Where there is some dispute with regard to the amount of tax deducted and amount of tax deposited and/or delay in deposit and/or the interest payable thereon then the passing of an order under section 201 of the Act before initiating penalty proceedings may be necessary. This is because there is a dispute on the factual determination whether or not the assessee is in default or deemed to be in default and the extent of default. AO may pass combined order under sections 201 & 221 if the fact and quantum of delayed deposit of TDS is not disputed by the deductor-assessee
HIGH COURT OF BOMBAY
Reliance Industries Ltd. v. Commissioner of Income-tax-Mumbai