Due date extended for for filing TDS returns for Government Deductor: Double standard of CBDT”Relief should also extends to other assessee”
Introduction: Recently on 4th March CBDT Issue a CBDT circular No. 07/2014 F. No. 275/27/2013-IT(B) in which CBDT extends the due date forfiling return for F.Y.2012-13 ( for 2nd to 4th quarter) and F.Y.2013-14(for 1st to 3rd quarter).this is welcome steps of CBDT and big relief for government deductor who are facing the bunch of notices from Income tax department for pay late filing fees of T.D.S/TCS Returns. CBDT after considering their practical difficulty came out with circular forextending the date of Returns for only government deductor. Question for relief to other assessee is still pending, In the case of asseesee (other than government deductor) who deposit their T.D.S well in time but not filed their return within prescribed time are facing similar difficulty and they are liable to pay late filing fees u/s 234 E.

Contents of Circular:

1.The Central Board of Direct Taxes (‘the Board’) has received several from deductors/collectors, being an office of the Government (‘Government deductors’), regarding delay in filing of TDS/TCS statements due to late furnishing of the BookIdentification Number (BIN) by the Principal Accounts Officers (PAO) / District Treasury Office (DTO) / Cheque Drawing and Disbursing Office (CDDO). This has resulted in consequential levy of fees under section 234E of the Income-Tax Act, 1961.
2.The matter has been examined. In case of Government deductors, if TDS/TCS is paid without production of challan, TDS/TCS quarterly statement is to be filed after obtaining the BIN from the PAOs / DTOs / CDDOs who are required to file Form 24G (TDS/TCS Book Adjustment Statement) and intimate the BIN generated to each of the Government deductors in respect of whom the sum deducted has been credited. The mandatory quoting of BIN in the TDS/TCS statements, in the case of Government deductors was applicable from 01-04-2010. However, the allotment of Accounts Officers Identification Numbers (AIN) to the PAOs/DTOs/CDDOs (a pre-requisite for filing Form 24G and generation of BIN) was completed in F.Y. 2012-13. This has resulted in delay in filing of TDS/TCS statements by a large number of Government deductors.
3.In exercise of the powers conferred under section 119 of the Act, the Board has decided to, ex-post facto, extend the due date of filing of the TDS/TCS statement prescribed under subsection (3) of section 200 /proviso to sub-section (3) of section 206C of the Act read with rule 31A/31AA of the Income-tax Rules, 1962. The due date is hereby extended to 31.03.2014 for a Government deductor and mapped to a valid AIN for -
(i) FY 2012-13 – 2nd to 4th Quarter
(ii) FY 2013-14 – 1st to 3rd Quarter
4. However, any fee under section 234E of the Act already paid by a Government deductor shall not be refunded.
5. Timely filing of TDS/TCS statements is essential to ensure timely reconciliation of Government accounts and for providing tax credit to the assessees while processing their
Income-tax Returns. Therefore, it is clarified that the above extension is a one time exception in view of the special circumstances referred to above. Since the Government deductor and the associated PAO/ DTO/ CDDO belong to the same administrative setup that regulates the clearance of expenditure, the deductors/collectors may be advised to co-ordinate with the respective PAO/DTO/CDDO to ensure timely receipt of BIN/filing of TDS/TCS statements.

Judicial Background for issuing circular:

1.In Recent past, The constitutional validity of Section 234E of the Income Tax Act, 1961 has been challenged in the Kerala High Court in the case of Narath Mapila LP School vs. UOI WP (C) No. 31498/2013(J). Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months.
2. Very recently,The Honbl’e High Court of Karnataka in the case of Adithya Bizorp Solutions India Pvt. Ltd vs. Union of India has stayed the enforcement of notices issued u/s 234E till further order . Order passed by the honbl’e court is as under:
Petitioners have questioned the constitutional validity of the provision of Section 234E of theincome Tax Act and a notice to the petitioner levying fee vide annexure A1 to A21 and Annexure – B.
Pending consideration of the grounds in the writ petition, it is desirable that enforcement of notices referred to above issued by the 4th respondent are stayed until further orders. In the meantime respondents are permitted to file counter-within two weeks.

Practical difficulties facing by Government Deductors:

Many government deductor which are situated at remote places like in villages, where there is no facility for filing T.D.S. return due to non availability qualified staff and facilitation center for filing returns. Many Government deductor not aware for implementation of section 234E w.e.f.01/07/2012.these government deductor also required to obtained the BIN from the PAOs / DTOs / CDDOs.It was practical difficulty for government deductor like education institution and such school run through government grants in such grants, there is no provision for payment of such kind of delay filing fees for T.D.S. returns.

Relevant Sections under Income tax Act 1961 :
200A. Processing of statements of tax deducted at source
(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) under section 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 undersection 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.]

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.]

Conclusion :
This circular definitely given a big relief to government deductors of T.D.S/TCS but similar relief also expected/sought by other assessee. After reading of above definition of Section 200A & 234 E, we have understand that charging fee u/s 234E has not been prescribed in u/s 200A and fee cannot be levied while processing TDS statements. this question remain unanswered/silent while issuing this circular. CBDT should also considered the practical difficulty facing by other assessee, those who are not government deductor and given a due relief to such other assessee at par with government deductor. After issuing these circular It is also expected from all government deductor to file their future returns well in time considering this circular as a one time relief for past delay for filing of return of T.D.S. and avoid late filing fees u/s 234E for future.