Case Law Details

Case Name : Narath Mapila LP School Vs UOI (Kerala High Court)
Appeal Number : WP (C) No. 31498/2013(J)
Date of Judgement/Order : 18/12/2013
Related Assessment Year :
Courts : All High Courts (5314) Kerala High Court (276)

As reported by us in our previous article titled “File TDS return on time to avoid Penalty / Late Payment Fees ” Income Tax Department has WEF 1st of July 2012 imposed a late filing fees of Rs. 200 per day Under section 234E of the Income Tax Act, 1961 for late filing of TDS return which can be up to TDS amount.

The constitutional validity of Section 234E of the Income Tax Act, 1961 has been challenged in the Kerala High Court in the case of Narath Mapila LP School vs. UOI WP (C) No. 31498/2013(J). Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months.

Interim Order is as follows :-

234E stay


More Under Income Tax


    1. chandrasekar says:

      Dear sir

      Petition is dismissed and give the judgement in favour of department. Judgement pronounced by Bombay high court on 06.02.2015.
      This is for your information.

    2. chandrasekar - Renganayaki Papers pvt ltd says:

      Rashmikant Kundalia vs. UOI (Bombay High Court)
      February 9th, 2015
      COURT: Bombay High Court

      CORAM: B. P. Colabawalla J, Mohit Shah CJ

      SECTION(S): 234E

      GENRE: Domestic Tax

      CATCH WORDS: fee, penalty, TDS deduction

      COUNSEL: B. L. Gandhi

      DATE: February 6, 2015 (Date of pronouncement)

      DATE: February 9, 2015 (Date of publication)
      AY: –
      FILE: Click here to download the file in pdf format

      S. 234E: The late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing. The fee is not in the guise of a tax nor is it onerous. The levy is constitutionally valid
      S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). A Writ Petition to challenge the validity of s. 234E has been filed in the Bombay High Court. The Petition claims that assessees who are deducting tax at source are discharging an administrative function of the department and that they are a “honorary agent” of the department. It is stated that this obligation is onerous in nature and that there are already numerous penalties prescribed for a default. It is stated that the fee now levied by s. 234E is “exponentially harsh and burdensome” and also “deceitful, atrocious and obnoxious“. It is also claimed that Parliament does not have the jurisdiction or competence to impose such a levy on tax-payers. HELD by the High Court dismissing the Petition:
      (i) On a perusal of sub-section (1) of section 234E, it is clear that a fee is sought to be levied inter alia on a person who fails to deliver or cause to be delivered the TDS return/statements within the prescribed time in sub-section (3) of section 200. The fee prescribed is Rs.200/- for every day during which the failure continues. Sub-section (2) further stipulates that the amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible as the case may be;
      (ii) It is not in dispute that as per the existing provisions, a person responsible for deduction of tax (the deductor) is required to furnish periodical quarterly statements containing the details of deduction of tax made during the quarter, by the prescribed due date. Undoubtedly, delay in furnishing of TDS return/statements has a cascading effect. Under the Income Tax Act, there is an obligation on the Income Tax Department to process the income tax returns within the specified period from the date of filing. The Department cannot accurately process the return on whose behalf tax has been deducted (the deductee) until information of such deductions is furnished by the deductor within the prescribed time. The timely processing of returns is the bedrock of an efficient tax administration system. If the income tax returns, especially having refund claims, are not processed in a timely manner, then (i) a delay occurs in the granting of credit of TDS to the person on whose behalf tax is deducted (the deductee) and consequently leads to delay in issuing refunds to the deductee, or raising of infructuous demands against the deductee; (ii) the confidence of a general taxpayer on the tax administration is eroded; (iii) the late payment of refund affects the Government financially as the Government has to pay interest for delay in granting the refunds; and (iv) the delay in receipt of refunds results into a cash flow crunch, especially for business entities;
      (iii) The Legislature took note of the fact that a 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;
      (iv) As stated earlier, the late submission of TDS statements means the Department is burdened with extra work which is otherwise not required if the TDS statements were furnished within the prescribed time. This fee is for the payment of the additional burden forced upon the Department. A person deducting the tax (the deductor), is allowed to file his TDS statement beyond the prescribed time provided he pays the fee as prescribed under section 234E of the Act. In other words, the 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;
      (v) We are therefore clearly of the view that the 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.


    after stay on demand of 234E by HC,while department issue notice U/s 234E to deductors. what are the next steps for the deductors who are received demand order u/s 234E. Go for appeal procedure or wait or nothing to do.


    after stay on demand of 234E by HC,while department issue notice U/s 234E to deductors. what are the next steps for the deductors who are received demand order u/s 243E. Go for appeal procedure or wait or nothing to do.


    after stay on demand of 243E by HC,while department issue notice U/s 234E to deductors. what are the next steps for the deductors who are received demand order u/s 243E. Go for appeal procedure or wait or nothing to do.

