2016 (11) TMI 378 - AT - Income Tax

Late Filing Fee U/S 234E - default in submitting the TDS statements in time - Held that - Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in so far as levy of fee under Section 234E is set aside and fee levied is deleted. See Smt. G. Indhirani, Salem, RAJAGURU SPINNING MILLS LTD., A. DHAKSHINAMURTHY , PADMA TEXTILES & MURTHY LUNGI COMPANY Versus The Deputy Commissioner of Income Tax, CPC TDS, TDS CPC, Uttar Pradesh 2015 (7) TMI 640 - ITAT CHENNAI - Decided in favour of assessee

Issues Involved:
1. Late filing fee under Section 234E.
2. Jurisdiction and competence for levy of late filing fee under Section 234E.
3. Processing of TDS statements under Section 200A.
4. Validity of demand notice under Section 156.
5. Applicability of Section 204.
6. Amendments to Section 200A by Finance Act, 2015.
7. Opportunity to the Assessee for explaining grounds.

Issue-wise Detailed Analysis:

1. Late Filing Fee under Section 234E:
The core issue revolves around the levy of a fee of ?53,200 under Section 234E of the Income Tax Act for the delayed submission of TDS statements for Quarter 3 of the Financial Year 2012-13. The CIT(A) upheld the ITO-TDS's order, which led to the present appeal by the assessee.

2. Jurisdiction and Competence for Levy of Late Filing Fee under Section 234E:
The CIT(A) followed the judgment of the Bombay High Court, which dismissed a writ petition challenging the jurisdiction for imposing a late filing fee under Section 234E. However, the assessee argued that the issue of timing for filing TDS statements was not adequately addressed by the CIT(A).

3. Processing of TDS Statements under Section 200A:
Section 200A outlines the permissible adjustments during the processing of TDS statements. The Tribunal noted that prior to the amendments effective from June 1, 2015, Section 200A did not authorize adjustments for late filing fees under Section 234E. The Tribunal referenced the ITAT Chennai Bench's decision, emphasizing that adjustments for late fees under Section 234E were not permissible before the amendment.

4. Validity of Demand Notice under Section 156:
The Tribunal held that no subsequent recovery could be made by issuing a demand notice under Section 156 if the TDS statements were filed without paying the late fee under Section 234E. The Tribunal found that the CIT(A) did not consider this point while deciding the issue.

5. Applicability of Section 204:
The provisions of Section 204, which define the person responsible for deducting tax, do not explicitly cover Section 234E. Therefore, the collection of late fees under Section 234E was argued to be void ab initio. The Tribunal agreed that the law, as it stood before June 1, 2015, did not permit such recovery.

6. Amendments to Section 200A by Finance Act, 2015:
The Tribunal highlighted that the Finance Act, 2015, amended Section 200A to include clauses (c) to (e), enabling the computation and adjustment of fees under Section 234E from June 1, 2015. Before this amendment, the Assessing Officer could not levy fees under Section 234E while processing TDS statements.

7. Opportunity to the Assessee for Explaining Grounds:
The Tribunal noted that the CIT(A) did not provide a reasonable opportunity for the assessee to explain the grounds attached to Form No. 35. The fee under Section 234E was confirmed without proper hearing, which was deemed arbitrary.

Conclusion:
The Tribunal allowed the assessee's appeal, setting aside the impugned order of the CIT(A). The Tribunal upheld that the levy of fees under Section 234E while processing TDS statements under Section 200A before June 1, 2015, was not sustainable in law. The Tribunal emphasized maintaining judicial consistency by following the ITAT Chennai Bench's decision, thereby allowing the appeal and deleting the fee levied under Section 234E. The other adjustments made by the Assessing Officer in the impugned intimation remained unchanged.

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