Chennai: As deadline for filling tax returns is nearing the Madras high court has ordered notice to the Centre on a petition challenging the Centre's move to impose penalty for default in furnishing return on income.
The First Bench comprising Chief Justice Indira Banerjee and Justice PT Asha, before which a PIL filed by K.Nirai Mathi Azhagan of Vellore came up for hearing on Friday, has ordered notice to Attorney General through Additional Solicitor General G. Rajagopalan. After issuing notice the bench posted the matter for further hearing to August 3, 2018.
The petitioner sought to declare that the Section 234F of the income tax Act, 1961, inserted by the Finance Act 2017 is in violation of Article 14 of the Constitution. He said by the virtue of Financial Act 2017, Section 234F was inserted with effect from April 1, 2018, which pertains to “fee for default in furnishing return on income”, As per the statute from the assessment year 2018-19, an assessee shall pay a fee in addition to tax for his failure or delay in filing the return of income before the due date prescribed by the Income Tax Act, 1961.
The petitioner said according to 271F, if the return is not filed before the end of relevant assessment year then the Assessing Officer, may levy a penalty amounting to Rs. 5,000. However, this section has been withdrawn from the assessment year 2018-19. The petitioner submitted that under section 234F penalty is charged indiscriminately to all taxpayers, except for tax payer with income below Rs 5 lakhs, wherein it is Rs 1000, based on length of delay. A person with income above Rs 1 crore and a person with income Rs 5.01 lakhs will have to pay the same amount of penalty of Rs 5000 if the delay is up to 31st day of December of every assessment year. Similarly, a person with income above Rs 1 crore and a person with income Rs 5.01 lakhs will have to pay the same amount of fee of and Rs 0000 if delay is after 31st December of every assessment year.
Submitting that a person earning Rs 5.01 lakhs is treated on the same pedestal with a person earning in crores or rupees the petitioner said the statute infringes the cornerstone of equality enshrined under Article 14 of the Constitution which postulates not only that equals should not be treated unequally but also that unequal's must not be treated equally.
