Representation On Relaxing The Application Of Section 234F Of Income Tax Act And Extension Of Due Date For Filing Income Tax Returns Of Individuals And Small Businesses
The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an association of Chartered Accountants, registered under the Karnataka Societies Registration Act, in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the professional problems faced by chartered accountants and business community.
We have written to your good selves many a times populating issues and possible solutions. Herein, we are presenting difficulties and hardships faced by the trade, consultants and public at large pursuant to introduction of Section 234F and also, relating to adhering the timelines for filing of Income Tax returns within 31st July 2018, the due date as mentioned in Explanation 2 of Section 139(1). Having a wide outreach to Chartered Accountants, tax practitioners, trade bodies etc., and issues populated by them, KSCAA felt it necessary to put forth these issues and seek your redressal mechanism to alleviate the pain caused as well as seek a reasonable extension of due date.
We wish to present before you the following facts on the ongoings and public sentiment on the matter under two segments:
A. Regarding Section 234F of the Income Tax Act
The Union Budget, 2017 introduced Section 234F for levy of fee for delay in filing of Income Tax Return beyond due date.
Our view-points:
• In view of various interpretations, general connotations and judicial precedents, fees can be categorized as compensatory or regulatory. While ‘Compensatory’ involves something of a quid pro quo, ‘Regulatory’ involves regulating activities which Government feels important but must be reasonable and not excessive and the charge would be in lieu of license.
• The levy under Section 234F is neither for a service nor for any kind of license. Hence, it partakes the character of penalty because it is punitive in nature rather than compensatory. Further, mere change in nomenclature of a levy disregarding its intention and function cannot alter the character of levy.
• Opportunity of being heard is a foundational concept of principles of natural justice. Notice and fair hearing are two aspects which are essential and elementary even in tax laws. It is very important to provide a reasonable opportunity of being heard for such a levy of penalty, which is being introduced under the garb of ‘fee’ and is not built on sound fundamental principle of natural justice.
• The Department is already deriving revenue on late filings in the form of interest under Section 234A, 234B and 234C on the count of delay in filing of returns, non-payment of advance tax and irregular or non-payment of advance tax installments respectively. Hence the Revenue is sufficiently compensated.
• The filing of return is being narrowed down to assessment year itself and to top that up, this imposition seems too harsh and regressive.
• The nominal earners who are brought into tax net may be discouraged to file the returns though genuinely they wish to file the returns.
• For those assessees whose income does not exceed maximum amount not chargeable to tax, but, filing returns only for the sake of claiming the refund as well as those assessees who file with ‘Nil’ tax liability, this levy seems agonizingly harsh.
Therefore, on behalf of the tax paying community of India, and on behalf of the tax professionals who assist the tax payers in honestly complying with the tax laws of the country, we strongly urge you to withdraw this levy of late fee under Section 234F of the Act.
B. Regarding extension of due date for filing income tax returns of individuals and small businesses:
The due date fixed for filing returns i.e. on or before 31stJuly seems more than sufficient to comply but for various factors which are practically acting collectively against such compliance on the part of the assessees, trade and practitioners. We have presented here in below the actual facts for your better understanding:
• The due date presupposes that all returns pan India can be filed within a span of four months from the completion of the financial year. But practically the filing can only start around June or even later part of June for few class of assessees and window for filing within the due date immediately closes next month itself pursuant to myriad of factors as underlined herein infra.
• The tax return preparation involves compilation of data from various sources, say from bank, from businesses in the form of TDS certificates, employer’s Form 16, credit of tax in Form 26AS despite issuance of such records by the respective deductors. It is a known fact that the TDS certificate is only issued in June and many a times, Deductors issue TDS certificates late due technical glitches or to delayed filings of e-TDS returns by them.
• Many assessees have multiple businesses and streams of revenue, in genuine situations, may have to await the proper reflection of tax credits and thereafter commence and forward it to their respective consultants. Also, GST compilation and reporting requires time and effort and has to conform with Form 26AS and follow up with the respective deductors for any inadvertent errors and such correspondences happen only after TDS is reflected and is complete in all respects.
• Also, certain documents may be lacking or incomplete on the part of assessees when they present to their consultants and would be prompted rightly to be provided. The process of such collation from respective sources would also kill time and it is not useful to start this process in April as everyone is aware that things gets reflected in TDS database only in June and it will be a futile exercise to follow up before 1stApril.
