TDS on salary- always resort to deduction on projected calculations- avoid irregular or casual deductions

 
If the employer resort to deduction of tax at source on casual basis/lump sum basis during the earlier months of the Financial Year, by not deducting the tax correctly as required u/s 192(1), then the AO can infer that employer has not deducted the whole or any part of the tax as required by or under the Act being the condition to be satisfied before charging interest u/s 201(1A). This is what is stated by Ahmedabad bench of ITAT in Madhya Gujarat Vij Co. Ltd. v. Income-tax Officer, Ward 3(4) & TDS, Petlad (2011) 133ITD89. The bench held that the AO has to see what was the deficiency in different months from deduction of tax i.e. what was actually required to be deducted as per section 192(1), and what has been actually deducted, whether the deficiency is substantial and continues to percolate in subsequent months in which situation onus would be on the assessee employer to show his bona fides. And if no such bona fide is shown then he would be liable to pay interest u/s 201(1A) for the deficiency so continued.



The bench further held that section 192(3) does not authorize employer to make deduction casually from payments of salary in different months and resorts to lump sum deduction at the end of the Financial Year for making good the deficiency. The employer has to find out immediately at the time of subsequent payment to the employee whether there was deficiency of deduction of tax in the preceding month. He has to make good such deficiency in the subsequent following month or otherwise has to show his bona fide