I-T act section prescribing Rs 5k fine for delayed return challenged in HC

The Madras High Court today issued a notice to the Centre on a PIL challenging a new section in the Income Tax Act which imposes a fine of up to Rs 10,000 for late filing of I-T returns from Assessment Year 2018-19.

First bench comprising Chief Justice Indira Banerjee and Justice P T Asha issued the notice to the attorney general through Additional Solicitor General G Rajagopalan and posted the matter for further hearing on August 3.

The public interest litigation petition filed by K Nirai Mathi Azhagan of Vellore seeking to declare Section 234F inserted in the Income Tax Act by the Finance Act, 2017 as violative of Article 14 (Equality Before Law) of the Constitution.

He said as per the section, a fine of Rs 5,000 shall be payable if the return is furnished after the due date but on or before December 31 of the assessment year and a fine of Rs 10,000 shall be payable if the return is filed after December 31.

Submitting that a person with an income above Rs 1 crore and one earning Rs 5.01 lakh were treated on the same pedestal in the payment of the fine amount, the petitioner said the statute infringes the cornerstone of equality enshrined under Article 14 of the Constitution.

Azhagab said the article postulates not only that equals should not be treated unequally but also that unequals must not be treated equally.

The petitioner also pointed out that the earlier section 271F provided for a penalty of Rs 5,000 if the return was not filed before the end of the relevant assessment year, that too at the discretion of the assessing officer and after giving an opportunity to the assessee to explain the delay.

However, this section had been withdrawn from assessment year 2018-19 with the introduction of 234F with effect from from April 1 this year.

The petitioner submitted that the fine under section 234F was imposed indiscriminately on all taxpayers except for those with income under Rs 5 lakh.