CPC has charged s.234E fee in a s.200A intimation for TDS quarters going back to 2010-11. My consultant says the Karnataka High Court struck that down. Does that help me in Tamil Nadu?
No. The Madras High Court set the Karnataka view in Fatheraj Singhvi against the Gujarat view in Rajesh Kourani, expressly declined to follow Karnataka, and held that s.234E is itself the substantive charge — it bites the moment the statement is late and does not wait for the s.200A(1)(c) machinery inserted on 1 June 2015. The waiver-rejection order was left standing, but the Court decided no separate question about a power of waiver.
Decided by the High Court (Mohammed Shaffiq J) on 2023-11-10, reported as W.P. No.16934 of 2021 and W.M.P. Nos.17943 and 17945 of 2021 (Madras High Court); reserved 29 September 2023, pronounced 10 November 2023. No ITR/CTR citation was located for this judgment.. It bears on section 234E, section 200A, section 200A(1)(c), section 200(3), section 206C(3) of the Income Tax Act 1961, in TDS Defaults, How Tax Law Is Read and Penalty matters.
This is the single most contested point in the whole of s.234E, and it is decided differently in different States. The taxpayer wins in Karnataka (Fatheraj Singhvi) and Kerala (Sarala Memorial Hospital, followed in Sajeev Mathew). The Revenue wins in Gujarat (Rajesh Kourani), Rajasthan (Dundlod Shikshan Sansthan) and now Madras (this case, and Qatalys Software Technologies, which this judgment records the officer as relying on). So the first question in any pre-June-2015 s.234E matter is not what the law is but which High Court has territorial jurisdiction over your Assessing Officer. This judgment is also the cleanest single place to read both lines: it reproduces Fatheraj Singhvi paras 22 and 24, Rajesh Kourani paras 19 and 20, and Dundlod para 8, and then reasons its way between them. Note also what this judgment does not decide. The assessee had also applied for waiver of the fee and interest; the officer rejected it on the ground that no power of waiver exists (recorded at para 2.3), and that rejection order was one of the two orders under challenge and was left standing when the writ was dismissed. The Court did not itself decide whether a power of waiver exists.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner manufactures leather and leather products at Ranipet and engaged sub-contractors, on payments to whom it was required to deduct tax at source. An intimation under s.200A dated 11 December 2013 was issued for the financial years 2012-13 to 2015-16 intimating the sum due. On 19 January 2021 a further intimation was issued for an outstanding TDS demand of Rs 6,54,350 for the period 2010-11 to 2015-16. By letter dated 29 January 2021 the petitioner replied that the department was not empowered to levy fee under s.234E prior to 1 June 2015, and in the alternative asked for waiver of the late fee and interest. By order dated 26 February 2021 the officer rejected the waiver request, holding there is no power of waiver in respect of the s.234E fee, and pointed the petitioner to the Madras High Court's decision in Qatalys Software Technologies Pvt. Ltd. and the Gujarat High Court's decision in Rajesh Kourani v. Union of India, in which the fee was held operative from 1 July 2012. The petitioner sought certiorari to quash both the communication dated 19 January 2021 and the waiver-rejection order dated 26 February 2021 insofar as they demanded late fee under s.234E.
The writ petition was dismissed with no costs. Section 234E(1) is the substantive provision and the liability to the fee is not dependent on s.200A(1)(c), which prescribes only a recovery mechanism; the fee is attracted the moment a person fails to deliver the statement within the time prescribed by s.200(3) or the proviso to s.206C(3), and s.234E(3) provides for self-assessment and payment of the fee before the statement is delivered, while s.234E(4) fixes 1 July 2012 as the date from which the section applies. The challenge to the levy of late fee for the period prior to 1 June 2015 was therefore rejected, and the Court expressly declined to follow the Karnataka High Court (paras 7.1 to 7.3).
