2018 (2) TMI 264 - AT - Income Tax

Levy of fee u/s 234E while processing the statement furnished by the assessee u/s 200A - intimation in form No. 35 presumed to be the order passed U/S 234E - Held that - Adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A before 01/06/2015. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us by the Ld. DR and it is thus settled law that in the absence of the enabling provision under section 200A, no such levy could be effected. 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 as the related TDS statement was filed on 14th October, 2014, such a levy could only have been made at best within 15th October, 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, bearing in mind entirety the facts of the case, the impugned levy of fees under section 234E is unsustainable in law. - Decided in favour of assessee.

Summary

Issues:
Levy of fee under section 234E of the Income Tax Act while processing the statement filed by the assessee under section 200A.

Analysis:

Issue 1: Levy of Fee under Section 234E
The appeal was filed by the assessee against the order of CIT(A)-1, Gurgaon, regarding the levy of late filing fees under section 234E of the Income Tax Act. The assessee had raised concerns about the imposition of fees despite a clerical mistake in the initial appeal form. The main contention was whether the fees imposed were justified under the law.

Issue 2: Interpretation of Intimation under Section 200A
The assessing authority had imposed late filing fees under section 234E based on the intimation under section 200A of the Act. The assessee argued that the intimation was not equivalent to a separate order passed under section 234E. The ITAT, after careful examination, concluded that the intimation in form No. 35 could not be presumed as an order passed under section 234E itself.

Issue 3: Legal Validity of Fee Imposition
The ITAT referred to precedents, including the case of M/s. Dundlod Shikshan Sansthan, to determine the legality of fee imposition under section 234E before the amendments made by the Finance Act, 2015. The ITAT highlighted that the assessing authority could pass a separate order under section 234E for fee levy, provided the limitation had not expired.

Issue 4: Scope of Adjustments under Section 200A
The ITAT emphasized that the adjustment for levy of fees under section 234E was beyond the permissible scope of adjustments under section 200A before 01/06/2015. It was clarified that such a levy could not be effected during the intimation process under section 200A without a specific enabling provision.

Conclusion:
The ITAT ruled in favor of the assessee, stating that the levy of fee under section 234E was unsustainable in law. The ITAT accepted the grievance of the assessee as justified and deleted the impugned levy of fee under section 234E. The appeal of the assessee was allowed, emphasizing the importance of adhering to legal provisions and limitations in fee imposition under the Income Tax Act.