In Rajesh Kourani v. Union of India & Ors, a division bench of the Gujarat High Court held that the IT Department can collect a late fee even prior to the insertion of Section 234E of the Income Tax Act while processing statements of TDS under Section 200A of the Income Tax Act.
In the instant case, Assessee, an individual, aggrieved by the order of the Assessing Officer, while processing statement of TDS under s. 200A had adjusted a sum of Rs.33,123/by way of the late filing fee under section 234E of the Act.
Before the High Court, the petitioner argued that prior to amendment in section 200A, there was no mechanism provided under the Act for the collection of fee under section 234E of the Act and therefore, the Assessing Officer could not have adjusted such fee in terms of section 200A of the Act.
A bench comprising of Justices Akil Kureshi and Biren Vaishnav observed that section 200A of the Act is a machinery provision providing a mechanism for processing a statement of deduction of tax at source and for making adjustments, which are arithmetical or prima facia in nature. After the amendment in 2015, the provision specifically provides for computing the fee payable under section 234E of the Act.
“On the other hand, section 234E is a charging provision creating a charge for levying a fee for certain defaults in filing the statements. Under no circumstances, a machinery provision can override or overrule a charging provision. We are unable to see that section 200A of the Act creates any charge in any manner. It only provides a mechanism for processing a statement for a tax deduction and the method in which the same would be done. When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements.”
While dismissing the petition, the bench clarified that the Revenue can collect a late fee even prior to the introduction of s. 234E in terms of s. 200A. “Section 200A would merely regulate the manner in which the computation of such a fee would be made and demand raised. In other words, we cannot subscribe to the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied. Any such view would amount to a charging section yielding to the machinery provision. If at all, the recast clause (c) of subsection (1) of section 200A would be in the nature of the clarificatory amendment. Even in absence of such provision, as noted, it was always open for the Revenue to charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Income Tax Act.”
Read the full text of the Judgment below.
