Mandatory levy of fees for delay in filing of Return and statements etc. being in nature of penalty is not justified.

[DEV KUMAR KOTHARI]

These levy of fees are mandatory and has to be paid before filing of the statement / ROi as the case may be.

In era of e-filing fees payable is computed by software, and unless it is agreed to be payable and is paid, the statement of ROI may not be accepted/ and filed.

Whether calling such levy as fees is justified:

There is no definition of fees provided under the IT Act. As generally understood fees is charged for some services rendered. In case of statutory fees, it may be fixed on some presumptive basis and not fully linked to services availed by any person but there should be services available. Provision of some services is an essential feature for levy of even statutory fees. For example in case of services rendered by Municipal corporations, market Committes etc. availing of service may be voluntary but services must be available.

Definition of fee as per some dictionaries is given below with examples:

https://www.google.com/search?client=firefox-b&q=meaning+of+%27fees%27

a payment made to a professional person or to a professional or public body in exchange for advice or services.

"they were faced with legal fees of £3000"

synonyms:

payment, emolument, wage, salary, allowance, stipend, handout, price, cost, charge, tariff, toll, rate, amount, sum, figure, percentage, commission, consideration, honorarium; remuneration, dues, earnings, pay "he delivered the parcels for a very modest fee"

https://dictionary.cambridge.org/dictionary/english/fee

an amount of money paid for a particular piece of work or for a particular right or service:

legal fees

university fees

an entrance/registration fee

We couldn't pay the lawyer's fee.

• The entrance fee is six pounds, two pounds for the unwaged.
• Someone proposed a motion to increase the membership fee to £500 a year.
• The students are holding a demonstration to protest against the increase in their fees.
• It was something of a hollow victory - she won the case but lost all her savings in legal fees.
• For a nominal fee, they will deliver orders to customers' homes.

https://www.thefreedictionary.com/fees

1. A fixed sum charged, as by an institution or by law, for a privilege: a license fee; tuition fees.

2. A charge for professional services: a surgeon's fee.

3. A tip; a gratuity.

4. Law See fee simple.

5.

a. In feudal law, an estate in land granted by a lord to his vassal on condition of homage and service. Also called feud², fief.

b. The land so held.

tr.v. feed, fee·ing, fees

1. To give a tip to.

2. Scots To hire.

Fees for late filing:

In case any statement or Return is filed late, we find that there is no service rendered by Government. Therefore, it is wrong to describe and provide for levy of such fees for such delay.

Levying a penalty and collecting the same in name of fees is not at all justified. Such levy is not at all based on principal of natural justice. Such provisions should be deleted.

Provisions, explanatory statement etc. reproduced with highlights added for analysis:

 

Chapter XVII- Collection and recovery of taxes

Income-tax Act, 1961

G.-Levy of fee in certain cases

¹[Fee for default in furnishing return of income.

234F. (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.

(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, 2017

Statutory Provisions

FINANCE BILL, 2017

Insertion of new section 234F.

75. After section 234E of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2018, namely:-

Fee for default in furnishing return of income.

 “234F. (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 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.

(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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Clause 75 of the Bill seeks to insert section 234F of the Income-tax Act relating to fee for default in furnishing return of income.

It is proposed to provide that a fee for delay in filing of return shall be paid for assessment year 2018-2019 and onwards in a case where the return is not filed within the due dates specified for filing of return under sub-section (1) of section 139. It is further proposed that a fee of five thousand rupees be payable, if the return is furnished after the due date but on or before the 31st day of December of the assessment year. A fee of ten thousand rupees is proposed to be payable in any other case. However, in a case where the total income does not exceed five lakh rupees, it is proposed that the fee amount shall not exceed one thousand rupees.

This amendment will take effect from 1st April, 2018 and will, accordingly apply in relation to assessment year 2018- 2019 and subsequent years.

Statutory Provisions

Income-tax Act, 1961

¹[Fee for default in furnishing return of income.

234F. (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.

(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, 2017

Income-tax Act, 1961

G.-Levy of fee in certain cases

Fee for default in furnishing statements.

     ¹[234E.(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 sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

      (3) The amount of fee referred to in sub-section (1) 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.

      (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused 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.]

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Notes:-

1. Inserted vide Finance Act, 2012, w.e.f. 01-07-2012

Tax Management India .com	https://www.taxmanagementindia.com

Statutory Provisions

FINANCE BILL, 2012

Insertion of new section 234E.

     86. After section 234D of the Income-tax Act, the following sub-heading and section shall be inserted with effect from the 1st day of July, 2012, namely:-

“G.-Levy of fee in certain cases

Fee for defaults in furnishing statements.

     234E. (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 sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

      (3) The amount of fee referred to in sub-section (1) 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.

      (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused 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.”.

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Clause 86 of the Bill seeks to insert a new sub-heading “G.-Levy of fee in certain cases” and a new section 234E in the Income-tax Act relating to fee for defaults in furnishing statements.

It is proposed to insert a new section 243E so as to provide that-

(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 sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

(3) The amount of fee referred to in sub-section (1) 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.

(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused 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.

This amendment will take effect from 1st July, 2012.

Old provision:

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.]

¹[ 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. ]

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Notes:-

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