Section 448 — Penalty for failure to deduct tax at source. Successor to s.271C of the 1961 Act.
Section 448 is in Chapter XXI — Penalties, which runs from section 439 to section 472.
The section creates one penalty for two kinds of failure. Clause (a) covers a failure to deduct the whole or any part of the tax required under Chapter XIX-B. Clause (b) covers a failure to pay, or to ensure the payment of, the whole or any part of the tax required by or under Note 2 below the Table in section 393(3), or Note 6 to section 393(1) (Table: Sl. No. 8).
Where either failure occurs, the Assessing Officer may impose on the person a penalty equal to the tax which he failed to deduct or to pay or to ensure payment of.
Deduction at source works only if the person required to deduct actually does so, and the tax itself can be recovered from him in any event, so a sanction is needed that costs something beyond the tax. Setting the penalty at the amount not deducted or not paid makes the failure as expensive as the obligation, and clause (b) extends the same exposure to the two situations where the duty is to pay or ensure payment rather than to deduct.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Amount of the penalty | Equal to the tax which the person failed to deduct or pay or ensure payment of | Imposable by the Assessing Officer; the section says "may impose", so the imposition is discretionary while the amount is fixed at that equality | Closing words of the section |
The amount is not a range. Once the Assessing Officer decides to impose, the penalty is equal to the tax not deducted or not paid, so the argument has to be made against imposition rather than against quantum, and the discretion in the word "may" is the officer's. A partial failure is enough: both clauses reach a failure to deduct or pay "the whole or any part" of the tax, so short deduction is caught as squarely as no deduction. Clause (b) is a distinct exposure that is easy to overlook, because the duty there is to pay or ensure payment under two specific Notes rather than to deduct anything.
A company was required under Chapter XIX-B to deduct Rs. 4 lakh from payments made during a tax year and deducted only Rs. 1 lakh. The failure is of part of the tax, which clause (a) covers, and the Assessing Officer may impose a penalty equal to the Rs. 3 lakh not deducted. That penalty is separate from the tax itself, which remains recoverable, and the amount cannot be scaled down — the only question open is whether the penalty is imposed at all.
In a penalty notice and order from the Assessing Officer, usually following an order or demand arising from a tax deduction at source default; it is addressed to the deductor, not to the person whose income was to bear the tax.
the Assessing Officer may impose on him, a penalty equal to the tax which such person failed to deduct or pay or ensure payment of
deduct the whole or any part of the tax as required under Chapter XIX-B
See the full 1961 to 2025 concordance.