Assessee-in-default SCN reply (s.201(1)/(1A)): how to reply

TDS AO proposes an assessee-in-default order for non-deduction/non-payment of TDS

Filed through e-Proceedings / TDS AO.

As stated in the notice. Set by the officer or left to discretion; the date is stated in the notice.

Unverified: This is to be confirmed against the notified text.

FORM NO. 26A: Accountant's certificate of the payee's compliance (Rule 31ACB), filed through e-Proceedings / TDS AO.

Unverified: The field list of this form is to be confirmed against the notified text.

• Form 26A / proviso to s.201(1) defence where payee compliance can be shown
• recomputed s.201(1A) interest limited to the date of the payee's own return filing, not the full period
• comparison of the recomputed interest to the demand raised
• facts: payment/credit dates and the TDS position taken

The strongest available defence is often the proviso to s.201(1) via Form 26A: if the payee has already included the income and paid tax on it, the deductor cannot be treated as in default for the principal amount, only interest under s.201(1A) survives, and only up to the date the payee actually filed their own return, not the full period to the order date. Recompute interest on that basis and compare it to the demand. Where Form 26A is not yet obtained, note it as pending and reserve the point.

1. Facts

   Payment/credit dates and the TDS position taken.

2. Legal ground

   Rate applicability, exemption, or payee compliance under Form 26A (CA-certified) establishing the payee has already paid tax on the income.

3. Interest computation

   Recompute interest under s.201(1A) and compare to the demand raised.

4. Prayer

   Request the assessee-in-default order not be passed, or interest be limited to what is computed above.

• Section 201(1), Income-tax Act, 1961
• Section 201(1A), Income-tax Act, 1961