S.234F - Delayed Filing of ROI- mandatory fees – is not justified.

[DEV KUMAR KOTHARI]

S.234F - Delayed Filing of ROI- mandatory fees – is not justified.

As discussed in this article, S.234F provides for mandatory fees payable  by assesse in case ROI is not filed within prescribed time. The fees is computed and is payable even in process of filing of e-ROI, online.

Considering history of similar levy, by way of penalty u.s. 271F, there is no justification for mandatory fees levied and payable by assesses.

Penalty u.s. 271F, was introduced as  mandatory, however  within short time, it was made as to be levied by the AO and AO had discretion in this regard.

Section 234F was inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2018 and it was amended vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 by which Sub-section (1) was substituited.

This section is within  Chapter: XVII with main heading

“Collection and recovery of tax” and under part sub chapter or part “G –Levy of fees in certain cases” This part was inserted vide the Finance Act, 2012 w.e.f. 01.07.2012. Section 234F was inserted by the Finance Act, 2017 w.e.f. 01.04.2018 Therefore, we find that concept of levy of Fees was first introduced in the Income Tax Act w.e.f. 01.07.2012. At present , this sub-chapter G includes the following sections which are in force: Section 234E : Fee for default in furnishing statements Section 234F : Fee for default in furnishing return of income Section 234G : Fee for default relating to statement or certificate Section 234H : Fee for default relating to intimation of Aadhaar number

Prior to S.234F there was penalty u.s. 271F

Prior to insertion of S.234F, there was provision of penalty u.s. 271F. This was under provisions of Chapter XXI  - PENALTIES IMPOSABLE.

The penalty provision w.e.f. 01.06.2001 provided for a mandatory penalty payable by assessee without any action by the AO. However, this was amended w.e.f. 01.06.2002 and then was made imposable by the AO by use of words  ‘The Assessing Officer may direct ... ‘

Whereas u.s. 234F, fees has been imposed in a mandatory manner, and is payable by assessee without any action by the AO.

The fees may be payable even if no tax is payable, if assesses is required to file ROI.

Whereas in case of penalty, the law required due process for issue of show cause notice and providing opportunity of hearing to the assesse.  After hearing, the AO could drop penalty proceeding or impose a penalty. It was also subject to certain limitations.

For ready reference, the above sections are reproduced below with highlights  and a correction by the author:

Income-tax Act, 1961

Part F                         ( PER AUTHOR SIC PART G)

Interest chargeable in certain cases

¹[Fee for default in furnishing return of income.

234F. ²[(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of a fee, a sum of five thousand rupees:

Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.]

(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.]

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Notes:-

1. Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2018

2. Substituted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 before it was read as

"(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of fee, a sum of,-           

(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;

(b) ten thousand rupees in any other case:

Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees."

Income-tax Act, 1961

Chapter XXI

PENALTIES IMPOSABLE 1[Penalty for failure to furnish return of income. 271F. If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees.] 2[Provided that nothing contained in this section shall apply to and in relation to the return of income required to be furnished for any assessment year commencing on or after the 1st day of April, 2018.] ------------------------- Notes :- 1.  Substituted by the Finance Act, 2002, w.e.f. 1-6-2002. Prior to its substitution, section 271F, as inserted by the Finance Act, 1997, w.e.f. 1-4-1997, substituted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999 and later on amended by the Finance Act, 2001, w.e.f. 1-6-2001, read as under : "271F. Penalty for failure to furnish return of income.-If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, a sum of five thousand rupees : Provided that a person who is required to furnish a return of his income, as required by the proviso to sub-section (1) of section 139, fails to furnish such return on or before the due date, he shall be liable to pay, by way of penalty, a sum of five thousand rupees." 2. Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2018