Remedies for Notices from Income Tax Department charging Late filing fee on eTDS returns after the due date : Rs 200 per day u/s 234 E of the Income Tax Act, 1961 from 1.7.2012
The section is given below.
234E. (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
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax
deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or
causing to be delivered a statement in accordance with sub-section (3) of section
200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section
(3) of section 200 or the proviso to sub-section (3) of section 206Cwhich is to be
delivered or caused to be delivered for tax deducted at source or tax collected at
source, as the case may be, on or after the 1st day of July, 2012.]
You can see at https://www.tdscpc.gov.in/ that
“ Levy u/s 234E of the Income Tax Act, 1961 is a statutory levy and cannot be waived”
“ Deductors are advised that the demand raised in the intimation u/s 200A can be closed by making payment and filing the corresponding correction statement ”
The Intimation u/s 200A of the Income Tax Act, 1961 is deemed to be an order passed under the Act.
Such an order can be modified/rectified/amended by the Assessing Officer himself or on receipt of an application from the assessee u/s 154 of the Act.
Since the Income Tax Department has taken the above view that it cannot be waived the AO may reject your application for waiver of demand even though you have valid reasons for the delay in filing returns.
However Late fee cannot be recovered for TDS statements which were due for F.Y. 2011-12 or earlier years as Sec 234 E (4) states that this Section is applicable from 1/7/2012.
You have two options.
Accept the demand. Pay the amount. Send reply to CPC, Bangaluru and also send a CC to AO by providing him the copy of late payment interest challan as deposited in bank and copy of receipt of return revised. Please specify in your reply that “ please update your records and delete the demand ”. This could help you from not receiving further notices on the same issue.
Reject the demand. Do not pay the amount. Send reply to AO on the following grounds.
1. Provisions of Sec. 234E has been made applicable w.e.f. 1st July, 2012. It states that “ Amount of late fee shall be paid before delivering a TDS statement”, It means that any late fee should have been deposited just at the time of delivering TDS statement and not later than this. The authorized TIN- NSDL centre which accepted the TDS statement also accepted these without late fee, as well as the software utility of the TDS department itself accepted these without late fee.
Once the TDS statement has been accepted without late fee, then such late fee cannot be recovered later on. TDS statement late fee cannot be recovered for F.Y. 2012-13, as it is not collected at the time of delivering TDS statement to the department.
2. It is also pertinent to note that the law has not made any person responsible, to deposit late fee, in case of default in depositing late fee along with tds statement, which can be inferred from the provisions of Sec. 204 of the act, which states as under:-
“Sec. 204 of the act . For the purposes of [the foregoing provisions of this Chapter] and section 285, the expression “person responsible for paying” means—
(i) in the case of payments of income chargeable under the head “Salaries”, other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof;
(ii) in the case of payments of income chargeable under the head “Interest on securities”, other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof;
[(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the [authorised person] responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with [the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder;]
(iii) [in the case of credit, or, as the case may be, payment] of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;
[(iv) in the case of credit, or as the case may be, payment of any sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum.]”
The section 204 specifically says that “for the purposes of Sec. 190 to Sec. 203 and for Sec. 285 of the act the following persons would be responsible” , so it is clear that for the purpose of Sec. 234E none of the person has been made responsible, therefore if any late fee is due and not deposited along with the tds statement none can be held responsible to deposit it.
3. Demand of late fee cannot be raised also by way of processing of TDS statement, because provisions of Sec. 200A of the act does not cover default in payment of late fee u/s 234E, except any arithmetical error, or incorrect claim, or default in payment of interest, any tds payable or refundable etc.
Sec 200A is given below.
Processing of statements of tax deducted at source18.
200A. (1) Where a statement of tax deduction at source has been made by a person deducting any sum (hereafter referred to in this section as deductor) undersection 200, such statement shall be processed in the following manner, namely:—
(a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—
(i) any arithmetical error in the statement; or
(ii) an incorrect claim, apparent from any information in the statement;
(b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;
(c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest;
(d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and
(e) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor :
Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.
Explanation.—For the purposes of this sub-section, “an incorrect claim apparent from any information in the statement” shall mean a claim, on the basis of an entry, in the statement—
(i) of an item, which is inconsistent with another entry of the same or some other item in such statement;
(ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act.
(2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme19 for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.]
In view of the above it is my opinion that late fee cannot be recovered later on by way of any notice, neither notice of demand U/s 156 can be issued for this.
On receiving the application the AO has to pass an amendment order within 6 months from the end of the month in which the said application is received or he may reject the application within such time.
If he rejects your abovementioned arguments with reasons not acceptable to you then you can go for an appeal.
Hope this will help you in selecting your option wisely on the issue of such notices from Income Tax Department on a case to case basis.