HC upholds constitutional validity of Section 234E of the Income Tax Act, 1961 (“the Act”) imposing fee for delayed filing of TDS statements

Facts of the case:

• Assessee, an Advocate challenged the constitutional validity of section 234E of the Act and also sought quashing of the fee imposed upon him as an assessee by the Department. Assessee’s main contention was that the levy under section 234E of the Act was incorrectly and illegally described as ‘fee’ since it was levied mandatorily and automatically, without actually being in the nature of fee as understood in law. Order Zenegra http://valleyofthesunpharmacy.com/zenegra/

Held by the Hon’ble Delhi High Court:-

• Under Section 234E of the Act, a fee is imposed for delay in furnishing a TDS return in lieu of the benefit or accommodation afforded by the Government to a person who has deducted tax on account of another person but has failed to furnish the tax deducted statement within the time stipulated in the law.
• While addressing the operation and effect of Section 234E of the Act, it is necessary to refer to the provisions of section 271H of the Act which, waives the imposition of penalty for delayed filing of TDS return/statement, if a person proves that he has paid the tax deducted and has filed the TDS statement along with the fee and interest, before expiry of a period of one year from the time prescribed modafinil http://www.buymodafinilonlinefast.com/.
• Upon a conspectus of the above, it is clear that the fee imposed under section 234E is levied towards regularisation of the delay in filing of a TDS return or statement, since the department has to expend extra effort and resources for processing delayed TDS returns or statements; and possibly also incurs the additional burden of interest to be paid to the assessee on whose account tax deduction has been made.
• It is further held that describing the levy under section 234E as a ‘fee’ does not invalidate the imposition made. Section 234E of the Act affords a person deducting tax at source the evident benefit of relaxation of timelines for furnishing a statement of the tax so deducted. The fee imposed under section 234E of the Act is for all intents and purposes a ‘late fee’ payable for accepting the TDS statement/return at a belated point in time.
• Thus the provisions of section 234E imposing a fee for delayed filing of statement of tax deducted at source are not ultra vires the provisions of the Constitution.
• The petition is accordingly dismissed.

Source:- [2019] 103 taxmann.com 290 (Delhi) – Biswajit Das v. Union of India