Whether levy of late filing fees u/s 234E due to late filing of TDS returns is constitutionally valid?

Last updated: 14 February 2015

Court :
Bombay High Court

Brief :
By this Writ Petition filed under Article 226 of theConstitution of India, the Petitioners have challenged the constitutionalvalidity of section 234E of the Income Tax Act, 1961. Section 234E seeksto levy a fee of Rs.200/- per day (subject to certain other conditions as setout therein) inter alia on a person who deducts Tax at Source (TDS) andthen fails to deliver or cause to be delivered the TDS return/statements tothe authorities within the prescribed period. Consequently, the Petitionershave also sought a declaration that the notices issued to Petitioner Nos.2and 3 under section 200A of the Act are null, void and bad-in-law beingultra vires the Constitution of India.Petitioner is a practisingChartered Accountant who has received several notices under section200A of the Act that were served by the Revenue on his various clients.According to the Petitioners, section 234E is ultra vires and violative of Article 14 of the Constitution of India and therefore deserves to be struckdown by this Court. Consequently, even the notices issued by the Revenueought to be set aside.Held that Section 234E of theIncome Tax Act, 1961 does not violate any provision of the Constitutionand is therefore intra vires, Constitution of India.

Citation :
Mr. Rashmikant Kundalia - Petitioners – Versus - Union of India- Respondents