2018 (10) TMI 1638 - AT - Income Tax

Levy of fees for delay in filing the TDS return u/s 234E in intimation under section 200A - AO authority to charge the fees under section 234E while issuing intimation under section 200A - scope of amendment to section 200A(1) - Held that - The assessee filed its TDS return (Form 26Q) for the fourth quarter of financial year 2012-13 on 26.12.2012 and the same was processed and intimation under section 200A was issued vide order dated 15.12.2013 much prior to the amendment to section 200A of the Act w.e.f. 1.6.2015 empowering the Assessing officer levying the fees under section 234E of the Act. It is therefore not a case of continuing default where the assessee has defaulted in furnishing the TDS statement even after 1.6.2015 and thereafter the demand for payment of fees under section 234E has been raised by the Assessing officer. In case of Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT has held that the provisions of amended section 200A are prospective in nature. Further the decision of the Hon ble Rajasthan High Court in case of M/s. Dundlod Shikshan Sansthan and Others 2015 (9) TMI 807 - RAJASTHAN HIGH COURT as relied by ld. CIT (A) is in the context of validity of section 234E but not in the context of power of AO for levy of fee under section 234E prior to 1.6.2015. AO while processing the TDS statements for the period prior to 01.06.2015 was not empowered to charge fees under section 234E of the Act. Hence the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. - Decided in favour of assessee.

Summary

Issues Involved:

1. Levy of fees for delay in filing TDS return under Section 234E of the Income Tax Act, 1961.
2. Validity of the levy of fees under Section 234E in the order passed under Section 200A of the Act.

Detailed Analysis:

1. Levy of Fees for Delay in Filing TDS Return Under Section 234E:

The assessee contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the levy of fees for delay in filing the TDS return under Section 234E without appreciating the facts and circumstances of the case. The assessee argued that the CIT(A) should have directed the waiver of the said fees. The CIT(A) upheld the levy based on the decision of the Rajasthan High Court in the case of M/s Dundlod Shikshan Sansthan v. Union of India, which validated the imposition of compensatory fees for late filing of TDS returns.

2. Validity of the Levy of Fees Under Section 234E in the Order Passed Under Section 200A:

The assessee argued that the power to collect fees under Section 234E by the prescribed authority was vested only after the amendment by the Finance Act, 2015, effective from 01.06.2015. Prior to this amendment, the Assessing Officer (AO) had no authority to charge fees under Section 234E while issuing intimation under Section 200A. The AO imposed late filing fees of Rs. 14,400 under Section 234E while processing the TDS return (26Q) for the second quarter of the F.Y. 2012-13, and the intimation under Section 200A was passed on 15th December 2013.

Condonation of Delay:

The assessee filed a condonation petition explaining the delay in filing the appeal due to the unavailability of the concerned employee responsible for TDS matters. The Tribunal found the reasons for the delay to be genuine and bona fide, thus condoning the delay of 143 days in filing the appeal.

Merits of the Case:

The Tribunal noted that the provisions of Section 200A, as amended by the Finance Act, 2015, effective from 01.06.2015, allowed for the computation of fees under Section 234E. The amendment was prospective and not retrospective. Therefore, the AO erred in levying fees under Section 234E while processing the TDS statement for a period prior to 01.06.2015.

Judicial Precedents:

The Tribunal cited several judgments supporting the assessee's contention:

- M/s Mentor India Limited vs. DCIT: The Tribunal held that if there are conflicting views by different courts, the view favoring the assessee should be adopted, referencing the Supreme Court's decision in CIT vs. Vatika Township P. Ltd.
- M/s. Sandeep Jhanwar Advisory Services Pvt. Ltd. vs. The TDS CPC: The Tribunal followed the Karnataka High Court's decision in Fatheraj Singhvi v. Union of India, which held that no demand for fees under Section 234E could be made in intimation issued for TDS deducted under Section 200A before 01.06.2015.
- Maharashtra Cricket Association vs. DCIT: The Tribunal reiterated that the AO did not have the power to charge fees under Section 234E while processing TDS returns before 01.06.2015.

Conclusion:

The Tribunal concluded that the AO was not empowered to charge fees under Section 234E while processing TDS statements for the period prior to 01.06.2015. Hence, the demand raised by way of charging fees under Section 234E was not valid and was deleted. The appeal of the assessee was allowed.

Order Pronounced:

The order was pronounced in the open Court on 29/10/2018.