2015 (6) TMI 437 - AT - Income Tax

Fee for defaults in furnishing TDS statements / TDS returns - Levy of fees u/s 234E - Held that - Adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order under section 246A(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Learned CIT(A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. - as the law stood, prior to 1st June 2015, there was no enabling provision u/s 200A for raising a demand in respect of levy of fees under section 234E. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing appeal challenging levy of fees under section 234E of the Income Tax Act, 1961.
2. Interpretation of whether fees under section 234E could be levied in intimation under section 200A for defaults in furnishing TDS statements prior to 1st June 2015.

Analysis:

1. The appellant challenged the order upholding the levy of fees under section 234E of the Income Tax Act, 1961, for delayed filing of TDS statements. The appeal was time-barred by 62 days, but the delay was condoned after considering the petition. The matter was taken up on merits after condonation of delay.

2. The key issue was whether, prior to 1st June 2015, fees under section 234E could be levied in intimation under section 200A for defaults in furnishing TDS statements. The appellant contested the levy of fees under section 234E in an intimation issued under section 200A. The Tribunal examined the legal position and relevant case laws to determine the scope of adjustments permissible under section 200A.

3. The Tribunal considered the provisions of section 234E, inserted by the Finance Act 2012, and section 200A, inserted by the Finance Act 2009. The Tribunal analyzed the amendments made to section 200A by the Finance Act 2015, effective from 1st June 2015, allowing for the computation of fees under section 234E in the processing of TDS statements.

4. The Tribunal highlighted that prior to 1st June 2015, the law did not permit the levy of fees under section 234E in the course of intimation under section 200A. The Tribunal emphasized that section 200A only allowed for specific adjustments related to arithmetical errors, incorrect claims, and interest computation, and no other adjustments were permissible.

5. The Tribunal concluded that the adjustment for the levy of fees under section 234E was beyond the scope of permissible adjustments under section 200A before 1st June 2015. The Tribunal held that the impugned levy of fees under section 234E was unsustainable in law. As the time limit for such levy had elapsed, the Tribunal upheld the appellant's grievance and deleted the levy of fees under section 234E.

6. Consequently, the Tribunal allowed the appeal, pronouncing the judgment on 9th June 2015, in favor of the appellant. The decision provided relief to the appellant by deleting the impugned levy of fees under section 234E of the Income Tax Act.