  4. P.C.Bagal says:

    Dear Sir,
    Income Tax TDS Return Filing should be simple.

    File Validation utility i.e. FVU version changes should be at end of the quarter or before start work filing the quarter.

    Facility should be available to Every deductor to file online tds return.

    all facility give to the all deductor and training and then after u/s 234e imposed other wise this is very bad impact of tax collection.

  5. CA Kurian says:

    Who is to be blamed, the law makers or laws enforcing authorities? Now let us pin our hopes on the last resort, our Judiciary. Let them discuss on the freedom guaranteed under the constitution. The extent of “restrictions” and “reasonable restrictions” on our freedom that can be imposed by law. One should think of system in which the constitutional validity of every law made by the legislature, of late, be fist approved for its constitutional validity by the apex court. Alternatively, there must be a mechanism in our judicial system to take cognisance, of such situations and immediately set the law in the correct perspective by referring it to the apex court so as to have a finality. This is to avoid unnecessary litigation in the courts at various levels , which is already over burdened.

  6. Ravichandran says:

    Interest under section 234 E is a draconian law enacted by the Income tax department. Already the assessess are subject to harrassment from all compliances, rules, procedures. I understand that if penalty is levied for non payment of taxes because it is against law and that your are holding somebody’s money. In case of this levying interest u/s 234 E in what way is the government is incurring losses. Government should think over it and stop harrassing the assessees.

  7. Sadiq says:

    Section 234E is absolutely wrong.this section causes loss to the income tax department. how I explain now. iam a tax consultant giving service to nationalized banks to file their etds quarterly returns, last year one bank has paid 35 lakhs tds collected from customers,this year only 6 lakhs they paid, bankers forcing their depositors to submit form 15G/H and refunding the tds deducted at branch level only, bcoz it is easy to file the return in time if no of deductees are less, so in my opinion income tax department should think about this and pass a new circular of cancelling 234E. Immediately

  8. Praveen says:

    Dear Sir

    I filed the TDS return 24Q, Q4 for 5 employees salary return FY 2013-14
    from this tds deducted from 2 employees,other 3 have exemption certificate
    and there is no tds deducted from their salary, filed the nil return

    i get the form 16 of 2 employees only (tds deducted), how i get the form 16
    of other employees under nil return filed. they need the form 16 for filing the ITR

    can i issue the form 16 mannually other than from TDS Traces

    please advise


  9. girish says:

    spent a whole day answering tds payments done 3 to 4 years back with my CA. Still not able to reconcile because of upload and download delays on the internet.
    Itax department has to take aleaf out of karnataka VAT where direct payment is made to department through bank without any intermediary.

  10. AMALESH KHATUA says:

    Respected sir,
    What a ridiculous news if one person not giving the tax at all he will be free
    from all obligations,but after giving the required tax to the govt he will be
    punish due to not submission of documents in the govt boxes of records.It is called u/s 234e of Income tax act.Actually it is a matter of shame that we people
    should not declare that we live in a democratic country where such a injustice law
    is prevailing.Actually it could be say how the act was made,the people who made this ,at least they have also no idea about the implementation of this rule.anyway
    i request to strict for depositing tax to the govt rather submission of documents
    and relief from this useless 234e.

  11. sanjay gupta says:

    Is there a case filed in the karnakata high court also. Does any one has details on the same? Please share the link etc. sanjay

  12. Masteraarif says:

    Pls help me 234e section. Lest fee payment. All quoted total amount me de 60000 Mara boss Mara account fee me less kar dege to aap mu je bataye ke ye fee bharni padegi ke. Nahi isliye Krupa kar ke muje bataye Nahi to me paise se taqlif me aagaye hu or mujper deva hogay a he pls muje Iska rasta dikhaye sir pls help me

  13. John Daniel P says:

    I don’t understand why there are so many steps to filing of TDS and so many have to get involved in a single filing of TDS. First we have to pay in the Bank, then we file return in RPU and then we have to take this NSDL agent to upload the data. None of these agents or Bank people doesn’t even bother to check whether the data is given correctly or not. Even for no fault of deductors or Taxpayer, they are penalised for fancy reasons, even after paying the TDS amount.
    In this Internet age, why don’t Income tax people make it simple. Make it one step process. After logging into the Account, give all the details there and pay the amount either through Internet banking or Credit cards.

