9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 379 - HC - Income TaxValidity of Section 234E challenged - Fee for default in furnishing TDS return/statements - Whether it is ultra vires of Constitution of India and/or to declare by an appropriate writ that under the newly inserted Section 234E of the Act, fee could be levied only after affording the petitioners a reasonable opportunity and for consequential relief of quashing the intimations whereunder fee has been levied under Section 234E for late filing of TDS statements? - whether levy of fee under Section 234E for default in furnishing the statements is in the guise of penalty and there is no nexus to the services rendered by the department? - Held that - A bare perusal of Section 244A of the Act would indicate that where refund of any amount becomes due to the assessee under the Act, such assessee would be entitled to receive in addition to the amount of refund of tax, simple interest at the rate of one-half percent for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which refund is granted as indicated in sub-section(1)(a) of the Act. A bare perusal of Section 271H which came to be inserted by Finance Act, 2012 with effect from 01.07.2012 would indicate it provides for levy of penalty for failure to furnish statements of tax deducted at source under Section 200(3) or under proviso to Section 206C or for furnishing incorrect information. As per sub-section (2), penalty will be not less than 10,000/- and it may extend upto '1,00,000/-. Section 273B indicates that no penalty shall be imposable on the person or the assessee for any failure referred to in the said provision if he proves that there was reasonable cause for such failure. Section 273B has also been amended by adding Section 271H and as already noticed under Section 271H(2)(k) penalty can be imposed for failure to furnish statement within prescribed time. However, by incorporating Section 271H in Section 273B, it would indicate that penalty need not be imposed under Section 271H if reasonable cause is shown. The contention of the assessee is that there is no similar provision in the impugned provision namely Section 234E and as such it takes away the valuable right of the assessee. The said contention does not hold water inasmuch as Section 119(2)(a) enables the Board to issue general or special orders in respect of any class of incomes or class of cases from time to time, which includes sub-section(1A) of Section 201 and as such no hardship would be caused to the assessees. As such contention raised in this regard cannot be accepted. The fee sought to be levied under Section 234E of the Income Tax Act, 1961 is not in the guise of a tax that is sought to be levied on the deductor. We also do not find the provisions of Section 234E as being onerous on the ground that the Section does not empower the Assessing Officer to condone the delay in late filing of the TDS return/statements, or that no appeal is provided for from an arbitrary order passed under Section 234E. It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this Court in its extra ordinary equitable jurisdiction under Article 226/227 of the Constitution of India, as the case may be. We therefore cannot agree with the argument of the Petitioners that simply because no remedy of appeal is provided for, the provisions of Section 234E are onerous. Similarly, on the same parity of reasoning, we find the argument regarding condonation of delay also to be wholly without any merit. See Mr Rashmikant Kundalia and another Versus Union of India and others 2015 (2) TMI 412 - BOMBAY HIGH COURT . Thus, viewed from any angle it cannot be held that Section 234E of the Income Tax Act, 1961 suffers from any vices for being declared to be ultra vires of the Constitution. - Decided against assessee.
Issues Involved:
1. Constitutional validity of Section 234E of the Income Tax Act, 1961. 2. Whether the levy under Section 234E is a fee or a penalty. 3. Whether the impugned provision violates principles of natural justice. 4. Whether the impugned provision is beyond legislative competence. 5. Whether the impugned provision violates Article 19(1)(g) of the Constitution. 6. Whether the impugned provision leads to double jeopardy under Article 20(2). Detailed Analysis: 1. Constitutional Validity of Section 234E: The primary issue examined was whether Section 234E of the Income Tax Act, 1961, inserted by Finance Act, 2012, is to be struck down or its validity upheld. The court emphasized the principle of "ut res magis valeat quam pereat," which means a statute should be interpreted to uphold its validity if possible. The court started with a presumption in favor of constitutionality and preferred a construction that keeps the statute within the competence of the legislature. 2. Fee vs. Penalty: The petitioners argued that the levy under Section 234E is in the guise of a penalty and lacks a nexus to the services rendered by the department. The court referred to various precedents to delineate the difference between a tax, a fee, and a compensatory tax. It was noted that a fee is generally a charge for a special service rendered to individuals by governmental agencies. The court concluded that the levy under Section 234E is a fee and not a penalty, as it is intended to compensate for the administrative expenses incurred due to the delay in filing TDS statements. 3. Principles of Natural Justice: The petitioners contended that the impugned provision violates the principle of "audi alterum partem" (no one should be condemned unheard). The court noted that the processing of returns under Section 200A, similar to Section 143(1), does not provide for a personal hearing. Therefore, the doctrine of natural justice is not applicable in this context. The court also highlighted that Section 119(2)(a) allows for the mitigation of hardships, thereby addressing concerns related to the opportunity of being heard. 4. Legislative Competence: The petitioners argued that the impugned provision is beyond the legislative competence of Parliament under Article 246(1) read with Entry 82 of List I of Schedule 7 of the Constitution. The court rejected this contention, stating that the provision falls within the legislative competence of Parliament. 5. Violation of Article 19(1)(g): The petitioners claimed that Section 234E imposes unreasonable restrictions on their business, violating Article 19(1)(g) of the Constitution. The court found that the provision does not impose any unreasonable restrictions and is a reasonable regulatory measure to ensure timely filing of TDS statements. 6. Double Jeopardy: The petitioners argued that Section 234E and Section 271H together lead to double jeopardy, violating Article 20(2) of the Constitution. The court noted that Section 271H provides for penalties in cases of delay beyond one year, while Section 234E imposes a fee for each day of delay. The court concluded that these provisions operate in different contexts and do not constitute double jeopardy. Conclusion: The court upheld the constitutional validity of Section 234E, stating that it does not suffer from any vices for being declared ultra vires of the Constitution. The writ petitions were dismissed, affirming that Section 234E of the Income Tax Act, 1961, is intra vires of the Constitution.
|