The Court began by recording that there is uniformity among the High Courts that s.234E is constitutionally valid, and that the divergence is confined to whether the fee can be imposed for periods before the 1 June 2015 amendment to s.200A(1)(c) (para 4). It set out the Karnataka High Court's reasoning in Fatheraj Singhvi that the substitution of clause (c) in s.200A(1) was substantive rather than merely regulatory and therefore prospective, so that no demand of fee under s.234E could be made in an intimation under s.200A for a period before 1 June 2015 (para 5). It then set out the contrary reasoning of the Gujarat High Court in Rajesh Kourani and of the Rajasthan High Court in Dundlod Shikshan Sansthan, that s.234E is the charging section and s.200A a mere machinery provision which cannot override it (para 6). Turning to the text of s.234E itself (para 7), the Court reasoned from the structure of the section: sub-section (1) fastens the liability on the failure to deliver the statement; sub-section (3) requires the fee to be paid before delivering the statement, which is in substance a self-assessment; and sub-section (4) fixes the section's own commencement at 1 July 2012 (para 7.1). On that reading, the submission that s.234E is inoperative until s.200A(1)(c) was introduced 'overlooks the fact that Section 234E (1) of the Act is the substantive provision' and that s.234E(3) already provides the mode of payment (para 7.2). The Court concluded that the Gujarat view reflects the true intent and purpose of s.234E and, with respect, said it was unable to subscribe to the Karnataka view (para 7.2).
Section 234E of the Act which provides for late fee is the substantive provision and the levy is not dependent on Section 200A(1)(c) of the Act which only prescribes a recovery mechanism.
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Handle my notice → Ask a CA on WhatsAppNo. The Madras High Court set the Karnataka view in Fatheraj Singhvi against the Gujarat view in Rajesh Kourani, expressly declined to follow Karnataka, and held that s.234E is itself the substantive charge — it bites the moment the statement is late and does not wait for the s.200A(1)(c) machinery inserted on 1 June 2015. The waiver-rejection order was left standing, but the Court decided no separate question about a power of waiver. This was decided by the High Court (Mohammed Shaffiq J) and bears on section 234E, section 200A, section 200A(1)(c), section 200(3), section 206C(3) of the Income Tax Act 1961. It is reported as W.P. No.16934 of 2021 and W.M.P. Nos.17943 and 17945 of 2021 (Madras High Court); reserved 29 September 2023, pronounced 10 November 2023. No ITR/CTR citation was located for this judgment.. This is the single most contested point in the whole of s.234E, and it is decided differently in different States. The taxpayer wins in Karnataka (Fatheraj Singhvi) and Kerala (Sarala Memorial Hospital, followed in Sajeev Mathew). The Revenue wins in Gujarat (Rajesh Kourani), Rajasthan (Dundlod Shikshan Sansthan) and now Madras (this case, and Qatalys Software Technologies, which this judgment records the officer as relying on). So the first question in any pre-June-2015 s.234E matter is not what the law is but which High Court has territorial jurisdiction over your Assessing Officer. This judgment is also the cleanest single place to read both lines: it reproduces Fatheraj Singhvi paras 22 and 24, Rajesh Kourani paras 19 and 20, and Dundlod para 8, and then reasons its way between them. Note also what this judgment does not decide. The assessee had also applied for waiver of the fee and interest; the officer rejected it on the ground that no power of waiver exists (recorded at para 2.3), and that rejection order was one of the two orders under challenge and was left standing when the writ was dismissed. The Court did not itself decide whether a power of waiver exists. If it applies to you, the first step is this: Identify which High Court's decisions bind your Assessing Officer before you argue anything. If it is Karnataka or Kerala, run the machinery point. If it is Gujarat, Rajasthan or Madras, it is closed against you at High Court level and you should look for a different ground.
