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2023 (12) TMI 281 - HC - Income TaxLevy late fee u/s 234E - intimation u/s 200A - late fee imposed prior to 01.06.2015 - whether late fee u/s 234E can be levied prior to the amendment to the Section 200A(1)(c) of the Act vide Finance Act, 2015 w.e.f. 01.06.2015? - Reliance was sought to be placed upon the judgment of Fatheraj Singhvi Ors. Vs. Union of India Ors 2016 (9) TMI 964 - KARNATAKA HIGH COURT wherein it was held that the amendment to Section 200A of the Act brought about with effect from 01.06.2015 whereby sub clause (c) to sub-section (1) to Section 200A of the Act was introduced is not merely a regulatory mechanism but is substantive in nature thus the amendment to Section 200A(1)(c) of the Act cannot be given retrospective effect. HELD THAT - Liability to pay, by way of fee gets attracted under sub-section(1) to Section 234E of the Act once 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 of the Act and the liability shall continue for every day during which the failure continues. Sub-section (3) to Section 234E of the Act provides that the fee referred to in subsection (1) to Section 234E of the Act shall be paid before delivering or causing to be delivered a Statement in accordance with sub-section (3) of Section 200 or the proviso to sub-section (3) of Section 206C.Importantly, sub-section (4) to Section 234E of the Act provides that the above provisions would apply to statement referred to in sub-section (3) to Section 200 of the Act which is to delivered or cause to delivered on or after 01.07.2012. Section 234 E of the Act and on considering both the above views, it appears to me that the opinion expressed by the Gujarat High Court that 2017 (7) TMI 458 - GUJARAT HIGH COURT Section 234E of the Act by itself creates a liability and the liability to pay the late fee is not dependent on Section 200A(1)(c) of the Act which only prescribes the recovery mechanism reflects the true intent and purpose of Section 234E of the Act. Section 234E of the Act which provides for late fee is the substantive provision and the levy is not dependent on Section 200A(1)(c) of the Act which only prescribes a recovery mechanism. A reading of Section 234E of the Act would make it clear that it gets attracted, the moment there is a failure on the part of a person to deliver or cause to be delivered a statement within the time prescribed in subsection (3) of Section 200 or the proviso to sub Section (3) of Section 206C of the Act. Sub Section(4) to Section 234E of the Act also makes it clear that the above provision would be effective from 01.07.2012. Therefore the submission that 234E of the Act would not be operable / effective unless and until Section 200A(1)(c) was introduced overlooks the fact that Section 234E (1) of the Act is the substantive provision and Section 234E(3) of the Act provides for a self declaration / payment for the delay in complying with sub-section(3) of Section 200 or the proviso to sub -section(3) of Section 206C of the Act. With due respect I am unable to subscribe to the view expressed by the Karnataka High Court in view of the reasons stated supra. Thus challenge to the order dated 26.02.2021 imposing the levy of late fee prior to 01.06.2015 stands rejected. The writ petition stands dismissed.
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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