2016 (2) TMI 494 - AT - Income Tax

Levy of fee u/s 234E in the order u/s 200A - Held that - The 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. 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 uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. See Lions Club of North Surat Charitable Trust Versus Income Tax Officer TDS-2 Surat (New). 2015 (9) TMI 1231 - ITAT AHMEDABAD - Decided in favour of assessee

Summary

Issues:
1. Levy of late fee u/s. 234E by the Assessing Officer.
2. Application of Section 200A and its impact on the levy of late fees.
3. Interpretation of legal provisions regarding late filing fees under Section 234E.
4. Comparison of judicial precedents and their influence on the decision-making process.

Issue 1: Levy of late fee u/s. 234E by the Assessing Officer:
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals)-IV, Surat, regarding the levy of a fee under Section 234E by the Assessing Officer. The assessee contended that the Assessing Officer did not consider the late deduction and payment of interest, relying solely on the Traces Computerized System report. The assessee argued that the Assessing Officer erred in not considering the provisions of Section 200A, which do not authorize the levy of charges under Section 234E. The Tribunal noted that the Assessing Officer should have given the assessee an opportunity to explain the delay before levying any penalty.

Issue 2: Application of Section 200A and its impact on the levy of late fees:
The Authorized Representative for the assessee highlighted a similar issue decided by the ITAT Amritsar Bench in favor of the assessee. The Tribunal observed that the intimation under Section 200A, prior to the amendment in June 2015, did not provide for the levy of fees under Section 234E. The Tribunal emphasized that the adjustment for late fees under Section 234E was beyond the scope of permissible adjustments under Section 200A. The Tribunal held that the levy of fees under Section 234E was unsustainable in law and deleted the late filing fees.

Issue 3: Interpretation of legal provisions regarding late filing fees under Section 234E:
The Tribunal referred to the legal provisions of Section 234E and Section 200A, analyzing the statutory framework and the amendments introduced by the Finance Acts. The Tribunal emphasized that prior to the June 2015 amendment, the law did not permit the levy of fees under Section 234E during the processing of a TDS statement. The Tribunal concluded that the levy of late filing fees under Section 234E was not legally sustainable before the specified amendment date.

Issue 4: Comparison of judicial precedents and their influence on the decision-making process:
The Tribunal considered the judicial precedent set by the ITAT Amritsar Bench and the decisions of various High Courts in similar cases. The Tribunal highlighted the importance of legal interpretations and the need to adhere to the statutory provisions while making decisions. The Tribunal relied on the precedent to support the deletion of the late filing fees charged under Section 234E. The Tribunal upheld the appeal filed by the assessee, following the reasoning of the Coordinate Bench in a similar case.

In conclusion, the Tribunal allowed the appeal filed by the assessee, deleting the late filing fees charged under Section 234E, based on the interpretation of legal provisions and judicial precedents. The decision emphasized the importance of statutory compliance and proper application of the law in such matters.