The petitioner manufactures leather and leather products at Ranipet and engaged sub-contractors, on payments to whom it was required to deduct tax at source. An intimation under s.200A dated 11 December 2013 was issued for the financial years 2012-13 to 2015-16 intimating the sum due. On 19 January 2021 a further intimation was issued for an outstanding TDS demand of Rs 6,54,350 for the period 2010-11 to 2015-16. By letter dated 29 January 2021 the petitioner replied that the department was not empowered to levy fee under s.234E prior to 1 June 2015, and in the alternative asked for waiver of the late fee and interest. By order dated 26 February 2021 the officer rejected the waiver request, holding there is no power of waiver in respect of the s.234E fee, and pointed the petitioner to the Madras High Court's decision in Qatalys Software Technologies Pvt. Ltd. and the Gujarat High Court's decision in Rajesh Kourani v. Union of India, in which the fee was held operative from 1 July 2012. The petitioner sought certiorari to quash both the communication dated 19 January 2021 and the waiver-rejection order dated 26 February 2021 insofar as they demanded late fee under s.234E. The matter was decided on 2023-11-10 by the High Court (Mohammed Shaffiq J). On those facts the High Court held as follows. The writ petition was dismissed with no costs. Section 234E(1) is the substantive provision and the liability to the fee is not dependent on s.200A(1)(c), which prescribes only a recovery mechanism; the fee is attracted the moment a person fails to deliver the statement within the time prescribed by s.200(3) or the proviso to s.206C(3), and s.234E(3) provides for self-assessment and payment of the fee before the statement is delivered, while s.234E(4) fixes 1 July 2012 as the date from which the section applies. The challenge to the levy of late fee for the period prior to 1 June 2015 was therefore rejected, and the Court expressly declined to follow the Karnataka High Court (paras 7.1 to 7.3).
The Court began by recording that there is uniformity among the High Courts that s.234E is constitutionally valid, and that the divergence is confined to whether the fee can be imposed for periods before the 1 June 2015 amendment to s.200A(1)(c) (para 4). It set out the Karnataka High Court's reasoning in Fatheraj Singhvi that the substitution of clause (c) in s.200A(1) was substantive rather than merely regulatory and therefore prospective, so that no demand of fee under s.234E could be made in an intimation under s.200A for a period before 1 June 2015 (para 5). It then set out the contrary reasoning of the Gujarat High Court in Rajesh Kourani and of the Rajasthan High Court in Dundlod Shikshan Sansthan, that s.234E is the charging section and s.200A a mere machinery provision which cannot override it (para 6). Turning to the text of s.234E itself (para 7), the Court reasoned from the structure of the section: sub-section (1) fastens the liability on the failure to deliver the statement; sub-section (3) requires the fee to be paid before delivering the statement, which is in substance a self-assessment; and sub-section (4) fixes the section's own commencement at 1 July 2012 (para 7.1). On that reading, the submission that s.234E is inoperative until s.200A(1)(c) was introduced 'overlooks the fact that Section 234E (1) of the Act is the substantive provision' and that s.234E(3) already provides the mode of payment (para 7.2). The Court concluded that the Gujarat view reflects the true intent and purpose of s.234E and, with respect, said it was unable to subscribe to the Karnataka view (para 7.2). In the words reproduced by the source cited on this page: "Section 234E of the Act which provides for late fee is the substantive provision and the levy is not dependent on Section 200A(1)(c) of the Act which only prescribes a recovery mechanism." The decision followed or applied Rajesh Kourani v. Union of India (2017) 297 CTR 502 (Guj) — followed; Dundlod Shikshan Sansthan v. Union of India 284 CTR 175 (Raj) — followed; Qatalys Software Technologies Pvt. Ltd. — referred to in the impugned order as having upheld the levy; Fatheraj Singhvi v. Union of India 142 DTR 0281 (Kar) — considered and expressly dissented from.