• Returns would not be comprehensive without considering all the streams of revenue. The tax credits, which sometimes get reflected belatedly and creeping every now and then into the tax credits also cause deviation in the reporting of income in returns. The veracity of the screening process consumes time and effort and filing without considering the same can have penal implications. Adhoc filing without considering all relevant income streams would be futile and incomplete. If the assessee waits for such reflection, there would be delay in filing and this mandatory levy of late fee under Section 234F imposes additional burden to the assessee for no fault of his.
• The tax department itself does not provide facility to file on 1stApril and does not release schema at the beginning of the Assessment Year for all categories of assessees. This is despite it having one full year from the date of assent by the Hon. President of India.
• Another point of due mention is frequent and intermittent changes to schema not doing any good to the already persistent woes.
• The e-TDS Return filing deadline for fourth quarter for the deductors being 31stMay and though there are penal provisions, many deductors for genuine reasons too are filing belatedly and the same is having a rippling effect on the deductees’filing woes.
This write-up is on the back of representations received from our members, tax practitioners and trade bodies who are in the thick of things with the assessees.
We would be highly thankful if you could extend the due date well in advance, which would be very useful in planning the filings for the assessees, businesses and practitioners. Also, we seek your intervention on unjust levy under Section 234F fees for filing beyond due date.
Thanks & Regards,
CA. Raghavendra T N | President
KARNATAKA STATE CHARTERED ACCOUNTANTS ASSOCIATION
No.7/8, 2nd Floor, Shoukath Building, S.J.P Road, Bangalore – 560002. India
T +91 80 2222 2155 | M +91 98801 87870| E president@kscaa.com | W kscaa.com
Link ITR Filing Due date with ITR E-filing Utility Release Date
Other Representations
1. Central Gujarat Chamber of Tax Consultants- Extend due date of ITR to 30.09.2018 & 30.11.2018 respectively
2. Association of Tax Practitioners, Chartered Accountants and Advocates, Aurangabad – Extend Due Date of ITR for AY 2018-19
Author Bio
SECTION 234F IS ITSELF A STEALING OF FUNDAMENTAL RIGHT OF A HONOURABLE INCOMETAX PAYERS. IT ACTUALLY ILLEGAL. MOREOVER WHAT IS THERE IN TELLING ASSESSMENT YEAR? LET THEM NARRATE IT AS ASSESSMENT YEAR ENDING WITH PENALTY OR WITHOUT PENALTY.
After working 24 hours a day still cant complete half load of files, how much stress can human being can take please consider & extend date of filing till 30 th septemper its humble request
HELLO SIR PLEASE DUE DATE INCOME TAX E FILLING RETURN 31-12-2018 NO PANALITY SIR BAHUT HARD WORKING HOO RAHI HAI
may parveen kumar batala may bhaur dukhi huw PALISE DATE EXTED KARU
This is humble request for All states association to come forward for extension of date from 31.july to 31.8.2018 penalty from December
The chances of getting a favorable order is rather weak in view of the judgment in view of the judgment of the Bombay High Court on section 234E which is pari materia with section 234F.
BOMBAY HIGH COURT
[2015] 373 ITR 268 (Bom) Dated.- February 9, 2015
MR RASHMIKANT KUNDALIA AND ANOTHER VERSUS UNION OF INDIA AND OTHERS
Constitutional validity of section 234E challenged – Fee for default in furnishing TDS return/statements – as per assesse “fee” is known in the commercial and legal world to be a recompense of some service or some special service performed, and it cannot be collected for any dis-service or default – Held that:- Substantial number of deductors were not furnishing their TDS retun/statements within the prescribed time frame which was absolutely essential. This led to an additional work burden upon the Department due to the fault of the deductor by not furnishing the information in time and which he was statutorily bound to furnish. It is in this light, and to compensate for the additional work burden forced upon the Department, that a fee was sought to be levied under section 234E of the Act. Looking at this from this perspective, we are clearly of the view that section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the Department has to provide due to the late filing of the TDS statements. Late filing of the TDS return/statements is regularised upon payment of the fee as set out in section 234E. This is nothing but a privilege and a special service to the deductor allowing him to file the TDS return/statements beyond the time prescribed by the Act and/or the Rules. We therefore cannot agree with the argument of the Petitioners that the fee that is sought to be collected under section 234E of the Act is really nothing but a collection in the guise of a tax.
