2020 (7) TMI 752 - AT - Income Tax

Chargeability of late fee under section 234E - whether Late fee can be levied prior to 1.6.2015, i.e. prior to enactment of section 234E? - diversified views of various High courts on issue - CIT(A) has decided the issue by following the decision of honourable Gujarat High Court in case of Rajesh Kourani 2017 (7) TMI 458 - GUJARAT HIGH COURT - Though CIT(A) has noted the decision of Sri Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT which is in favour of the assessee he has chosen not to follow the same also distinguished the decision of honourable Supreme Court in the case of Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT by referring that the said decision was in connection with penalty - HELD THAT - CIT appeals has totally erred in distinguishing the decision of honourable Supreme Court in the case of vegetable products. The ratio arising from the said decision is that if two constructions are possible the one in favour of assessee should be applied. In the present case we note that the decision of honourable Karnataka High Court is in favour of the assessee. Accordingly we follow the said decision on the touchstone of ratio arising from honourable Supreme Court decision in the case of Vegetable Products Ltd. (supra). No decision contrary to this from the honourable jurisdictional High Court has been brought to our notice. Furthermore as referred by the assessee in grounds of appeal the issue is also covered in favour of the assessee

Summary

Issues involved:
1. Levy of late fee under section 234E prior to 01.06.2015.
2. Applicability of judicial decisions in determining chargeability of late fee.

Analysis:

Issue 1: Levy of late fee under section 234E prior to 01.06.2015
The appeal was against the order of the CIT(A) regarding the levy of late fee under section 234E amounting to ?11,800 for the assessment year 2013-14. The key contention was whether the late fee could be imposed prior to 01.06.2015, before the enactment of section 234E. The CIT(A) relied on the Gujarat High Court decision in the case of Rajesh Kourani Vs. UOI, while the appellant cited the Karnataka High Court decision in the case of Sri Fatheraj Singhvi Vs. UOI, which favored the assessee. The CIT(A) also distinguished the Supreme Court decision in the case of Vegetable Products Ltd. by noting it was related to penalty. The ITAT Mumbai found the CIT(A) erred in distinguishing the Supreme Court decision and held that the construction favoring the assessee should be applied. They followed the Karnataka High Court decision in favor of the assessee and noted no contrary decision from the jurisdictional High Court. The issue was also supported by a decision of ITAT Mumbai, leading to the orders of the authorities below being set aside in favor of the assessee.

Issue 2: Applicability of judicial decisions in determining chargeability of late fee
The ITAT Mumbai emphasized the importance of applying a construction favoring the assessee when two interpretations are possible. They highlighted that the decision in the present case was in favor of the assessee based on the Karnataka High Court decision and the principles set by the Supreme Court in the Vegetable Products Ltd. case. The absence of any conflicting decision from the jurisdictional High Court further supported the decision in favor of the assessee. By considering these judicial precedents, the ITAT Mumbai allowed the appeal filed by the assessee, setting aside the orders of the authorities below and deciding the issue in favor of the assessee.

This detailed analysis showcases how the ITAT Mumbai carefully considered the legal arguments and judicial precedents to arrive at a decision that favored the assessee regarding the levy of late fee under section 234E prior to 01.06.2015.