Section 201(1A) of the Income Tax Act

Income-tax Act, 2025: s.398

Section 201(1A) falls under section 201 of the Income-tax Act, 1961, which corresponds to section 398 (Consequences of failure to deduct or pay or, collect or pay) of the Income-tax Act, 2025.

Read section 398 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 201(1A) is GE India Technology Centre Pvt. Ltd. v. CIT (327 ITR 456), cited in 663 of the 4,608 judgments on BharatTax that turn on this section.

Leading authorities on Section 201(1A)

GE India Technology Centre Pvt. Ltd. v. CIT
327 ITR 456 · 2010 · Supreme Court
663
citing judgments

Tax must be deducted at source from payments made to a non-resident under Section 195 only if such payment is chargeable to tax in India. The Assessing Officer bears the onus to establish that the payments made are indeed chargeable to tax under the Income Tax Act.

Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT
293 ITR 226 · 2007 · Supreme Court
576
citing judgments

The deductor cannot be treated as an assessee-in-default under Section 201(1) if the deductee has already paid the tax or offered the impugned receipts in their return of income. However, interest under Section 201(1A) for delayed deposit of tax can still be levied up to the date of filing of the return of income by the deductee.

MALPE VISHWANATH ACHARYA AND OTHERS v. STATE OF MAHARASHTRA AND ANOTHER. 365 32
9 SCC 1 · 2018 · Supreme Court
533
citing judgments
254 ITR 121 (Guj) ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd.
243 ITR 435 · 2000 · High Court
173
citing judgments
247 ITR 305 (Guj) CIT v. Nestle India Ltd.
140 ITR 832 · 1983 · High Court
172
citing judgments

An employer is not in default under section 201 if they have made a bona fide estimate of employee income and deducted tax at source based on that estimate.

Jagaran Prakashan Ltd. v. DCIT
345 ITR 288 · 2012 · High Court
164
citing judgments

A deductor cannot be treated as an assessee in default for failure to deduct tax at source if the recipient has already paid the income tax directly. The onus is on the deductor to prove that the recipient has paid the tax.

Chandra Kishore Jha v. Mahavir Prasad
8 SCC 266 · 1999 · Supreme Court
163
citing judgments

If a statute or law prescribes that a thing must be done in a particular manner, then it must be done in that manner alone and in no other way. This principle mandates strict adherence to statutory procedures.

CIT v. Kotak Securities Ltd.
340 ITR 333 · 2012 · High Court
161
citing judgments

A deductor's bonafide belief or reliance on a Tax Residency Certificate (TRC) can influence whether they are deemed an 'assessee in default' under Section 195 for failing to deduct tax at source on payments to non-residents. The decision clarifies the due diligence required when interpreting tax treaties and TRCs for TDS compliance.

CIT vs. Nicholas Piramal India Ltd (2008) 299 ITR 0356 (BOMBAY); CIT v. Semiconductor Complex Ltd.
282 ITR 263 · 2006 · High Court
159
citing judgments

An employer making a bona fide estimate of taxable salary income is acting in accordance with established legal precedent.

Verizon Communications Singapore Pte Ltd. v. ITO
361 ITR 575 · 2014 · High Court
156
citing judgments

Payments for the use of equipment or copyrighted articles constitute royalty income under section 9(1)(vi) of the Income-tax Act, necessitating TDS deduction under section 195 and attracting disallowance under section 40(a)(i) for non-compliance.

Judgments on Section 201(1A)

M/S Barnala Steel Industries Ltd., Muzaffarnagar vs. JCIT, Muzaffarnagar

In the result, the appeal filed by the assessees is partly allowed for statistical purposes

ITA 341/DEL/2016[2010-11]Status: DisposedITAT Delhi17 Feb 2020AY 2010-11

Bench: Shri Bhavnesh Saini & Shri R.K. Pandaassessment Year: 2010-11 Barnala Steel Industries Ltd., Vs Jcit, Village Vehlana, Range-2, Meerut Road, Muzaffarnagar. Muzaffarnagar. Pan: Aabcb2772Q (Appellant) (Respondent) Assessee By : Shri Ankit Gupta, Advocate Revenue By : Shri S.L. Anuragi, Sr. Dr Date Of Hearing : 04.02.2020 Date Of Pronouncement : 17.02.2020 Order Per R.K. Panda, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 23Rd November, 2015 Of The Cit(A)-Muzaffarnagar, Relating To Assessment Year 2010- 11. 2. The First Issue Raised By The Assessee In The Grounds Of Appeal Relates To The Addition Of Rs.3,52,799/- Made By The Ao U/S 40A(3) Of The It Act. 3. Facts Of The Case, In Brief, Are That The Assessee Is A Company Engaged In The Business Of Manufacturing Of Ms Bar & Tmt. It Filed Its Return Of Income On 13Th October, 2010 Declaring The Total Income At Rs.1,48,33,980/- & An Amount Of Rs.2,22,85,162/- As Book Profit U/S 115Jb Of The Act. During The Course Of Assessment Proceedings, The Ao Observed From The Various Details Filed By The Assessee That The Assessee Has Violated The Provisions Of Section 40A(3) Of The Act For The Purchases From The Above Parties:- Date Of Payment Name Of Supplier Amount 03.11.2009 Mishra Coal Traders 76107/- 05.11.2009 Khan Coal Traders 92950/- 10.11.2009 Khan Coal Traders 91182/- 10.11.2009 Vikas Distributors 92560/-

For Appellant: Shri Ankit Gupta, AdvocateFor Respondent: Shri S.L. Anuragi, Sr. DR
Section 115JSection 194ASection 201Section 40Section 40A(3)