It was decided by the High Court on 2023-11-10 and is reported as W.P. No.16934 of 2021 and W.M.P. Nos.17943 and 17945 of 2021 (Madras High Court); reserved 29 September 2023, pronounced 10 November 2023. No ITR/CTR citation was located for this judgment.. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 234E, section 200A, section 200A(1)(c), section 200(3), section 206C(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petition was dismissed with no costs. Section 234E(1) is the substantive provision and the liability to the fee is not dependent on s.200A(1)(c), which prescribes only a recovery mechanism; the fee is attracted the moment a person fails to deliver the statement within the time prescribed by s.200(3) or the proviso to s.206C(3), and s.234E(3) provides for self-assessment and payment of the fee before the statement is delivered, while s.234E(4) fixes 1 July 2012 as the date from which the section applies. The challenge to the levy of late fee for the period prior to 1 June 2015 was therefore rejected, and the Court expressly declined to follow the Karnataka High Court (paras 7.1 to 7.3). It arises in TDS Defaults, How Tax Law Is Read and Penalty matters, on section 234E, section 200A, section 200A(1)(c), section 200(3), section 206C(3) of the Income Tax Act 1961, and was decided by Mohammed Shaffiq J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check the quarter, not the assessment year. The distinction turns on whether the intimation under s.200A relates to a statement for a period before 1 June 2015, so extract the quarter-wise table from the CPC intimation and separate the pre- and post-June-2015 quarters. Do not file a waiver application for the s.234E fee expecting relief. The Court dismissed the challenge to the rejection order without deciding the waiver question, so a waiver application is not a route this judgment opens; if a waiver order has already been passed against you, the rejection order is what you would have to challenge, and a challenge of exactly that kind failed here. If your quarters are post-June-2015, this argument is unavailable to everyone; attack the computation instead — the s.234E(2) cap at the amount of tax deductible or collectible, and the date the statement was actually delivered. Preserve the point in the grounds even in a Revenue-line State, because the split is unresolved at Supreme Court level and a favourable ruling later will only help someone who kept the ground alive.
High Courts differ on this point. Squarely on the taxpayer's side of the same question: Fatheraj Singhvi v. Union of India (Karnataka, 2016), applied by the Bangalore Bench of the Tribunal in Kooud Software Pvt. Ltd. v. DDIT (CPC) TDS (ITA Nos.82-90/Bang/2022, 25 March 2022); and Sarala Memorial Hospital v. Union of India (Kerala), applied by the Kerala High Court in Sajeev Mathew and Company v. ITO (TDS) Kochi (W.P.(C) No.24533 of 2021, 30 November 2021). On the Revenue's side: Rajesh Kourani (Gujarat, 2017) and Dundlod Shikshan Sansthan (Rajasthan). I did not trace whether any special leave petition against this judgment or against Fatheraj Singhvi or Rajesh Kourani has been filed or decided, and I did not check later treatment of this judgment. No Supreme Court decision resolving the split was located. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment was fetched twice from the same indiankanoon print URL and the operative paragraph 7.2 came back word-for-word identical on both passes, so the quote is safe. Two defects in the report should be known. First, the extract of Fatheraj Singhvi para 24 set out in para 5 reads 'the amendment made under Section 200A of the Act which has come into effect on 1.6.2013' — the date 1.6.2013 is a slip; every other reference in the same extract, and the whole of the reasoning, is to 1 June 2015. Second, paragraph numbering runs 1, 2, 2.1-2.3, 3, 4, 5, 6, 7, 7.1-7.3, with no paragraph between the quotation of Dundlod and the setting out of s.234E. The concluding paragraph is numbered 7.3 and there is no separate operative paragraph. I did not retrieve Fatheraj Singhvi, Qatalys Software Technologies or Dundlod Shikshan Sansthan in their own texts; what this entry says about them is what this Court records about them. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was dismissed with no costs. Section 234E(1) is the substantive provision and the liability to the fee is not dependent on s.200A(1)(c), which prescribes only a recovery mechanism; the fee is attracted the moment a person fails to deliver the statement within the time prescribed by s.200(3) or the proviso to s.206C(3), and s.234E(3) provides for self-assessment and payment of the fee before the statement is delivered, while s.234E(4) fixes 1 July 2012 as the date from which the section applies. The challenge to the levy of late fee for the period prior to 1 June 2015 was therefore rejected, and the Court expressly declined to follow the Karnataka High Court (paras 7.1 to 7.3).
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