  14. Raghunath Das says:

    In my opinion before levy of late fee u/s 234(E)a scope is required to given to the deductor for filling pending e-tds returne . In the matter that to prepare & filling e-tds return are depend various factor … like…electricity, Computer, software, internet, NSDL office,skill manpower etc. In our country large No. of deductor are residing at remote village, there have no electricity & other component they are completely depend upon outsources nearest town/cities. On the other hand deductor in an employee of a Govt./Public Sector, his primary activities are own official job & secondary activities are others. so personal liabilities is not moral. I request to deptt. to serve alert through SMS/E-mail about Law, Rule etc changes day to day to all detuctors for concuss in this matter .

  15. M Rama Rao,LLB says:

    In my Opinion the assessee is deposited tax with in 07 days from date of payment but the quarterly return filling is late due to so many reaction from CA,CA staff,DDO and NSDl authorized agent side but finial bear is assessee (Party) but here the assessee is paid the on due time but quarterly return is not filled in such case the U/S.234E is not applicable,this type CBDT is modify then the TDS is raised


    govt when started ETDS PROMISED TO refund TDS within 3months after filing return. what penalty fixed on govt for not paying even after 6 years and even there are many cases where refunds lapsed which are the hard earned money of citizens. TDS is totally a computersied way. matched TDS can be refunded in 8 days( one of my clients also got in 8days). lacs of people still not getting after matched 26AS cases even after 6 to 8 months what penalty is fixed ? when a computersied system is a failure why manual feeding (TDS retunr filing) will be penalised ?
    filing ETDS return late is definitely a bad habbit. but till now many institutions do not have 100% PAN. when a new institution head comes even for not having a single PAN with fear is requesting not to file a return. when we tell them about consequences of not filing and also the return can be revised subsequently he declines to consent to file. has govt ever had any where in media declared that returns can be filed without PAN and for that only they have ruled no PAN 20% ? no. when we are giving a rectification to a challan they are taking a year even at times not rectifying which can be done in minutes. what penalty on them. nil. many have not taken TAN. means no TDS. has officials done survey to trace them ? no. but a person filed return a day late. 200+200 penalty. one month 6000+6000. really very bad. why they are not considering that the persons who are filig returns should be considered and penalty may be waved if no pecuniary loss has been incurred by the govt. now sir i can provide 6 institutions who culd not file TDSR are not filing returns for last 2 years means 7 qrts due the red eye of govt by penalising. what is the fate?
    regarding filing – challan deposit last date is 7th. csi comes after 3to 4 days. it is 11th now. 4 days given to file a return. if there is sunday followed by another holiday then 2 days to file return. good – karo yamaro yato jeb se bharo. return preparers are packed . filers are in q. a good race for life and death can be seen in the eyes of the filers. tears ooz from the bones if i am late i have to pay penalty. can this filing date not be extended 15 more days to last date of the month. a complete no from the govt. they are rule makers income tax depart is a computerised enforcement unit. we the return filers are fool colourful fishes in their aquar5ium or tasty good looking deers in the tree less forest to be preyed by the enforcement lions.

    sir always there is a humanitarian rule to excuse faults who accepts a misdid. they who are MAKING tds are never criminals. they can noway use tds chains for buying gold chains for their lovely or ugly wives. but buying intimatin penalty u/s 200 they are taking feeding of the baby of the deductor.
    deductors are now getting nocices that ur tds was 500020 during the previous year why this is 4999999 – show cause. can u imagine what a harrassing letter this is. are we alcohol (off/on) shops ? means u r giving us target that ur tds can not go down. actually these deductors are target achievers of I T depart. when a new target is given for collection of TAXES now they have started writing these cheap letters.

