• TDS deposition from rent supposedly paid

Kindly advise,taking the following points into consideration.
1.There is a tenant,which is a registered private PARTNERSHIP FIRM,on rent in our house,on a tenancy agreement,that specifies explicitly,that TDS deducted from rent given by tenant would be deposited with IT dept.
2.For the last 6 years,it has not paid us rent,nor has it deposited any TDS deducted from rent with IT dept.
3.It doesnt possess a TAN number.It is a fake private engineering institution with staff,faculty & employees.
4.When I questioned about rent & TDS to the tenant,it did not reply.I then wrote to the IT dept & to the Police to investigate.
5.The IT dept issued notice to tenant,upon which,the tenant gave a FALSE declaration to the IT dept that it is a sole proprietorship/individual & that its account books are not audited & hence provisions of TDS didnt apply to it.
6.I submitted the registration details as a partnership firm to the IT dept.
7.The tenant has unofficially sent some xerox copies of payment of rent received by my Late father(each year the rent paid was 180000 Rs).The signatures appear fake & have not been done on Revenue Stamp & the rent receipt has been written in the tenant's handwriting.My mother however says that no rent was ever paid by the tenant & none of the money seems to have been deposited in any bank account belonging to my mother or my father.Its very likely that the tenant has faked.
8.The IT department has now sent me a notice asking me to produce proof of actual payment of rent & a legal heir certificate,to adjudge whether the provisions of TDS are applicable in this case or not.There are 3 legal heirs,me my mother & my sister.My father expired in Nov 2015 & rent was supposed to be paid from the month of Jan 2011.

Kindly advise on the following-
1.Is giving false declaration to IT dept to escape a TDS fraud an offence or not?
2.Is the concerned ITO trying to save the tenant as it appears to me.
3.Is being a private partnership firm & an engineering educational institution with teaching/non teaching staff & faculty,not enough ground to have provisions of TDS applicable?
4.What should be my reply to the ITO?(The ITO,infact,at the first instance,just accepted the false declaration of the tenant as an individual,never bothered to investigate & closed the case,till I brought the truth to notice,that the tenant is a regd. partnership firm)
Asked 7 years ago in Taxation

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4 Answers

Dear Querist

My opinion on your queries are as under:

1.Is giving false declaration to IT dept to escape a TDS fraud an offence or not?

Opinion: It is an offence, If a person or entity fails to deduct tax at source for payments made to a third party (for example prize money of lottery etc) or in another case, collects the tax at source but does not remit the same to the IT department, then he is liable to pay a penalty equal to amount of tax which was failed to be deducted at source.

2.Is the concerned ITO trying to save the tenant as it appears to me.

Opinion: It may be possible.

3.Is being a private partnership firm & an engineering educational institution with teaching/non teaching staff & faculty,not enough ground to have provisions of TDS applicable?

Opinion: TDS will be applicable on them being a third party transaction which was more then 20,000/-

4.What should be my reply to the ITO?(The ITO,infact,at the first instance,just accepted the false declaration of the tenant as an individual,never bothered to investigate & closed the case,till I brought the truth to notice,that the tenant is a regd. partnership firm)

Opinion: It's depend on the contents of the notice and requirement of department, is there any registered rent agreement executed between the tenant and your father?

Nadeem Qureshi
Advocate, New Delhi
6307 Answers
302 Consultations

4.9 on 5.0

1) giving false declaration to income tax is an offence

2) ITO is not trying to save the tenant . He has called upon you to produce LHC on father demise

3) ITO erred in accepting statements of tenant at face value . Should have called upon tenant to produce documentary evidence that it is proprietary concern

4) it is necessary to peruse show cause notice to guide you as to reply to be filed

Ajay Sethi
Advocate, Mumbai
95198 Answers
7607 Consultations

5.0 on 5.0

1. No doubt giving false declaration to IT department is a fraudulent at or cheating, but it is your responsibility to prove it.

2. You can obtain the information about the action taken by the IT department through RTI act and then pursue the matter legally as per provisions of law in this regard.

3. Yes, it is but you may have to see what statement he has given with regard to the firm. You can prove his statement as false by producing evidence in your possession.

4. You have to give a reply to the notice served on you on the lines of explanation sought from you.

If you are not able to give a proper reply then you may approach a local advocate and issue reply to the notice received as per provisions of law.

T Kalaiselvan
Advocate, Vellore
85398 Answers
2235 Consultations

5.0 on 5.0

1. Furnishing a false declaration to the ITO is surely an offence within the provisions of IT Act and IPC. However, the prosecution will be launched by the ITO only if he finds that there is sufficient evidence to make him stand trial in the court.

2. It does not appear that ITO is trying to save him as he has only asked you to produce evidence in support of your complaint.

3. The reply has to be according to the queries made by the ITO, so without perusal of the notice it is not possible to advise. Consult a lawyer with the notice received by you.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

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