Section 234E creates substantive liability for late fee from 2012, independent of Section 200A recovery mechanism

The HC dismissed a writ petition challenging the levy of late fee under Section 234E prior to 01.06.2015. The court held that Section 234E creates substantive liability for late fee when statements are not filed within prescribed time limits, effective from 01.07.2012. The liability is independent of Section 200A(1)(c) which merely prescribes recovery mechanism and was introduced through Finance Act 2015. The court disagreed with Karnataka HC's view that Section 234E requires Section 200A(1)(c) to be operative, finding Section 234E is self-contained substantive provision allowing self-declaration and payment of late fee.

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Issues Involved:
1. Levy of late fee under Section 234E of the Income Tax Act, 1961 prior to the amendment to Section 200A(1)(c) w.e.f. 01.06.2015.
2. Constitutional validity of Section 234E of the Act.
3. Retrospective application of the amendment to Section 200A(1)(c).

Summary:

1. Levy of Late Fee under Section 234E Prior to Amendment:
The primary issue was whether the late fee under Section 234E of the Income Tax Act, 1961 could be levied before the amendment to Section 200A(1)(c) of the Act, which came into effect on 01.06.2015. The petitioner contended that the Income Tax Department was not empowered to levy the late fee under Section 234E before this date. However, the court referred to judgments from various High Courts, including the Gujarat High Court in the case of Rajesh Kourani v. Union of India and Ors., which held that the late fee under Section 234E was operative from 01.07.2012.

2. Constitutional Validity of Section 234E:
The court observed that multiple High Courts, including the Madras High Court, Gujarat High Court, Karnataka High Court, Kerala High Court, and Bombay High Court, had uniformly upheld the constitutional validity of Section 234E, which imposes a fee for the delayed filing of statements of tax deducted at source.

3. Retrospective Application of Amendment to Section 200A(1)(c):
The court discussed divergent views on whether the late fee under Section 234E could be imposed before the amendment to Section 200A(1)(c). The Karnataka High Court in Fatheraj Singhvi & Ors. v. Union of India & Ors. held that the amendment was substantive and could not be applied retrospectively. Consequently, demands for late fees under Section 234E prior to 01.06.2015 were without authority of law. Conversely, the Gujarat High Court in Rajesh Kourani v. Union of India and the Rajasthan High Court in Dundlod Shikshan Sanasthan v. Union of India held that Section 234E was a charging section and could operate independently of Section 200A(1)(c), which was merely a machinery provision.

Conclusion:
The court concluded that Section 234E of the Act creates a liability for late fees independently of Section 200A(1)(c). The levy of late fees is not contingent on the amendment to Section 200A(1)(c). Thus, the challenge to the order imposing the late fee prior to 01.06.2015 was rejected, and the writ petition was dismissed.

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