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Dr. Amrit Lal Mangal And Others Versus The Union of India And Others

2015 (11) TMI 22 - PUNJAB & HARYANA HIGH COURT

Levy of late filing fee u/s 234E without issuing SCN - delay in submitted TDS returns - Constitutional validity challenged - prayer has been made for quashing the assessment orders passed under Section 200A read with Section 234E of the Act - Held that:- With reference to the judgments relied upon by learned counsel for the petitioners, suffice it to notice that the principles of law enunciated therein are well recognized but in view of pronouncements of Bombay High Court in Rashmikant Kundalia' .....

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In view of the above, we find that the provisions of Section 234E of the Act are neither ultra vires nor unconstitutional and, thus, finding no merit in the instant writ petition, the same is hereby dismissed. - Decided against assessee. - CWP No. 6255 of 2014 - Dated:- 14-8-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Vishal Gupta, Adv For the Respondent : Mr. Yogesh Putney, Adv ORDER Ajay Kumar Mittal, J. 1. In this writ petition filed under Articles 226/227 o .....

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stated, the facts necessary for adjudication of the instant petition as narrated therein may be noticed. The petitioners are challenging the vires of Section 234E of the Act inserted vide Finance Act, 2012 w.e.f. 1.7.2012. Under Section 200 (3) of the Act 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 .....

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ly) under Section 200A of the Act by levying late filing fee amounting to ₹ 46,400/- upon petitioner No.1, ₹ 24,000/- upon petitioner No.2, ₹ 26,400/- upon petitioner No.3 and ₹ 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 Act is intra vires i .....

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that the fee could be levied only for rendering of service but they have lost sight of the fact that the tax is a compulsory exaction made under the enactment. The word 'Tax' includes all money raised by the taxation including the tax levied by Union and State Legislatures, rates and other charges, levied by local authorities under the statutory powers. The fee is being imposed on a late filer of the TDS statements because the late filing has serious consequences wherein the credibility .....

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further submitted that the provision is violative of principles of natural justice as no opportunity of being heard is provided before demand of fee under Section 234E of the Act can be raised. In other words, no power has been conferred on the Assessing Officer to condone the delay and even no remedy of appeal has been provided to challenge the imposition of such fee. In support of the said contentions, learned counsel for the petitioners has placed reliance upon the following judgments:- (i) .....

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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 .....

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as under:- "Section 234E- Fee for defaults in furnishing statements, in the following terms:- (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in subsection .....

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ed to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012." 8. According to sub-section (1), a person is liable to pay a sum of ₹ 200/- per day by way of fee in case he defaults to deliver or cause to be delivered a statement within the time prescribed in Section 200(3) or the proviso to Section 206C (3). Sub-section (2) of Section 234E of the Act prescribes the maximum amount of fee under Section 234E(1) which .....

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elivered or caused to be delivered for tax deducted at source or the tax collected at source, as the case may be after 1.7.2012. 9. It would also be expedient to notice the legislative intent in enacting Section 234E of the Act. The respondents in their written statement have enumerated the purpose of introducing this provision in the following words:- "As per the existing provisions of the Act, a person responsible for deduction of tax ( the deductor ) is required to furnish periodical TDS .....

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st 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 ₹ 100 per day was leviable for delay in furnishing of TDS statement. The said penalty was not proved to be effective in reducing or eliminatin .....

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from the due date of furnishing of TDS statement to the date of furnishing of TDS statement. It has also been provided that the total amount of fee shall not exceed the total amount of tax deductible during the period for which the TDS statement is delayed. Further, the Finance Act, 2012 has also inserted Section 271H in the Act which provides for penalty ranging from ₹ 10,000/- to ₹ 1,00,000/- for late filing of TDS statement. Sub-section (3) of Section 271H provides that no penalty .....

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e provision relates to collection of a fee and not tax. The relevant portion of the reply reads thus:- "That the marginal heading of section 234E reads - Fee for defaults in furnishing statements . The title per se indicates that the section is regarding collection of fee. This is not a penal provision, but a fee for defaults in furnishing statements in TDS. The late submission of TDS statement creates additional work for the Income-tax department. The department has to revise the assessmen .....

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y the deductor by not furnishing the information in time which he statutorily is 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 .....

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eas 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 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 .....

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able 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. Further, the provision of Section 234E of the Act was held to be constitutionally valid with the following obse .....

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of economic and administrative experts and has no expertise in these matters. These well settled principles have been very succinctly set out in the judgment of the Supreme Court in the case of Government of Andhra Pradesh and Others versus P. Laxmi Devi [2008] 4 SCC 720, and more particularly, paragraphs 46, 67, 68, 78, 79 and 80 thereof, which read thus:- "46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid .....

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nstitutional, 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 Ke .....

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rrowly or widely, the court should do so vide G.P. Singh's Principles of Statutory Interpretation, 9th Edn., 2004, p. 497. Thus the word "property" in the Hindu Women's Right to Property Act, 1937 was construed by the Federal Court in Hindu Women's Rights to Property Act, 1937, In re AIR 1941 FC 72 to mean "property other than agricultural land", otherwise the Act would have become unconstitutional. 68. The court must, therefore, make every effort to uphold the co .....

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activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion, etc. Thus, the Constitution Bench decision in R.K. Garg case [(1981) 4 SCC 675 : 1982 SCC (Tax) 30; [1982] 133 ITR 239 (SC) is an authority for the proposition which has been stated herein, namely, when a law of the legislature encroaches on the civil rights and civil liberties of the people mentioned in Part III of the Constitution (the fundamental rights), such as f .....

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radox in the judgments of Holmes, J. (who, as we have already stated above, was a disciple of Thayer) that while he urged tolerance and deference to legislative judgment in broad areas of law-making challenged as unconstitutional, he seemed willing to reverse the presumption of constitutionality when 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 a .....

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