compounding.
A. COMMENTARY
The gist — deduct and not deposit
Section 276B is the criminal sanction against a person who, having deducted tax at source under Chapter XVII-B (or who is liable to pay tax under the special provisions referred to — section 115-O(2) of Chapter XII-D, the provisos to sections 194B/194R/194S and section 194BA(2)), fails to pay that tax to the credit of the Central Government within the prescribed time. The vice is the retention of money that belongs to the exchequer — tax already deducted from a third party. It is crucial to distinguish non-payment of deducted tax (276B) from a failure to deduct at all: the Supreme Court in US Technologies has confirmed that the two attract different consequences.
Mens rea, reasonable cause and the safe-harbour proviso
Although the section does not use the word 'wilful', section 278AA provides a complete defence of 'reasonable cause', and section 278E raises a (rebuttable) presumption of culpable mental state. A genuine financial crunch, an accountant's bona fide error, or deposit (with interest under section 201(1A)) before sanction have repeatedly persuaded the courts to quash. The proviso (inserted by the Finance (No.2) Act, 2024, w.e.f. 1 October 2024) is a statutory safe harbour: no offence under clause (a) if the deducted tax is paid on or before the time prescribed for filing the section 200(3) statement.
Principal-officer notice and sanction
Where the deductor is a company, prosecution of its directors/officers proceeds via section 278B, but a person can be made the 'principal officer' liable under section 276B only after a notice under section 2(35)(b) expressing the department's intention to treat him as such. Sanction under section 279(1) and adherence to the CBDT prosecution and compounding instructions (notably the circulars of 28 May 1980 and 24 April 2008 and the compounding Guidelines) are essential; their neglect renders the launch an abuse of process.
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, sections 276B, 276BB, 276C, 276CC, 276CCC and 276D are wholly substituted with effect from 1 March 2026. For section 276B the new text (i) narrows the coverage of clause (b) to the proviso to section 194S(1) (consideration for transfer of a virtual digital asset, excluding consideration wholly in kind) and section 194BA(2) (online-game winnings, excluding winnings wholly in kind) — dropping the earlier references to section 115-O(2), the proviso to section 194B and the first proviso to section 194R(1); and (ii) replaces the old 'rigorous imprisonment not less than three months but up to seven years and with fine' with a graded structure: simple imprisonment up to two years, or fine, or both, where the tax exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The safe-harbour proviso (payment before the section 200(3) statement due date) is retained. The verbatim text in Part B is the pre-substitution (Finance Act, 2025) text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276B is wholly substituted (graded thresholds; simple imprisonment; narrowed clause (b)) — see the amendment note above.
Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
276B. If a person fails to,—
(a) pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) pay tax or ensure payment of tax to the credit of the Central Government, as required by or under—
(i) sub-section (2) of section 115-O;
(ii) the proviso to section 194B;
(iii) the first proviso to sub-section (1) of section 194R;
(iv) the proviso to sub-section (1) of section 194S; or
(v) sub-section (2) of section 194BA,
he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine:
Provided that the provisions of this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement for such payment under sub-section (3) of section 200.
C. AUTHORITIES
The authorities are arranged by issue-cluster. The principles (mens rea, reasonable cause, abuse of process, principal-officer notice) carry over to the substituted provision.
Cluster 1 — The offence is non-payment of deducted tax (not non-deduction)
Madhumilan Syntex Ltd. v. Union of India (2007) 290 ITR 199 (SC)
Citation (2007) 290 ITR 199 / (2007) 11 SCC 297 / 208 CTR 417 (SC).
Facts Tax was deducted at source but deposited beyond the prescribed time; the company and its directors (described in the show-cause notice as 'principal officers' under section 2(35)) were prosecuted under section 276B read with section 278B. The accused contended that late deposit, especially with interest under section 201(1A), was not an offence.