Fee sought to be levied under section 234E of the Income Tax Act, 1961 is not in the guise of a tax that is sought to be levied on the deductor. We also do not find the provisions of section 234E as being onerous on the ground that the section does not empower the Assessing Officer to condone the delay in late filing of the TDS return/statements, or that no appeal is provided for from an arbitrary order passed under section 234E. It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this Court in its extra ordinary equitable jurisdiction under Article 226 / 227 of the Constitution of India, as the case may be. We therefore cannot agree with the argument of the Petitioners that simply because no remedy of appeal is provided for, the provisions of section 234E are onerous. Similarly, on the same parity of reasoning, we find the argument regarding condonation of delay also to be wholly without any merit. Thus Section 234E of the Income Tax Act, 1961 does not violate any provision of the Constitution and is therefore intra vires, Constitution of India. – Decided against assessee.
The extension of date is certain in view of the jufgment of the Hon’ble Bombay Court which reads as under
Do you expect that the Due Date of Return filing for AY 18-19 will be extended?
Is the CBDT legally obliged to extend the date : Read On:
BOMBAY HIGH COURT: September 30, 2015
THE CHAMBER OF TAX CONSULTANTS & OTHERS VERSUS UNION OF INDIA & OTHERS
Extension of date for filing returns of income in the ITR Form Nos. 3,4,5,6, and 7 to 31st October, 2015 – extension sought on the ground that on similar grievances such a prayer has been finally allowed by orders in Vishal Garg v/s. Union of India PUNJAB & HARYANA HIGH COURT and All Gujarat Federation of Income Tax Consultants v/s. Central Board of Direct Taxes GUJARAT HIGH COURT
Held that:- The present situation has arisen only in view of the delay on the part of CBDT in discharging its obligations of making available the ITR Form Nos. 3,4,5,6, and 7 in due time. Thus, the need to extend the due date. One more feature which was emphasized was that in case of ITR Forms 1,2,2A and 4S being non-audit cases, necessary forms were notified only on 22nd June, 2015 instead of 1st April, 2015 i.e. a delay of 83 days. The normal date of filing of return in such cases would be 31st July, 2015. However, the CBDT extended the same to 7th September, 2015 by an order dated 2nd September, 2015 under Section 119 of the Act. This on the ground that the delay in notifying the forms would cause great hardship to the tax payers. We are unable to appreciate how a delay of 83 days in making the ITR Form Nos.1,2, 2A and 4S in case of non-audit will cause great prejudice and delay of 120 days in making ITR Form Nos.3,4,5,6 and 7 does not cause any prejudice.
The Gujarat High Court noted that the Scheme of the Act indicates that ordinarily a period of 180 days is available to the assessee to file income tax return in case of E-filing of return of income in Form Nos.3,4,5,6, and 7. Any curtailment of this period on account of non-availability of the necessary utility for filing a return online, does certainly cause prejudice to the assessee wholly on account of the delay on the part of the CBDT to notify the ITR Forms.
It is clear that it was also of the view that the CBDT should make available the necessary ITR Forms on 1st April of the subject Assessment Year for the benefit of the assessee. However, in case, there is any delay, the same should be recorded in writing and also consider whether in view of the delay, an extension of time in filing return is warranted.
Taking into account the fact that the decision of the Gujarat High Court and Punjab and Haryana High Court have been accepted by the CBDT issuing orders under Section 119 of the Act but very unfairly in case of an all India Statute restricting its benefit to only two States and one Union Territory. This itself warrants an extension of due date to the same date as is available for the assessees in Gujarat, Punjab and Haryana to avoid any discrimination to the assessees elsewhere. The Respondent No.2 i.e. CBDT is directed to forthwith issue the order/ notification under Section 119 of the Income Tax Act and extend the due date for E-filing of the Income Tax Returns in respect of the assessee who are required to file return of income by 30th September, 2015 to 31st October,2015.
From all circles and circumstances I urge that due date to be extended up to 3oth september and 234fsection of late fees will be burden on assessee in addition to belated interest charged u/s 234a,b,c.
Sir we don’t want relief in litigation case for time being we want time extension for filing of returns and 234f till December consider as humble request
Due date of filing should be till 31.12.2018 and thereafter penalty be imposed as natural justice.
