Income Tax

Section 234E Late TDS return fees invalid for periods prior to 01.06.2015

By CA Saurabh Chokhra Income Tax Judiciary August 26, 2016 1 comment

TaxGuru Citation: 2016 taxguru.in 576
Case Name: Sri. Fatheraj Singhvi And Others Vs. UOI And others (Karnataka High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2013-14 and 2014-15
Courts: All High Courts, Karnataka High Court

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CA Saurabh Chokhra

Brief of the case:

The Hon’ble Karnataka High court in the above cited case held that since before 01.06.2015 section 234E providing for late fee for delay filling of TDS returns was not linked to / not referred under Sec 200A processing of TDS returns. As a result of this the late fee charge was invalid and illegal.
Therefore, no late fees for delayed filling of TDS returns prior to 01.06.2015 can be levied.

Facts of the case:

The petitioners (assessees) , for the financial year 2012-13 and 2013-14 tax deducted at source was deducted by the respective petitioners and they were also deposited with govt. However, as per the respondent, there was delay in filing of the return/statements with the details of the persons from whom the TDS was deducted including the details of the persons concerned and the transaction etc.

Hence, the respondent-Department issued demand notices under Section 200A of the Act calling upon the respective petitioners to pay late filing fee under Section 234E of the Act in purported exercise of the power under Section 200A of the Act.
All the petitioners approached this Court by challenging the constitutional validity of Section 234E of the Act contending that there is no service being rendered to the petitioners/deductors by the respondent-Department and therefore, consequently, the principles of quid pro quo is not available nor the charging of fee by the department is having any nexus to any service to be rendered to the deductor.
The learned Single Judge after hearing all the respective petitioners and the respondents for the reasons recorded in the impugned order ultimately found that, Section 234E is not suffering from any vices for being declared as ultra vires to the Constitution and he held that the impugned Section 234E of the Act is intra vires to the Constitution and ultimately dismissed all the petitions.
Aggrieved petitioners are therefore, in appeal with the larger bench of the court.

Held by Hon’ble High Court: