2016 (4) TMI 349 - AT - Income Tax

Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that - We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT 2015 (6) TMI 437 - ITAT AMRITSAR adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. 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 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 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

Summary

Issues:
Levy of fee under section 234E of the Income Tax Act.

Analysis:
The case involved an appeal against the levy of a fee amounting to Rs. 30,600 under section 234E of the Income Tax Act. The appellant failed to file a TDS return on time for the fourth quarter of the financial year 2012-13, citing failure to deduct TDS and deposit the amount in the Government Treasury as the reason. The appellant contended that it deducted the tax in September 2013 and promptly deposited it, paying interest for the delay. The Assessing Officer charged the fee under section 234E, which was confirmed by the CIT(A), leading to the appeal before the ITAT.

Upon consideration, the ITAT referred to a precedent set by the ITAT, Amristar Bench, in a similar case, where it was held that the Assessing Officer does not have the power to levy a fee under section 234E while processing TDS returns. The ITAT analyzed the legal provisions of sections 234E and 200A of the Income Tax Act, noting that prior to June 1, 2015, there was no provision enabling the levy of fees under section 234E during the processing of TDS statements. The ITAT concluded that the adjustment for the levy of fees under section 234E was beyond the scope of permissible adjustments under section 200A at that time.

In light of the legal analysis and the absence of enabling provisions, the ITAT upheld the appellant's grievance and deleted the impugned levy of fee under section 234E. The ITAT emphasized that the levy of fees under section 234E was unsustainable in law and granted relief to the appellant accordingly. The ITAT also noted that the Departmental Representative did not dispute the legal position and deleted the levy of late filing fees under section 234E in the impugned intimation issued before June 1, 2015.

Based on the legal precedent and the legal provisions, the ITAT allowed the appeal of the assessee and deleted the fee charged under section 234E, aligning with the decision of the Co-ordinate Bench. Consequently, the appeal of the assessee was allowed, and the order was pronounced in court on March 8, 2016, at Ahmedabad.