2018 (7) TMI 819 - AT - Income Tax

Late filing fee under Section 234E - delay in furnishing the TDS statement to the Department - Held that - There cannot be levy of late fee u/s. 234E for the period prior to 01/06/2015, we are inclined to delete the levy of late fee u/s. 234E of the Act in all the cases. See Little Servants of Divine Providence Charitable Trust vs. ITO(TDS) reported in 2016 (9) TMI 960 ITAT, Cochin) and Fatheraj Singhvi & Ors. Vs. Union of India 2016 (9) TMI 964 - KARNATAKA HIGH COURT

Summary

Issues Involved:
1. Non-consideration of written submissions by the first appellate authority.
2. Constitutionality and arbitrary nature of Section 234E.
3. Delay in filing TDS statements due to reasons beyond the control of the appellant.
4. Prospective vs. retrospective application of Section 200A for imposing fees under Section 234E.

Issue-wise Detailed Analysis:

1. Non-consideration of Written Submissions by the First Appellate Authority:
The appellant argued that the written submissions made before the first appellate authority were not taken into account. However, this ground was not pressed by the assessee during the appeal, and thus, it was dismissed as not pressed.

2. Constitutionality and Arbitrary Nature of Section 234E:
The assessee contended that Section 234E confers arbitrary powers for the imposition of late filing fees without providing an opportunity to explain the reasons for the delay. The constitutional validity of Section 234E was being considered by various High Courts. The appellant argued that the fee levied under Section 234E is akin to a penalty and that the automatic levy of late fees without considering the circumstances leading to the delay is arbitrary and illegal. However, this ground was also not pressed by the assessee during the appeal, and thus, it was dismissed as not pressed.

3. Delay in Filing TDS Statements Due to Reasons Beyond Control:
The appellant, a Headmistress of a High School, explained that the delay in filing TDS statements was due to a mismatch in the TDS statements submitted by the treasury, which was beyond her control. The authorities below did not consider this aspect while passing the impugned order. This ground was not pressed by the assessee during the appeal, and thus, it was dismissed as not pressed.

4. Prospective vs. Retrospective Application of Section 200A for Imposing Fees under Section 234E:
The appellant argued that although Section 234E was introduced from 2012 onwards, the demand for late filing fees is provided by the mechanism under Section 200A, which was amended to enable the imposition and demand of late filing fees under Section 234E only with effect from 01-06-2015. Therefore, the demand for late filing fees for periods prior to 01-06-2015 was without justification and arbitrary.

The Tribunal referred to a similar case, Little Servants of Divine Providence Charitable Trust vs. ITO(TDS), where it was held that the amendment to Section 200A with effect from 1st June 2015 allowed for the computation of fees under Section 234E. Prior to this amendment, there was no enabling provision for raising a demand for fees under Section 234E. The Tribunal also referred to the Karnataka High Court's decision in Fatheraj Singhvi & Ors. Vs. Union of India, which held that intimation of demand notices under Section 200A for the computation and demand of fees under Section 234E for the period prior to 1st June 2015 is without authority of law.

Based on these precedents, the Tribunal concluded that the levy of late fees under Section 234E for the period prior to 01-06-2015 is not permissible. The Tribunal ordered the deletion of the levy of late fees under Section 234E for the periods in question.

Conclusion:
The Tribunal allowed the appeals filed by the assessee, deleting the levy of late fees under Section 234E for the periods prior to 01-06-2015. The order was pronounced in the open court on 5th July 2018.