Tax payers and Professionals are already under burden of various compliance . If tax payers are entitled to get refund and tax liability as NIL then also penalty should not be imposed.it is just and equity with citizen of India
I wish you had also considered the plight of poor soldiers who are battling to save us. NO EXEMPTION EVEN TO THEM. I had writtento the 3 Chiefs, Defence Secretary & Finance Secretary. They are just too busy.
Thanks a lot for the association, I wish the request may turn the stone
today i seating at this time 11.00 pm for income tax return file and shocking the site under maintanance
and they wasting the time 7 hours of public who want to file return after midnight and when ever they want
who is resposible for this maintanance and wasting of seven hours and not able to give us due date extension before due date end (31 JULY 2018) and force for late fee penalty to public.
Maintenance problem till morning
Thanks a lot for the association. filing of returns time to be ex tended till 31.08.2018 and initiating penalty from decembrr
Time extension is necessary, if it is known well advance it is very helpful
Due date should be extended at least for 3 months. Sec.234F must be deleted.
The Green Revolution under which companies have stopped sending hard copy advises of dividends remitted to Investors’ bank accounts adds to the woes of tax filing. Often the email advices are too brief and do not carry full particulars. The Statements from the BANKS often do not carry the details, why, even the name of the remitting company. This causes a huge loss of time and labour for the assesee to seatrch, sometimes correspond, to get the details . The green revolution is turnout to be a bane!
we are strongly urge to extend due date
Two points in this appeal by CAs are the ones which Govt must act by having a suitable system which also has Beta version for feedback by January and final to be released by march.
• The tax department itself does not provide facility to file on 1st April and does not release schema at the beginning of the Assessment Year for all categories of assesees. This is despite it having one full year from the date of assent by the Hon. President of India.
• Another point of due mention is frequent and intermittent changes to schema not doing any good to the already persistent woes.
Late filing of returns will attracts in addition to 234A,B,C and Penalty of 234F.
as per mgmt funda of ‘CARROTS & STICKS’
use of CARROTS should be more for compliance than STICKS.
the government officer will issue the date of extension on last day of filing day on time after 5.30 pm declare for up to next month extension due date and we all in keep under pressure of filing of return, the govt does they all work as machine. ees rout ki sabhi line bandh hai. sahi dekhenge nahi sahi bolenge nahi sahi sunenge nahi. public to pagal hai unke bolne se kya hota hai ?
Many Banks & Companys issue form 16/16A on or after 15th June. The current assessment year that is 2018-19 has thrown up a new problem which never existed before. Inspite of correct tds amount reflected in form 26AS, oltas remarks showing ‘F’, regretfully the income tax departments generates tds mismatch. Upon enquiry to the department I receive parrot answers that “it shall take time to update”. The actual return filling starts, for all practical purposes, for tds deductees only at the end of June month.
I fully agree with the views expressed here. In my case Kotak bank provided the Form 16A in first week of July. My form 16 from employer has having issues. It’s rectification took time, and it was July first week that I had all the correct data I needed for filing a truthful return. So effectively, I have just 3 weeks to file the return.
Yes date of filing ITR need to be extended for the current AY since Banks, Offices and others have started issuing F 16/16A by June end and many cases the deductors have still not issued Form 16/!6A.although filing of ITR are fixed for 31st July.
This is not justifiable nor reasonable for the Govt when the basic document for filing ITR is yet to be issued by several organizations including Govt Departments and Banks etc.
Pl. have the date extended to the reasonable time.
Madhavan
It seems that basic aim of govt is to harsh their own citizen . And stop new tax payer to enter who sincerely want to file ITR. Being mistakes in 26AS it is not possible for correct filling .it should be 31st Dec. for those who already deposited advance tax
due date for filing should be extended especially if one sees in corporate sector tax is already deducted at source and if employer delays giving form 16 than it is not individual’s fault. why an individual should pay penalty in such a scenario? some introspection is required by the Income Tax department.
M.K.SATEESH
Penalty for individuals filing Late Returns (now Tax Payers have Multiplied after Note Bandi), but Window is Same Size? TDS by banks available Only in 1st week June? Tax in 90% Individuals is already deposited by way of TCS/ TDS / Self Assmt. for the year. Only for Scrutiny Returns are required? What Govt. is likely to forego? If Tax is Due to Tax Payer as per Return On Scrutiny, they will Pay Interest & Penalty, No Loss to Govt!
