JIJI VARGHESE vs. INCOME TAX OFFICER TDS
What did the High Court hold?
The High Court held that the jurisdiction to levy late fee under Section 234E of the Income Tax Act, 1961, arises only from June 1, 2015, and not earlier. This finding was based on the reasoning that the amendment to Section 200A(1)(c), which enables the computation of such fees, took effect prospectively from June 1, 2015. The Court followed its earlier decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which had considered the statutory provisions and the implications of the amendment. Regarding the revenue's contention on delay, the Court found it unmeritorious because the petitioner's challenge was based on a total lack of jurisdiction to impose the late fee. In cases of alleged lack of jurisdiction, delay cannot be a ground to deny relief. The Court distinguished the precedents cited by the revenue, noting that they dealt with issues other than a total lack of jurisdiction. Consequently, the demands for late fee under Section 234E for the period from 2012-13 till June 1, 2015, were quashed as being legally unsustainable and bereft of authority. The operative direction was to quash the intimations to the extent they demanded late fee for the specified period.
What were the facts?
The petitioner, Jiji Varghese, a taxpayer who deducted Tax Deducted at Source (TDS) and remitted it to the Income Tax Department, faced demands for late filing fees under Section 234E of the Income Tax Act, 1961. These demands, communicated through intimations Ext.P1 to Ext.P9, pertained to the periods 2012-13 to 2014-15. The petitioner challenged these demands, arguing that Section 234E, though introduced from July 1, 2012, could not be applied retrospectively to levy late fees for periods prior to June 1, 2015, due to the amendment of Section 200A(1)(c). The respondents contended that the intimations were appealable orders under Section 246A, that the petitioner failed to challenge them, and that the demands had become final due to delay, citing several Supreme Court judgments.
What were the issues?
1. Whether the levy of late fee under Section 234E of the Income Tax Act, 1961, is legally sustainable for periods prior to June 1, 2015, considering the amendments to Section 200A of the Act? (Question of law) Assessee's Contention: The petitioner argued that Section 200A(1)(c), which provides for the computation of late fee under Section 234E, was incorporated with effect from June 1, 2015. Therefore, the petitioner cannot be subjected to late fees for non-filing of TDS statements prior to this date. The petitioner relied on the decision in M/s. Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018). Revenue's Contention: The respondents contended that the intimations demanding late fees were appealable under Section 246A of the Act, and the petitioner's failure to challenge these orders resulted in the demands becoming final. They argued that the delay in approaching the court should defeat the petitioner's claim, citing State of Maharashtra v. Digambar, G.C. Gupta and Others v. N.K. Pandey and Others, and State of M.P. And Another v. Bhailal Bhai.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
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Cause title — parties, addresses and appearances
JUDGMENT As an assessee under the Income Tax Act, 1961, petitioner had deducted TDS for payments made by him and remitted the same to the Income Tax Department. While filing the statement of returns regarding the remittance of TDS, delay occurred. When the returns were processed, the second respondent, on noticing the delay in filing the statement of TDS remittance, levied late fee under section 234E of the Act.
By Ext.P1 to Ext.P9 intimations, petitioner was called upon to pay the late filing fee under section 234E of the Income Tax Act, 1961 (for short,'the Act'). As per the aforesaid intimations, amounts have been demanded as late fee for the periods from 2012-13 to 2014-15 on the basis of the provisions in section 234E of the Act, which is as follows: “234E-Fee for default in furnishing statements:- (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.”
According to the petitioner, though section 234E of the Act was introduced by the Finance Act, 2012 with effect from 1st July, 2012, since petitioner is being demanded to pay, by Ext.P1 to Ext.P9, late fee for not filing the statement of tax deduction at source, it is necessary to refer to section 200A of the Act. It was further submitted that Section 200A(1) incorporated clause (c) only with effect from 01.06.2015. Sub-clause (c) to section 200A (1) refers to the fee if any to be computed in accordance with the provisions of section 200A(1)(e). It is the claim of the petitioner that till 01.06.2015 petitioner cannot be mulcted with any liability to pay late fee for non filing of any statement of tax deduction at source.
A statement has been filed by the respondents objecting to the claim of the petitioner. It is averred that the demands of late filing fee under section 234E of the Act were raised by orders issued from 2013 till 2016 and that the demands are still outstanding. The intimations issued by the department were all appealable orders under section 246A of the Act and the petitioner failed to challenge the levy of late fee. In such circumstances, the demands have become final and the petitioner has accepted the demands. Respondents also pleaded that the delay is a ground to refuse an appropriate relief so as to avoid unsettling the settled things. Relying upon the decisions in State of Maharashtra v. Digambar (AIR 1995 SC 1991), G.C.Gupta and Others v. N.K.Pandey and Others [(1988) 1 SCC 316] and State of M.P. And Another v. Bhailal Bhai (AIR 1964 SC 1006), it was asserted that the delay must defeat the claim raised by the petitioner.
I have heard Sri.P.J.Anilkumar, learned counsel for the petitioner, Sri.Christopher Abraham, learned Standing Counsel for the respondents 1 to 3 as well as Sri.S.Manu, learned Assistant Solicitor General of India for the fourth respondent.
I have considered the rival contentions.
In the decision in M/s.Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018) an identical question arose for consideration. After considering the statutory provisions of section 234E and section 200A of the Act and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the juri iction to levy late fee under section 234E arises only from 01-06.2015 and not earlier.
As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of juri iction of the respondents to impose late fee. Since in matters where total lack of juri iction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis. .
Further the decisions cited are distinguishable on the facts of those cases itself. In the decision in Digambar's case (supra), the delay of 20 years in approaching the High Court for grant of compensation for alleged utilization of the land was held as a decisive factor to disentitle the petitioner therein. Similarly in G.C.Gupta's case (supra) the issue related to seniority and petitioners challenged the orders of confirmation and determination of inter se seniority only after 15 years. In the decision in Bhailal Bhai's case (supra) the question related to refund of tax claimed belatedly. None of those cases related to a total lack of juri iction or authority.
In view of the above, the demand in Ext.P1 to Ext.P9 intimations for the period from 2012-13 to 2014-15 is bereft of authority and cannot be legally sustainable.
Accordingly, I quash Ext.P1 to Ext.P9 intimations to the extent it demands late fee under section 234E for the period from 2012-13 till 01.06.2015. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE vps Corrigendum Dated 30.03.2022 The words “Dated this the 24th day of March, 2021” in the header of the judgment shall be read as “Dated this the 24th day of March, 2022”. BECHU KURIAN THOMAS JUDGE vps
Appendix — schedule of exhibits
More judgments on Section 234E
- Mulchand Ramkishan Laddha, Pune vs Income Tax Officer (TDS-2), PuneITA 874/PUN/2026[2013-14]Status: Disposed30 Sept 2026AY 2013-14
- Suyash Dhondu Paste, Ratnagiri vs Income Tax Officer, TDS, KolhapurITA 2669/PUN/2026[2015-16]Status: Disposed28 Sept 2026AY 2015-16
- Suyash Dhondu Paste, Ratnagiri vs Income Tax Officer, TDS, KolhapurITA 2668/PUN/2026[2015-16]Status: Disposed28 Sept 2026AY 2015-16
- Suyash Dhondu Paste, Ratnagiri vs Income Tax Officer, TDS, KolhapurITA 2667/PUN/2026[2015-16]Status: Disposed28 Sept 2026AY 2015-16
- Suyash Dhondu Paste, Ratnagiri vs Income Tax Officer, TDS, KolhapurITA 2666/PUN/2026[2014-15]Status: Disposed28 Sept 2026AY 2014-15
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