Section 234E

Section 234E — the law in short

What the courts have decided on section 234E, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• ITO v MKY Constructions P Ltd High CourtHelps taxpayerValidity unconfirmed
  We paid the whole TDS default with interest before the complaint was filed. Can we still be prosecuted under s.276B?
  Not where a reasonable cause for the failure is made out. The Delhi High Court refused the department leave to appeal against an acquittal in three prosecutions under section 276B read with section 278B. Section 278AA carves out an express exception to penal liability under section 276B where the accused establishes a reasonable cause for the failure to deposit. The trial court had found that the company's default was driven by a liquidity crisis caused by legally recoverable payments withheld by contracting parties, that the entire defaulted tax had been deposited with interest under section 201(1A) and late fee under section 234E, and that the default was not deliberate. The High Court held that finding neither perverse nor legally infirm, and declined to disturb it.
• Conceria International P Ltd v ITO High CourtHelps departmentHigh Courts differ
  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.
• Sajeev Mathew and Company v ITO (TDS), Kochi High CourtHelps taxpayerHigh Courts differ
  I have a single consolidated s.234E demand covering 2011-12 right through to 2021-22. Can the old part be knocked out, and can I do it by writ?
  In Kerala, yes. The High Court quashed the demand notice to the extent it charged fee under s.234E for the period from 2011-12 up to 1 June 2015, holding that the insertion of clauses (c) to (f) in s.200A(1) took effect only from that date and is prospective. The rest of the demand was left standing.
• Rajesh Kourani v Union of India High CourtHelps departmentHigh Courts differ
  Is there High Court authority that the s.234E fee runs from 1 July 2012 whatever the 2015 amendment to s.200A did, and does paying the fee buy me out of s.271H penalty?
  Yes on the first, no on the second. The Gujarat High Court held that s.234E is the charging provision and s.200A merely machinery, that a machinery provision cannot override a charging provision, and that even before 1 June 2015 the Revenue could always calculate and collect the fee. It also held, against Karnataka, that the s.234E fee is not in lieu of the s.271H penalty — the two are independent levies.
• Rashmikant Kundalia v Union of India High CourtHelps department
  I filed my TDS statement late and have been charged Rs.200 a day under section 234E — is that levy even constitutional when no service is given in return?
  Yes. The Bombay High Court upheld section 234E on 9 February 2015. The levy is not punitive: it is a fixed charge for the extra work the Department must do because the statement came in late, and the deductor gets something in return — his late filing is regularised and he is allowed to file beyond the prescribed time. That is a privilege and a special service, so the charge is a fee and not a tax in disguise. The absence of a power to condone delay and of a right of appeal does not make the section onerous, a right of appeal being a creature of statute. The writ petition was dismissed.
• ITO (TDS) v Sashwat Energy P Ltd ITATHelps taxpayerValidity unconfirmed
  My deductee has returned the income and paid the tax, and I have filed Form 26A. I know the s.201(1) demand goes — but for how long does s.201(1A) interest run against me?
  To the date the resident payee furnished his return of income, not to the date you eventually pay. The Mumbai Bench stated the rule expressly: where the payer is not deemed to be an assessee in default under s.201(1) because the resident payee paid the tax, interest under s.201(1A)(i) is payable from the date on which the tax was deductible to the date of furnishing of the return of income by that resident payee. The s.201(1) demand itself was set aside subject to verification.
• Kooud Software P Ltd v DDIT (CPC) - TDS ITATHelps taxpayerHigh Courts differ
  The CIT(A) has confirmed my pre-June-2015 s.234E fee by following the Gujarat High Court, even though my jurisdictional High Court has decided the other way. Is the Tribunal bound to follow my own High Court?
  Yes. The Bangalore Bench held that the Karnataka High Court's decision in Fatheraj Singhvi is the binding decision of the jurisdictional High Court, and deleted the s.234E fee for all nine quarters, notwithstanding that the CIT(A) had preferred the Gujarat High Court's contrary decision in Rajesh Kourani. The fee under s.234E cannot be levied without the machinery provision of s.200A.
• Statutory position — s.271H replaced s.272A(2)(k) for TDS and TCS statements from 1 July 2012 CBDT Circulars & InstructionsCuts both ways
  The TDS officer has levied a penalty for a late quarterly statement. Which section applies — the daily penalty in section 272A(2)(k) or section 271H — and what gets me out of it?
  It depends on when the tax was deducted or collected. For tax deducted or collected before 1 July 2012 the penalty is under section 272A(2)(k) at Rs 100 for every day of default, capped by the proviso at the amount of tax deductible or collectible. For tax deducted or collected on or after 1 July 2012 the second proviso to section 272A(2) bars that penalty altogether and section 271H applies instead — a sum of not less than Rs 10,000 and up to Rs 1,00,000, directed by the Assessing Officer, with an escape in section 271H(3) which since 1 April 2025 requires the statement to have been filed within ONE MONTH of the prescribed time, not one year.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.