Held / ratio Delayed payment of the tax already deducted is itself the completed offence under section 276B; the offence is complete on failure to pay within the prescribed time, and payment of interest under section 201(1A) does not undo it. A section 2(35) intimation in the show-cause notice is sufficient to treat directors as principal officers, so their prosecution under section 278B was valid.
Significance The anchor authority: it both fixes the 'deduct-but-not-deposit' gravamen and validates the principal-officer route to director liability.
US Technologies International (P) Ltd. v. CIT (2023) 453 ITR 644 (SC)
Citation (2023) 453 ITR 644 / 293 Taxman 27 / 332 CTR 176 (SC).
Facts Tax was deducted but deposited late; the question was whether penalty under section 271C could be levied for the belated remittance.
Held / ratio Penalty under section 271C is confined to a failure to deduct tax at source; a mere belated payment or non-payment of tax already deducted is addressed by interest under section 201(1A) and by prosecution under section 276B — not by section 271C.
Significance Sharpens the boundary that section 276B bites on the failure to pay over deducted tax, not on a failure to deduct; useful in resisting an over-broad charge.
Cluster 2 — Reasonable cause (s.278AA) and quashing where TDS + interest paid
Sonali Autos (P) Ltd. v. State of Bihar (2017) 396 ITR 636 (Pat)
Citation (2017) 396 ITR 636 (Patna).
Facts TDS was deposited late; the delay was attributed to a bona fide oversight on the part of the company's accountant. Prosecution under section 276B was launched.
Held / ratio An accountant's bona fide oversight is a 'reasonable cause' within section 278AA; the test is whether the cause would prevent a man of ordinary prudence and average intelligence, acting reasonably, from complying. Reasonable cause being made out, the entire criminal proceedings were quashed.
Significance Leading articulation of the section 278AA standard in TDS prosecutions.
Aditya Institute of Technology & Management v. State of Andhra Pradesh (2024) 163 taxmann.com 738 (AP)
Citation (2024) 163 taxmann.com 738 (Andhra Pradesh).
Facts An educational institution deducted TDS on contract payments for AYs 2014-15 to 2016-17 but remitted it late, attributing the delay to belated fee-reimbursement from the State Government. The Commissioner sanctioned prosecution.
Held / ratio The sanctioning authority had 'conveniently ignored' material showing reasonable cause under section 278AA; belated deposit attributable to a bona fide cause (here, the State's delayed reimbursement) does not warrant prosecution. The section 276B proceedings were quashed.
Significance A recent reasonable-cause quashing on facts of genuine fund-flow disruption.
Dev Multicom (P) Ltd. v. State of Jharkhand (2023) 454 ITR 48 (Jharkhand)
Citation (2023) 454 ITR 48 (Jharkhand).
Facts Prosecution under section 276B was launched after the TDS and the section 201(1A) interest had already been received by the department, and without reference to the CBDT Instruction dated 28 May 1980.
Held / ratio Launching prosecution after the tax and interest had been received, and in disregard of the binding CBDT instruction, was an abuse of process; the proceedings were quashed.
Significance Confirms the CBDT-instruction discipline on launching TDS prosecutions.
Hemant Mahipatray Shah v. Anand Upadhyay (2024:BHC-AS:32594) (Bom)
Citation Bombay High Court, 12 August 2024; neutral citation 2024:BHC-AS:32594.
Facts Hubtown Ltd. deposited FY 2019-20 TDS late but with interest under section 201(1A); the delay was attributed to market sluggishness, insolvency proceedings and COVID-19. The directors were prosecuted under section 276B read with section 278B.
Held / ratio Per the CBDT circulars of 28 May 1980 and 24 April 2008, prosecution ought not to be launched once TDS with interest is deposited and the amount/period is not substantial; and section 278B requires the offence to be shown to be with the consent, connivance or neglect of the specific director — absent which the process against directors fails. Process against the directors was quashed.
Significance A strong 2024 combination of the CBDT-circular, reasonable-cause and section 278B-averment grounds.