Great Post
Must file PIL for constitunal validity of the said section
It is failure on the side of revenue to prove any default hence such section is introduced.
VERY GOOD STEP WHICH IS REQUIRED FOR COMPLIANCE UNDER THE INCOME TAX ACT. ALREADY TAX PRACTITIONERS AND C.A. PROFESSIONALS ARE STRIVING HARD TO DIGEST THE GST COMPLIANCE BY EDUCATING SMALL BUSINESSES. DUE DATES CAN BE KEPT SAME BUT LATE FEES SHALL BE DROPPED OR IN THE ALTERNATIVE DUE DATES SHALL BE EXTENDED BY TWO MONTHS AND LATE FEES SHALL BE NOT MORE THAN RS, 1,000/-…
Letter drafted nicely, giving the exact melodies of taxation. It is the requirement of smooth filing of return of income. Hence, the due date be extended. The section 234F be quashed.
Due date should be Extended by a month atlest and 234F should be removed.
i am strongly favour to remove 234F or date must be extended and also and the Section should not be enforced and should be deleted from the Act.
i am strongly favour to remove 234f or date must be extended and also and the Section should not be enforced and should be deleted from the Act.
The time extension required for salaried persons till 31st August, 2018 & others till 31st December 31st, 2018
Thanks for the good effort taken by Karntaka association “KSCAA” This representation is very good but it needs to be taken by all associations at state level and also at all india level.
Definitely, we must appreciate the initiation taken by the KSCCA for extension of due date and relaxing sec. 234-F. In my opinion the section 234-F should be withdrawn in the larger interest of assesse. Also we professional people will get extra pain & mental strain which will affect our health.
Good initiative. Please pursue until it succeed.
Time extension is necessary, if it is known well advance it is very helpful
DUE DATE To be extended. 234F To be avoided.
I agree with all members reply, This representation is a must and it needs to be taken by all associations at state level and all India level too. Details of GST and procedure for GST credit or debit in the books of accounts ledger is not clear to many small business class of assesses . Due these factor the extension is a must and tax authorities should feel the difficulties of the taxpayer as well as all CA + GST Practitioner & Tax Consultant.
I have down loaded 26 AS on 5th June 2018 for preparation of Accounts & Finalization etc and waited for few more days for filing ITR, once again i down loaded 26 AS on 7/7/18, there was differences of credit not only in this case but in 25% of the cases of clients these were observed.
These are the practical difficulties as Govt Department and Bankers i.e. Nationalized not filing the TDS Return in time and so many others small issues.
In fact considering the facts the extension should be granted.
Even looking at the load of compliance of all kind of Returns the filing date should be 31st August, 31st October every year so the load is divided – this my personal view.
One more point that is not covered but is applicable in our case. We regularly visit our children in USA from February to Early August, and there is not way we can collect all data for filing return by July end. Traditionally we have been doing so in August without any penalty attracted. There has to be exemption for this particular reason as well.
Fully agree to extend due date upto End Aug.and upto end Dec. Once interest is paid, why should the assessee pay late fee. Similar is the case with GST. Hope the present government will understand. Late fee of Rs.50 per day in case of GST and Rs.5000 in case of I.T. is too much. Instead rebate on taxes for prompt payment needs to be considered.
The article is good, convincing and well represented. It is irrational to impose when already levieng interest on late filing. It is hindrance new assessees and hindrance to the tax base widening, The PM is requested to intervene and extend Due date to 31.03.2019 and also allow at least to file for two years as earlier. It is need of the hour. It will felicitate not only existing but also new entrants in tax regime.
The ICAI should represent before the PM Modi to get the 234F removed completely. The logo of IT should not be KAR AUR DAND are MUUL of Income Tax.
Why the government harassing the citizens by giving due date and collecting late fees for all types of return
Please to extend due date of filing of individual income tax Return at least upto 31st August 2018. Small tax payers may avail benefit for the extent period.The image of ITD in the minds of assessee may become bad due to compulsory late fees.
we are strongly favour to remover 234f or date must be extended
The reasons given in the article for removal of section 234F are quite convincing. This is bad in law as late filling is already punished by imposing interest. As such imposing further fee for late filing is bad for double jeopardy. the Section should not be enforced and should be deleted from the Act.
due date for payment of gst,filing of gst return,filing of tds return,various detairs added to be submitted