2018 (10) TMI 1983 - AT - Income Tax

Levy of addition fee under section 234E - delay in filing TDS returns - intimation u/s 200A of the Act was made to the assessees on processing TDS returns filed by them - conflicting decisions on the issue in hand - HELD THAT - Chandigarh Bench of the Tribunal in the case of Sonalac Paints Coating Ltd. 2018 (6) TMI 303 - ITAT CHANDIGARH held that the fees levied in all the present cases u/s 234E prior to 01.06.2015 in the intimations made u/s 200A was without authority of law and the same is, therefore, directed to be deleted - it also considered the decisions of M/s Khanna Watches Ltd. 2015 (10) TMI 2541 - ITAT CHANDIGARH , Sibia Healthcare Pvt. Ltd. 2015 (6) TMI 437 - ITAT AMRITSAR , Fatheraj Singhvi ors. Vs Union of India Ors. 2016 (9) TMI 964 - KARNATAKA HIGH COURT ,CIT Vs Poddar Cement Pvt. Ltd. 1997 (5) TMI 2 - SUPREME COURT and CIT Vs Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT - The Hon'ble Apex Court in Vegetable Products held that when two views are possible, the view which favours the assessee may be adopted. In the aforesaid case, the Bench concluded that the fees levied under section 234E, prior to 01st June 2015, in the intimations made under section 200A of the Act was without authority of law and therefore, deserves to be deleted. Following the aforesaid cases, the appeals of the assessee are allowed.

Summary

Issues Involved:
1. Levy of fee under section 234E of the Income Tax Act, 1961 for late filing of TDS returns.
2. Maintainability of appeals against intimation under section 200A for levy of fee under section 234E.
3. Retrospective application of the amendment to section 200A authorizing adjustment of fees under section 234E.

Detailed Analysis:

1. Levy of Fee under Section 234E for Late Filing of TDS Returns:
The assessee contested the levy of fees under section 234E for late filing of TDS returns for the fourth quarter of the Assessment Year 2014-15 and the second quarter of the Assessment Year 2015-16. The assessee argued that the fees were levied while processing the TDS returns under section 200A before the amendment effective from 01.06.2015, which allowed such adjustments. The Tribunal noted that the provisions of section 200A did not authorize adjustments for fees under section 234E prior to the amendment effective from 01.06.2015. Therefore, the fees levied under section 234E in the present cases were without authority of law and were directed to be deleted.

2. Maintainability of Appeals Against Intimation Under Section 200A:
The CIT(A) had dismissed the appeals as non-maintainable, relying on decisions from the Hon'ble Bombay High Court and the Hon'ble Rajasthan High Court, which stated that no appeal lies against the levy of fees under section 234E. However, the Tribunal clarified that the appeals were filed against the intimations made under section 200A, which are appealable as per the provisions of section 246A of the Act. The Tribunal emphasized that the observations of the High Courts were in the context of the constitutional validity of section 234E and not regarding the appealability of intimations under section 200A. Therefore, the Tribunal held that the CIT(A) had wrongly dismissed the appeals as non-maintainable.

3. Retrospective Application of the Amendment to Section 200A:
The Tribunal examined conflicting decisions from different High Courts regarding the retrospective application of the amendment to section 200A. The Hon'ble Gujarat High Court held that the amendment authorizing the adjustment of fees under section 234E was retrospective, while the Hon'ble Karnataka High Court ruled that such adjustments prior to 01.06.2015 were without authority of law. The Tribunal, following the principle that in the case of two possible interpretations, the one favoring the assessee should be adopted, sided with the Karnataka High Court's decision. Thus, the fees levied under section 234E prior to 01.06.2015 were deemed without authority of law and were deleted.

Conclusion:
The Tribunal allowed the appeals of the assessee, holding that the fees levied under section 234E prior to 01.06.2015 were without authority of law and should be deleted. The appeals against intimations under section 200A were maintainable, and the CIT(A) had erred in dismissing them as non-maintainable. The Tribunal's decision was pronounced in the open court on 17/09/2018.