2019 (5) TMI 638 - HC - Income Tax

Constitutional validity of Section 234E - late furnishing of statements within the time prescribed under Section 200 (3) and the proviso to Section 206 C (3) - as urged that although the title to Section 234 E of the Act and the provision itself uses the word fee to describe the levy, it is in fact in the nature of penalty, therefore applying the law in relation to the distinction between a tax and a fee alone will not be apposite in testing the validity of such provision - as seeked to distinguish the judgments of the High Courts of Rajasthan, Karnataka and Kerala that have negatived the challenge to the constitutional validity of Section 234 E - HELD THAT - The judgment under review proceeds essentially on the basis that the challenge to the provision is because it does not satisfy the pre-requisites in law to be considered as a fee . The other points now urged, although forming part of the petition, were perhaps not urged during oral arguments and therefore not considered. Nevertheless, the Court is of the view that the said points do require another detailed examination. Accordingly, the judgment BISWAJIT DAS VERSUS UNION OF INDIA ORS. 2019 (1) TMI 604 - DELHI HIGH COURT is recalled. The review petition is allowed

Summary

Issues: Review of judgment concerning constitutional validity of Section 234E of the Income Tax Act, 1961.

Analysis:
1. The petition sought a review of a judgment dismissing W.P. (C) 9410 of 2014. The petitioner challenged the constitutional validity of Section 234E of the Income Tax Act, 1961, and the consequential orders issued by tax authorities.
2. The main contention was against the imposition of a uniform penalty of ?200 per day for late filing of statements under Section 234E (1) of the Act. The petitioner argued that this provision, in force from 1st July 2012 to 1st October 2014, removed judicial discretion and imposed penalties without considering genuine reasons for delays.
3. Additionally, the petitioner highlighted that the penalty demanded under Section 234E (1) exceeded the TDS amount, and he could also be liable under Section 271H of the Act for the same default.
4. The petitioner argued that despite being termed a "fee," the penalty under Section 234E was, in fact, a penalty in nature. He aimed to distinguish previous judgments from other High Courts that upheld the validity of Section 234E.
5. The review judgment acknowledged that the challenge to Section 234E was based on its classification as a fee and not meeting the legal prerequisites. It noted that certain points raised in the petition were not fully considered during oral arguments but warranted a detailed examination.
6. Consequently, the review petition was allowed, and W.P. (C) 9410 of 2014 was reinstated for further examination. The interim order from 24th December 2014 was reinstated, and the case was listed for final hearing on 26th July 2019 before the Roster Bench.