    SIR After 14 years of tds filing this quarter govt has started awareness programe on media b4 some days by declaring the last dates of filing tds returns. hence after the end of this financial year they should penalise as they have educated us now but penalising for the past. these news were for the wives of the deductors on tv fm etc. has there any clear column on the first page of all news papers on a perticular day so that there wuld hav been haul regarding. ? no . most of the institution heads are matchines. open office at 9 am close at 9 pm. even many work on sundays at office. no tv no fm. but are a part of an incomplete awareness campaign. sir 1st page on the 1st and 2nd monday on all nesw papers may attract many. many work shops by department is organised for a district with the attendance of 30 outsiders 10 govt officials. 1 lac expenditure. please utilise the same amount by hiring a cornor of 1st page of leading news papers on the 1st day of every month. many people will be educated.

    many things are there to discuss if an open forum will be there. we are penalising the best people in the society treating them as criminals – the deductors. please be kind to them and dont snatch their beard. this rule should be any way a hard and fast rule and this should be liberal one. a very very humble request.

  17. Chandrashekar R., Advocate says:

    The Hon’ble Karnataka High Court in bathch of writ petitions filed questinong the levy u/s 234E, is pleased to order notices to CBDT.

  18. Raj says:

    Notice for Approx. 50000/- has been served to my office by income tax u/s 234E. Office is not directly responsible for said lapse. For filing of tds BIN is mandatory which was not released by ZPAO on time.
    Now responsibility has been fixed to staff by authority and they are liable to pay levied amount. 9471924756.

  19. Animeh says:

    if government want revenue they have to increase the tds rates some reasonable rates and not as penalty which is not justified amount of Rs.200/- per day.

  20. Nitin K Goyal says:

    Dear All
    My question is still pending, after stay on demand of 243E by HC, what are the next steps for the deductors who are received demand order u/s 243E. Go for appeal procedure or wait or nothing to do.
    Nitin K Goyal

  21. o p maurya says:

    Is there any particular date has been defined for Income Tax Refund. We get only interest in late payment of refund. Section 234E applicable only to assessee to file tds return in time otherwise pay Rs. 200/- a day as penalty. It can be accepted only if IT department pay penalty on late discharge of refund. Penalty should not be only for assessee it should also for those who makes default in releasing refund.

    With Regards

  22. chandrasekar says:

    Govt need more and more public money for their deficit budget.dont thing budget means our national budget,their own household budget of our politicians not inclusive of exceptions. not only IT dept every department alerted by the govt to collect or levy new penalty, interest,etc., so beware of them. all the penalty and interest notice all issued by the office and its on their table itself, never to inform the industries. department very well known our email ids, phone no etc., but nothing is communicated to the industries especially small and medium scale. but they have our full address, email id, phone no for altert to pay interest and penalty etc.,

    so i request you all to beware of department leaded by the non corruption free government.

  23. Nitin K Goyal says:

    My question is whether late filling notice should be replied with appeal with CIT or leave all the notices without any reply. What will we do

  24. YATIN says:

    MY QUESTION IS WHAT DOES IT MEAN BY “the High Court has admitted the Petition and granted a stay of proceedings for a period of two months.”

  25. MOHIT says:

    In my opinion petitioner has done commandable Job by filling case against draconion law of it deptt.i think this petition should be filed in each and every court of law.

  26. nijaguna says:

    It is very easy to credit the TDS amount to party as and when the deductor itself deducted and remit to the bank at the time itself is to credit the concerned party. then there is no need to file the etds return of the deductor, because in p.t. esi etc., departments has done the same thing. and also it is very easy to understand the mistake appearent in the record.



  27. CA LAWRENCE says:

    IT dept is putting lot of pressure on the small and medium sized busniessmen who has crossed the turnover of Rs.1.00 crore by way of implementing TDS provisions to them asking them to file Quarterly TDS returns which may extend to 8 returns per annum. Worse in it is the late fee under section 234E. Though the assessee has been penalised for non deduction by way of disallownace of expense and interest for delayed payment, 234E is very harsh on the part of the assessees and has to be abolished. The department also frequently change the software utility (FVU)which most of the small businsess people not even aware.

  28. ca hitesh says:

    In my opinion in real sense the Dept ought not to have any locus standi in case of failure of filing TDS Return by the deductor. Dept is not the sufferer. There are various other penal like provisons for non compliance of TDS
    1)No deduction of expenses. 2)Interest for late payment etc.
    Dept has got the money. The deductee is the suffer if dedcutor does not file return. Dept will seat on the kitty and would not give credit to deductee if deductor has not filed the return. Deductee would pressurize the deductor to file return to get credit of tax deducted.
    The penalty u/s 234E must be abolished.
    TDS has become the most challenging and headache some assignment. It is endless job.
    All the best & Salute to the Petitioner
    CA Hitesh

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