Finance Bill, 2022 proposes to insert section 234F and include it in the list of sections mentioned in section 119(2)(a) of the Income-tax Act, 1961 (‘Act’) so as to enable the Board to issue such orders or instructions, as deemed fit.
Section 119 of the Act empowers the Board to issue orders, instructions and directions to other income-tax authorities for the proper administration of the Act.
Clause (a) of sub-section (2) of the said section gives powers to the Board to provide relaxation of provisions of certain sections of the Act such as 115P, 115S, 115WD, 139, 211, 234A, 234B, 234C, 234E, etc. by way of general or special orders, in respect of any class of incomes or class of cases, for the purpose of proper administration of the work of assessment or collection of revenue or initiation of proceedings for the imposition of penalties and such other issues, in public interest.
Section 234F of the Act which falls under Chapter XVII-F provides that in case a person fails to furnish return of income under section 139 within the prescribed time, he shall be liable to pay a fee of five thousand rupees.
Currently, this section is not expressly mentioned in clause (a) of sub-section (2) of section 119 of the Act.
While this section acts as a deterrent against those who do not comply with obligations imposed under the Act, it also leads to an unintended consequence of levying fee on persons who face genuine difficulties in filing return of income within the specified time, like members of the armed forces stationed in remote regions with no access to the requisite infrastructure.
Therefore, considering the genuine hardships faced by certain classes of persons in filing return of income and not to impose a fee for a default which is beyond their control, it is proposed to insert section 234F and include it in the list of sections mentioned in clause (a) of sub-section (2) of section 119 of the Act, so as to enable the Board to issue such orders or instructions, as deemed fit.
For this purpose, Clause 34 of the Finance Bill, 2022 proposes to amend section 119 in the following words-
Amendment of section 119.
34. In section 119 of the Income-tax Act, in sub-section (2), in clause (a), after the figures and letter “234E,”, the figures and letter “234F,” shall be inserted.
Explaining the proposed amendment to the provisions of section 119
Clause 34 seeks to amend section 119 of the Act relating to instructions to subordinate authorities.
Clause (a) of sub-section (2) of the said section empowers the Board to issue general or special orders in respect of any class of incomes or class of cases to be followed by other income-tax authorities by way of relaxation or otherwise relating to the provisions of the sections specified therein, for the purpose of proper and efficient management of the work of assessment and collection of revenue.
It is proposed to insert the reference of section 234F relating to fee for default in furnishing return of income, to the list of sections mentioned therein in respect of which such relaxation can be granted by the Board.
This amendment will take effect from 1st April 2022 or assessment year 2022-23.
Concluding Remarks
The amendment to section 119 empowering Board to issue instructions for section 234F is proposed to take effect from April 1, 2022 which shall apply from the assessment year 2022-23 and onwards. Hence, this amendment is prospective.
It should be noted that section 234F was made applicable from the assessment year 2018-19. The said section was further amended by the Finance Act, 2021.
Hence, this amendment had to be applied retrospectively so as to enable those who faced genuine hardship while filing their return of income in previous assessment years. This would enable them to seek a refund of fees already levied and paid under section 234F.
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