Income tax survey recovers Rs 84 lakh TDS from cotton trading firm in Sambhajinagar

Chhatrapati Sambhajinagar: Rs 84 lakh towards tax deducted at source (TDS), including Rs 13 lakh of applicable interest, was recovered by the income tax department after a day-long survey at the office premises of a leading cotton trading company in Chhatrapati Sambhajinagar on Wednesday.The survey was conducted by officers from the income tax office (TDS), Chhatrapati Sambhajinagar, as part of a focused drive to detect non-compliance with TDS provisions. The income tax team found that the firm allegedly failed to deduct TDS on interest payments of around Rs 20 crore, in violation of provisions of the Income Tax Act, 1961."During the operation, officials examined books of accounts, financial statements and other relevant documents throughout the day to verify whether statutory deductions and remittances were made in accordance with the law," said an official privy to the action.An I-T official maintained the company was subjected to a thorough investigation after it emerged that it allegedly did not comply with section 194A of the Income Tax Act, 1961. The section mandates that any company paying interest beyond the prescribed limit must deduct TDS at the rate of 10% at the time of payment or credit, whichever is earlier.During scrutiny of records, officers found that the company allegedly paid interest amounting to approximately Rs 20 crore without deducting any TDS. This failure resulted in a substantial amount of tax that should have been collected at source and deposited with central govt not being deducted at all, officials said.In addition, the company was also found to have defaulted in depositing TDS that was already deducted on other transactions. The unpaid amount in this regard was estimated at around Rs 71 lakh. The department recovered this amount during the course of the survey, along with interest applicable under the provisions of the Act, officials confirmed.Sources said the survey action is part of the Income Tax Department's ongoing efforts to strengthen compliance with TDS provisions, which are a key mechanism for ensuring steady tax collection and preventing revenue leakage. Officers said non-deduction or non-deposit of TDS not only attracts interest liability but can also invite further proceedings as per the law.The Income Tax Department appealed to all companies, firms and other entities liable to deduct tax at source to strictly adhere to TDS provisions under the Income Tax Act. Officials said timely deduction and prompt remittance of TDS to the central govt account is mandatory, and that lapses will be viewed seriously. Further action, if required, will be taken after a detailed examination of the documents and information gathered during the survey, said a senior official.