Cluster 3 — Principal-officer notice and corporate liability
CIT v. Delhi Iron Works (P) Ltd. (2011) 331 ITR 5 (Del)
Citation (2011) 331 ITR 5 (Delhi).
Facts A director was prosecuted under section 276B without a prior notice under section 2(35)(b) conveying the department's intention to treat him as the 'principal officer'.
Held / ratio A section 2(35)(b) notice is a condition precedent to prosecuting a director as principal officer; absent such notice the director's acquittal followed, and on the facts extended to the company.
Significance The standard authority on the principal-officer notice as a jurisdictional pre-condition.
Homi Phiroze Ranina v. State of Maharashtra (2003) 263 ITR 636 (Bom)
Citation (2003) 263 ITR 636 (Bombay).
Facts Directors were sought to be prosecuted under section 276B read with section 278B on a complaint that did not specifically disclose their responsibility for the day-to-day conduct of the company's business.
Held / ratio A complaint must prima facie disclose that the director was responsible for the day-to-day conduct of the company's business; a bald averment is insufficient to issue process.
Significance A check on the indiscriminate arraignment of directors in TDS prosecutions.
Aneeta Hada v. Godfather Travels & Tours (P) Ltd. (2012) 5 SCC 661 (SC)
Citation (2012) 5 SCC 661 (SC).
Facts Vicarious-liability question (under section 141 of the Negotiable Instruments Act, the analogue of section 278B): whether a director can be prosecuted where the company itself has not been arraigned as an accused.
Held / ratio Arraignment of the company is an imperative; for maintaining a prosecution under a vicarious-liability provision, the company must be made an accused — its non-impleadment is fatal to proceedings against the directors.
Significance Applied to section 278B, it requires the deductor-company itself to be arraigned before its directors can be prosecuted.
Cluster 4 — Sanction and compounding
Indo Arya Central Transport Ltd. v. CIT (TDS) (2018) 405 ITR 64 (Del)
Citation (2018) 405 ITR 64 / 255 Taxman 50 (Delhi).
Facts Challenge to a section 276B prosecution on the ground that the sanction under section 279(1) was granted without considering the reasonable-cause defence and the CBDT instructions.
Held / ratio Lays down the principles governing a valid sanction: the sanctioning authority must apply its mind to the section 278AA reasonable-cause defence and the CBDT instructions before according sanction.
Significance The leading recent statement on sanction validity in TDS prosecutions.
Vikram Singh v. Union of India (2017) 394 ITR 746 (Del)
Citation (2017) 394 ITR 746 (Delhi).
Facts Challenge to the rejection of a compounding application and to features of the CBDT compounding Guidelines.
Held / ratio There is no limitation period for filing a compounding application under section 279(2); the CBDT cannot reject merely for delay nor impose conditions contrary to the section. The Court examined the vires and proportionality of the compounding framework.
Significance Frames the compounding route, the practical exit from a TDS prosecution.
Cluster 5 — Tribunal (ITAT) dimension
The Tribunal has no jurisdiction over a section 276B prosecution; its relevance is collateral. Where the quantum/penalty appeal results in a finding that no tax was, in law, deductible by the assessee (so that there was no 'failure' to pay), that finding undermines the foundation of the charge. Unlike the concealment offences, however, the 276B offence is one of fact (deduction followed by non-deposit), so the linkage operates only where the deduction liability itself is negated.
CIT v. Hindustan Coca-Cola Beverages (P) Ltd. (2007) 293 ITR 226 (SC)
Citation (2007) 293 ITR 226 (SC).
Facts A short-deduction case where the recipient had already paid tax on the income; the Tribunal had held the deductor not liable to pay the tax over again (Circular No. 275/201/95-IT applied).
Held / ratio Where the payee has paid the tax, the deductor cannot be called upon to pay the same tax again (though interest and other consequences may follow). A Tribunal finding to this effect removes the substratum of a 'failure to pay' charge.
Significance Illustrates how a favourable Tribunal finding on the deduction/payment liability can defeat the foundation of a 276B prosecution.