TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 22
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....t read with Rule 31A of the Income Tax Rules, 1962 (hereinafter referred to as "1962 Rules"), the duty has been cast upon the person deducting the tax at source to furnish return of the tax so deducted in the manner prescribed. Section 200A of the Act deals with the processing of statement of tax deducted at source. The scope of this Section did not cover the levy of fee under Section 234E of the Act. In the year 2012-13, the petitioners filed their Tax Deducted at Source (TDS) returns (Annexure P-1 Colly) with the respondents as per Section 200 of the Act with some delay. The respondents without issuing any show cause notice and without affording an opportunity of hearing to the petitioners passed the orders (Annexure P-2 Colly) under Section 200A of the Act by levying late filing fee amounting to Rs. 46,400/- upon petitioner No.1, Rs. 24,000/- upon petitioner No.2, Rs. 26,400/- upon petitioner No.3 and Rs. 32,650/- upon petitioner No.4 under Section 234E of the Act. Hence, the present writ petition. 3. Upon notice of motion having been issued, respondents No.1 to 3 contested the writ petition by filing a written statement. It was pleaded that the provision of Section 234E of the....
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....2276; (v) Raja Jagannath Baksh Singh Versus State of U.P. and another, AIR 1962 SC 1563 ; (vi) Hardeo Motor Transport v. State of M.P. and others, AIR 2007 SC 839; (vii) M/s MSK Projects(I) (JV) Ltd. Versus State of Rajasthan and another, AIR 2011 SC 2979; and (viii) Commissioner of Income Tax, New Delhi v. M/s Eli Lilli and Company (India) P. Ltd., AIR 2009 SC(Supp) 333 . 5. On the other land, learned counsel for the respondents submitted that the issue is no longer res integra and the vires of Section 234E of the Act have been upheld by the Bombay High Court in Rashmikant Kundalia and another v. Union of India and others (2015) 373 ITR 268 (Bom) and also by the Karnataka High Court in M/s Lakshminirman Bangalore Pvt. Ltd. v. The Deputy Commissioner of Income Tax, Ghaziabad and another, Writ Petition No. 26589 of 2014 decided on 12.6.2015 . 6. After hearing learned counsel for parties, we do not find any substance in contentions of learned counsel for the petitioners. 7. It would be advantageous to refer to Section 234E of the Act incorporated vide Finance Act, 2012 with effect from 1s t July, 2012, which reads as under:- "Section 234E- Fee for defaults in furni....
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....or ') is required to furnish periodical TDS statement (quarterly) containing the details of deduction of tax made during the quarter by the prescribed due date. It was noticed that a substantial number of the deductors were not furnishing their TDS statement within the prescribed due date. Delay in furnishing of TDS statement resulted in delay in granting of credit of TDS to the person on whose behalf tax was deducted ('the deductee') and consequently led to delay in issue of refunds to the deductee or raising of infructuous demand against the deductee. Timely furnishing of TDS statement is sine qua non for processing of income-tax return of the assessee having TDS claim because credit for tax deducted on behalf of the deductee is granted to him only on the basis of information furnished by the deductor in the TDS statement. Before insertion of section 234E in the Act, a penalty of Rs. 100 per day was leviable for delay in furnishing of TDS statement. The said penalty was not proved to be effective in reducing or eliminating defaults relating to late furnishing of TDS statement. This was mainly because the TDS statements were processed in the computerized environment and it was not....
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....s bound to furnish within the prescribed time. The fee levied u/s 234E is not of penal nature but merely on account for the additional work burden and monetary loss due to payment of extra interest suffered by the department due to late filing of TDS statement by the deductor." 11. A challenge was laid before the Division Bench of Bombay High Court to the vires of Section 234E of the Act in Rashmikant Kundalia's case (supra) on similar grounds. While elaborately discussing the contentions of the parties, the said provision was held to be intravires. It was concluded that Section 234E of the Act is not punitive and is in the nature of fees and not a tax. It is levied as a fixed charge for the extra services which are required to be provided by the department to the deductee. If the TDS statement is filed within time by the deductor then there is no additional work which arises for the department whereas in case of default in timely filing of TDS statement, the department is to undertake extra work of revising the assessment of the deductee. It was noticed as under:- "18. We are therefore clearly of the view that the fee sought to be levied under section 234E of the Income Tax....
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.... State Legislature makes a law which only Parliament can make under List I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Msgr. Mark Netto v.State of Kerala [(1979) 1 SCC 23 : AIR 1979 SC 83] SCC para 6 : AIR paragraph 6. Also, it is none of the concern of the court whether the legislation in its opinion is wise or unwise. 67. Hence if two views are possible, one making the provision in the statute constitutional, and the other making it unconstitutional, the former should be preferred vide Kedar Nath Singh v. State of Bihar [AIR 19....
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....laws inhibiting civil liberties were before the court. 80. However, we find no paradox at all. As regards economic and other regulatory legislation judicial restraint must be observed by the court and greater latitude must be given to the legislature while adjudging the constitutionality of the statute because the court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of specialisation when policies have to be laid down with great care after consulting the specialists in the field, it will be wholly unwise for the court to encroach into the domain of the executive or legislative (sic legislature) and try to enforce its own views and perceptions." Therefore even looking at it from the perspective as set out in the aforesaid judgment, we are of the clear view that Section 234E of the Income Tax Act, 1961 does not violate any provision of the Constitution and is therefore intra vires, Constitution of India." 12. The Karnataka High Court in Lakshminirman Bangalore Pvt. Ltd's case (supra), in view of the aforesaid enunciation, had held Section 234E of the Act to be valid with the under noted conclusion:- "24. Thus, ....