27 February 2014

Karnataka HC gives interim stay on Sec 234E demand recovery

Karnataka HC gives interim stay on Sec 234E demand recovery

 

High court's relief for employers, businessmen from paying penal fees for not filing TDS


 In a big relief for several employers and businessmen, the Karnataka high court has stayed for four weeks the operation of series of demand notices sent by the Income Tax department asking them to pay penal fees in relation to non-filing of TDS statements. 

Justice Jawad Rahim passed an interim order to this affect while asking Income Tax department and 
ministry of finance to file their replies. 

Several employers as well as assessees under TAN have moved the court challenging the penal provisions under newly inserted section 234E of the Income Tax Act , 1961 connected to filing of TDS returns by employers. 
"The incorporation of Section 234E to the IT Act with effect from July 1,2012 has at one stroke ,deleted all the favorable and beneficial sections- an appeal under section 246(1)(l)(ii) of the Act and also waiver of penalty under section 273B itself .Now it is mandatory and compulsory on the deductees to pay fee at Rs.200 per day till the date of filing/submitting the TDS statement to TDS reconciliation analysis and correction enabling system, Ghaziabad. Failing which, the deductor/s will be totally debarred from filing their TDS statement itself and as a further consequence , they will not be competent to issue Form No.16 or 16A as stipulated under section203 of the IT Act to the dedctee/s." the petitioners have stated. 


"If they continue defaulting section 234E of the Act, then they would be further subjected rigorous penal provisions of having to shell out penalty at Rs.100 per day, as set out in Section 272A(2)(g), in case recipient/deductee claims credit of the TDS in his return of income tax" the petitioners have claimed. 


The petitioners have stated that levy of fee is against the scheme of the Income Tax Act and the word 'fee' is an alien word by itself vis-a-vis the Income Tax Act. 

Regards,

VMV S RAO                                                                                                            26/02/2014                                                                                                                           Source: Times of India



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