2022 (5) TMI 1602 - AT - Income Tax

Levy of fees u/s. 234E - intimation u/s 200A - Fee for default in furnishing statements - AR submitted that fees have been levied for the period prior to 01.06.2015 - HELD THAT - We find that a view favorable to the assessee has been taken by in recent decision titled as United Metals V/s ITO 2021 (12) TMI 1349 - KERALA HIGH COURT following its earlier decision in Sarala Memorial Hospital V/s UOI 2018 (12) TMI 1818 - KERALA HIGH COURT which is stated to have attained finality. Similar view favorable to assessee has been taken in its recent decision titled as M/s. DRG Rexine Inc. V/s ACIT 2022 (2) TMI 1404 - ITAT CHENNAI following the case law of Fatehraj Singhvi V/s UOI 2016 (9) TMI 964 - KARNATAKA HIGH COURT . Admittedly there is no decision by Hon ble High Court of Madras. In such a case an analogy could be drawn from the decision of Hon ble Supreme Court in CIT V/s Vegetable products Ltd. 1973 (1) TMI 1 - SUPREME COURT for the conclusion that in case of two reasonable constructions of taxing statutes the one that favors the assessee must be adopted. Respectfully following the same we would hold that a view favorable to the assessee was to be adopted and therefore the levy of fees u/s. 234E for any period prior to 01/06/2015 would not be sustainable in the eyes of law. We order so. In the result the fees levied by TDS officer u/s. 234E for Financial Years 2013-14 2014-15 could not be sustained - Assessee appeal allowed.

Summary

Issues Involved:
1. Levy of fees under Section 234E for periods prior to 01.06.2015.
2. Condonation of delay in filing the appeal.
3. Validity of the amendment to Section 200A effective from 01.06.2015.

Detailed Analysis:

1. Levy of Fees Under Section 234E for Periods Prior to 01.06.2015:
The primary issue was whether fees under Section 234E could be levied for periods before 01.06.2015. The appellant argued that the amendment to Section 200A, which enabled the levy of such fees, was only introduced with effect from 01.06.2015, making the amendment prospective. The appellant relied on the decision of the Hon'ble Karnataka High Court in Fatehraj Singhvi V/s UOI, which held that no fees would be payable for any period prior to 01.06.2015. Conversely, the revenue relied on the Hon'ble Gujarat High Court's decision in Rajesh Kourani V/s UOI, which upheld the levy of fees even for periods before the amendment date.

Upon careful consideration, the Tribunal found that Section 234E, inserted by the Finance Act 2012 w.e.f. 01/07/2012, envisaged the levy of fees for default in filing TDS statements. However, the amendment to Section 200A, which provided the mechanism for computing and demanding such fees, was only effective from 01.06.2015. The Tribunal noted that the Hon'ble Karnataka High Court had ruled that the amendment to Section 200A was prospective and not retroactive. Thus, the Tribunal concluded that the levy of fees under Section 234E for any period prior to 01.06.2015 was not sustainable.

2. Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 303 days, which the appellant attributed to the lockdown period due to the Covid-19 pandemic. The Tribunal noted that the due date for filing the appeal fell within the exclusion period from 15.03.2020 to 28.02.2022. Despite opposition from the Ld. Sr. DR, the Tribunal condoned the delay, agreeing with the appellant's submissions, and admitted the appeal for adjudication on merits.

3. Validity of the Amendment to Section 200A Effective from 01.06.2015:
The Tribunal examined the validity and applicability of the amendment to Section 200A, which included the computation of fees under Section 234E. The appellant argued that the amendment was prospective, meaning fees could not be levied for periods before 01.06.2015. The Tribunal supported this view, citing the Hon'ble Karnataka High Court's decision, which stated that the amendment to Section 200A conferred substantive power and was prospective. The Tribunal emphasized that in the absence of a specific provision for retroactive application, the amendment should be considered prospective.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that the levy of fees under Section 234E for periods prior to 01.06.2015 was not sustainable. The Tribunal directed the concerned authorities to recompute the demand payable by the appellant, excluding the fees levied under Section 234E for the relevant periods. All appeals were allowed accordingly.