Section 234e - provide some relief !

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CA Himanshu Bansal

Risk Manager

1921 Points Posted on 24 July 2014

Is the penalty under the name of "FEE" levied by IT department under section 234E justified ? The deductors are serving as tax collection points to government . If one looks at it generally, it is the government's payment, which the deductor is collecting and depositing to the government. Even after that in many bona fide cases, heavy penalties are being levied using the new system of TRACES ranging from period of 2012-13 to present.

Government should do something in this regard and a mechanism is needed to improve these situations where some remedy or hearing is available at Local TDS officer level.

Please share your views.

Replies (2)

CA R SEETHARAMAN

CA Practice

112092 Points Posted on 25 July 2014

Penalty under the name of "FEE" levied by IT department under section 234E is not justified that is why stay orders has been obtained and contitutional validity of leviying such fee under Income Tax Act has been questioned.

You have rightly ponted out that it is the government's payment, which the deductor is collecting and depositing to the government.

Deducting the correct amount and depositing in to the bank and filing returns and issuing form 16, much work is involved.

CA Himanshu Bansal

Risk Manager

1921 Points Posted on 25 July 2014

Originally posted by : SEETHARAMAN
	Penalty under the name of "FEE" levied by IT department under section 234E is not justified that is why stay orders has been obtained and contitutional validity of leviying such fee under Income Tax Act has been questioned. You have rightly ponted out that it is the government's payment, which the deductor is collecting and depositing to the government. Deducting the correct amount and depositing in to the bank and filing returns and issuing form 16, much work is involved.

Thanks SEETHARAMAN for opening the discussion board.

I am aware of the litigations going on in the appeallates and tribunals regarding this matter.But everyone cannot afford litigation specially where the amount of penaly is not so high. Later on if it is declared constitutionally invalid, then what is the government going to do with the sum already deposited by the deductors in fear of department's notice. It shall be unjustice to cases where delays were due to bonafide reasons on the part of deductors.