Recently, in the case of Rashmikant Kundalia and another vs Union of India and others, the constitutional validity of the fees being charged u/s 234E for delay in filing TDS returns was upheld by the Court of law, which primarily observed, that fees being charged for delay in filing of returns is in the nature of compensation for that extra work which our respective Income Tax department authorities need to do due to delay from our end in filing the TDS returns.
I agree that the respective law needs to provide for certain fees/fines and penalties in order to ensure timely compliance but the observation that our Income Tax department needs to do the extra work due to delay at our end is something which I could not digest.
Almost entire TDS return is prepared in the format as required by the department and is filed accordingly which is then updated in the Governmental records in due course of time. This means that most of the work is done by us. Plus, if there is any error in the TDS return filed by us then the same is informed to us via Notice to which we respond by doing the needful!
My question is that does department/Government pay us any fees for deducting TDS and depositing the same to the credit of the Government? Forget giving us something, even in cases wherein an Assessee in his ITR, by mistake, omits entering the detail of the entire TDS credit available to him, department considers only what has been claimed and not a rupee more despite the fact that they have access to our respective Form 26ASs which they keep referring from time to time for their benefit.
Intimations u/s 143(1) of the Income Tax show credit of what has been duly claimed by the Assessee, it nowhere provides the credit of TDS, details w.r.t. which were left out from being entered by mistake! Despite the fact that credit of TDS omitted was legitimately available to the Assessee.
Department is very prompt in penalising the Assessee for his fault but when it comes to the department then rules of the game change, we need to accept that it is our fault even if that’s not the case, we need to go multiple times to their offices because at times they are not available and at times they are not in mood, we need to do even the most trivial rectifications etc.
God forbid but if you end up filing your Income Tax Return after the due date and, by mistake, you omitted keying in the required data like TDS credit etc. then you, in most cases, will not have any recourse. As department, though having access to TDS credit available to you, will only allow the credit of TDS which has been claimed in the ITR and not a rupee more.
Department expects people to file their returns honestly, be honest tax payers and all but is our department/Government honest in its intentions? Despite paying taxes and doing the needful, those very people who survive on Taxes paid by us (Income Tax officials) make us feel as if its because of them that we are alive.
With this kind of attitude, biased intentions, lack of will to work for the Assessee, department/Government should not expect an Assessee to be honest and even if an Assessee wants to be our departmental authorities won’t let them be mainly.
It’s give and take, rules should be same for all so that efficiency is ensured at both the ends. Government should pay same rates of interests in case of undue delays in giving Tax refunds as it expects to charge when the delay is at our end. If our Government is so confident about our great Income Tax officials, so much so, that they have recently been awarded, then Government should provide for penalties for them as well for their inefficiencies etc. which should be deducted from their Salaries, then see how fast the clean-up takes place.
Our Government very well knows about the inefficiency of Income Tax officials that is why it has not provided for higher rates of interest/fines and penalties for errors and inefficiencies by Income Tax officials otherwise it may end becoming bankrupt because our Income Tax department works with unparalleled inefficiency.
From the top, its all Rosy, its below those Roses that thorns are hurting!!!!
Justice begets justice!!!!
(Author Details- CA Sahil Jolly – Jolly & Co. Chartered Accountants, Contact: +91-9999830077, Email : casahiljolly@gmail.com)
Assessee, a charitable society, the accounts officer deducted TDS / paid to credit of Central Govt in time . Huge amount, more than 1.5 Crore funds were embezzled by accountant, and he flew out of country. 2,3,4 Q were filed and it then transpired that Q-1 26Q was not filed by absconding accountant. Now 26Q-1 has been filed and department will impose FEE u/s 234 E. Is this fee of Rs. 200/- justified in such cases ? Please share your views.
it must be brought to the knowledge of finance minister and prime minister. what is worth of it about the assessee side pointed out very well. even we can forget about department faults or errors, because procedures and rules should be changed first.
Well thought Mr. Jolly, You are absolutly right. Government should pay some % of amount to the deductor to do work as a agent. Also government pay penalty for delay of refund after a period.
Sir,
For a small amount a default is committed the penalty will be very heavy. Therefore the penalty is irrational in my opinion. Already taxes have been paid what was a need to levy additional fees. The judgement is not in good spirit.
Well said and very practical. In this situation I want to share my view also. TDS is deducted for the help of Government and ETDS work and Charges connected there to are bourned by the Deductor, for this ETDS work. So the ultimate beneficiaries are, the Central Govt and Deductees. If Penalty u/s 234E imposed on the default by the deductor, he further suffered. So Incometax Department must see this fact and kindly remove or postpone the penalty u/s 234E and first properly inform and educate the Deductors in this regard. Because TDS Money properly deposited to the central govt, and only ETDS returns are delayed. Further there is acceptable shortage in ETDS return preparers and filers also. This is because of low income and high tension work on ETDS. Being a ETDS return preparer, Last 13/5/2015 to today I was mentally effected about the TDS filing. All are causes of 234E for delay in ETDS filing. So deductors strongly oppose penalty u/s 234E and Department must reconsider their penalty u/s 234E and may postpone the same. In the same time the Deductors must understand the problems of No-filing of ETDS returns. Because there must be a acceptable rule to file the ETDS returns. In the same time Deductors must realize their important part of work in this regard and must take due care to file ETDS in time. Particularly the Government Deductors must give due attention in this regard. They must come forward to know about TDS and procedures.
How true.But who will bell the cat?
Despite Delhi HC diktat and CBDT circular which remains on paper.
ITO’s are not willing to follow this and say that the software is not modified!Why our ICAI Direct taxes committee does not take this up or is it left to individual CA’s too to sort this vexed issue .
Well said…..
Sir, you are correct & good article.
Awesome Article!! You would have surely won the case at HC if you had argued the case.. Thanks
The author should not generalised by saying “inefficiency of income-tax officials”. Problems are there in every field. Let us not generalise. Income-tax Department is one of the best government departments and has won many awards for innovations and computerisation. The deficiencies in the system should not be termed as inefficiency of the “Individuals”.
Well said..!!!
Well written, however in my opinion, we dont have any objection to charge the penalty but the amount of penalty is unreasonable & excessive. it is rather generating sense of discouragement among the tax payers