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Section 271H and 234E Helpful proviso


SANJAY KUMAR GANNA

2014-01-21

Penal provisions for non filing or delayed filing of TDS Returns are

1. Fee U/s 234E and

2. Penalty U/s 271H

 

Text of Section 234E of Income Tax Act, 1961 is as under:

 

Section 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.

(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) ofsection 200 or the proviso to sub-section (3) of section 206C which 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.

 

Section 234E in very simple words :

 

Fee U/s 234E for non filing or delayed filing of TDS Return :

Section 234E is effective from 1st of July 2012. The deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS Return continues. However, the total fee cannot exceed the amount of TDS deductible for which TDS Return was required to be filed.

 

Text of Section 271H of Income Tax Act, 1961 is as under :

Section 271H   :   Penalty for failure to furnish statements, etc.

 (1) Without prejudice to the provisions of the Act, a person shall be liable to pay penalty, if, he—

(a)  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; or

(b)  furnishes incorrect information in the statement which is required to be delivered or caused to be delivered under sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

(2) The penalty referred to in sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

(3) Notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206Cbefore the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement.

(4) The provisions of this section shall apply to a statement referred to in sub-section (3) ofsection 200 or the proviso to sub-section (3) of section 206C which 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.

 

Section 271H in very simple words:

 

Penalty u/s 271H for non filing or delayed filing of TDS Return :

Section 271H is effective from 1st of July 2012. A deductor shall pay penalty of minimum Rs 10,000 to Rs 1 lakh for not filing the TDS Return within one year from the specified date within which he was supposed to file the TDS Return.

Thus, if the present due time for filing TDS statement is taken, the time up to which the penalty u/s 271H cannot be imposed are explained for any tax deduction for FY 2012-13

 

Sl. No

TDS Statement

Due date

Date up to which no penalty u/s 271H can be imposed

1

30th June

15th July 2012

15th July 2013

2

30th September

15th October 2012

15th October 2013

3

31st December

15th January 2013

15th January 2014

4

31st March

 15th May 2013.

15th May 2014

 

Five ways to avoid above penal consequences:

 

1.      Always file your e-TDS Return with prescribed due dates.

 

2.     File your e-TDS Return with available entries within prescribed due date and to add new entries file Revised e-TDS return on later date.

 

3.     Fill all the data of earlier unfiled e-TDS return in the latest e-TDS return for which due date is yet to come. (Possible if unfiled e-TDS Return is of earlier quarters of same financial year)

 

4.      File NIL e-TDS return even if no entry is there.

(In case NIL e-TDS Return can’t be filed, then pay TDS of Rs.10/- u/s 194H & file a Commission payment entry of Rs.100/-. Provide PAN of any known person)

 

5.     Do not deduct and deposit TDS at all, do not file e-TDS Return at all and take benefit of proviso to Section 40(a)(ia) read with section 201 (applicable from F.Y. 12-13)

 

 

For your convenience the text of relevant proviso to Section 40(a)(ia) & Section201(1) is given below:

 

Text of Second proviso to Section 40(a)(ia) of Income Tax Act, 1961 is as under :

 

Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1)of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.

 

Text of First proviso to Section 201(1) of Income Tax Act, 1961 is as under :

 

Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident

(i)  has furnished his return of income under section 139;

(ii)  has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed

 

Please go through this case law also may help : 

ITO vs. M/s.Theekathir Press (ITAT Chennai)


S. 40(a)(ia) TDS Disallowance: View in favour of the assessee should be followed

The assessee paid an amount without deducting TDS. The AO held that as there was no TDS, the deduction for the amount could not be allowed u/s 40(a)(ia). However, the CIT(A) reversed the AO on the ground that the word “payable” in s. 40(a)(ia) did not apply to amounts that had already been “paid” during the year. On appeal by the department to the Tribunal HELD dismissing the appeal:

There is a judicial controversy on whether s. 40(a)(ia) applies to amounts that have already been “paid” or it is confined to amounts that are “payable” as at the end of the year. The Special Bench in Merilyn Shipping and Transports 16 ITR (Trib) 1 (Vizag) and the Allahabad High Court in Vector Shipping Services have taken the view that s. 40(a)(ia) applies only to amounts remaining “payable” at the end of the previous year and does not apply to amounts already “paid” before the close of the relevant previous year. However, the Calcutta High Court in Crescent Export Syndicates & Md. Jakir Hossain Mondal and the Gujarat High Court in Sikandarkhan N.Tunvar have taken a contrary view that even amounts already “paid” have to be disallowed u/s 40(a)(ia). In such circumstances, the rule of Judicial Precedence demands that the view favourable to the assessee must be adopted as held by the Supreme Court in CIT vs. Vegetable Products Ltd 88 ITR 192. Following the said fundamental rule declared by the Supreme Court, the judgment of the Allahabad High Court in Vector Shipping which is in favour of the assessee has to be followed and it has to be held that disallowance u/s 40(a)(ia) applies only to amounts “payable” and not to amounts “paid”.

 

SANJAY KUMAR GANNA

2014-01-21

The above article has a disclaimer as it is posted on profession no need of writing disclaimer. It is presumed that above information may help.

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SANJAY KUMAR GANNA

2014-02-08

The CBDT has issued a Circular No. 10/DV/2013 dated 15.12.2013 in which it has analyzed the controversy created by recent judgements on the question whether the term “payable” in s. 40(a)(ia) includes the amounts that have already been paid during the year or it refers only to the amounts outstanding as at the year end. It is noted that while the Special Bench of the Tribunal in Merilyn Shipping 136 ITD 23 (SB) and the Allahabad High Court in Vector Shipping has taken the view that the disallowance in s. 40(a)(ia) does not apply to amounts that are already paid, a contrary view has been taken by the Calcutta High Court in Crescent Export Syndicate/ Md. Jakir Hossain Mondal and the Gujarat High Court in Sikandarkhan Tunvar. The CBDT has expressed the view that the disallowance u/s 40(a)(ia) would apply even to the amounts that have already been paid during the year. It is also clarified that if the High Court takes a view contrary to that taken by the CBDT, the CBDT’s view would not apply in that jurisdiction though steps should be taken to decide whether a SLP should be filed or legislative amendments made.

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