Dundlod Shikshan Sansthan & Anr Vs Union of India And Ors (Rajasthan High Court)
In the case of Dundlod Shikshan Sansthan & Anr vs Union of India & Ors, the Rajasthan High Court considered a writ petition challenging the constitutional validity of Section 234E of the Income Tax Act, 1961. The petitioners sought multiple forms of relief, including a declaration that Section 234E is unconstitutional, an extension of the benefit of Circular No.07/2014 dated March 4, 2014 to other deductors, quashing of demands raised under the provision, and any other relief deemed appropriate. The challenge arose from the levy of a fee for late filing of TDS/TCS statements, which the petitioners argued was unjustified and punitive, especially given the lack of a mechanism for condonation of delay prior to amendments introduced by the Finance Act, 2015.
Section 234E provides for the levy of a fee of Rs. 200 per day for the late filing of TDS returns, capped at the amount of tax deductible or collectible. The Bombay High Court, in Rashmikant Kundalia & Ors. v. Union of India & Ors ((2015) 229 Taxman 596), upheld the validity of Section 234E, holding that the fee is compensatory rather than punitive. The court observed that TDS deductors have a statutory duty under Section 200 to furnish periodic statements of tax deducted, and delays in submission hinder the processing of income tax returns for deductees, potentially causing delays in refunds, infructuous demands, erosion of taxpayer confidence, financial cost to the government, and cash flow issues for businesses.
