2019 (9) TMI 1117 - AT - Income Tax

Levy of fee u/s 234E - Late filing of TDS returns - demand has been raised by the department u/s 200 in terms of failure to comply with section 200A which deals with the processing of statement of tax deducted at source u/s 200 - HELD THAT - In this case the demand has been raised purely on the ground that statement has not been furnished for the tax deduction at source. The relevant provision of section 200(3) read with rule 31A (4A) only refers to filing of 'challan cum statement' after the tax has been paid. The word challan in the said rule indicates that the tax must stand paid and that is how form 26QB is generated. Thus, here in this case, it cannot be held that there is any violation of section 200(3). In any case, the levy of fee vi s 200A in accordance with the provision of section 234E has come into the statute w.e.f. 1.6.2015. Since the challan and statement has been filed much prior to this date, therefore, no such tax can be levied u/s 200A. Nowhere in the judgments Hon'ble Courts have held Fees u/s 200A read with section 234E shall be levied prior to 1.06.2105, because prior to this date has not prescribed levy of fees u/s 200A. Thus, we hold that no fee was leviable to the assessee u/ s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay. Accordingly, the demand on account of 234E is cancelled. Accordingly the appeal of the assessee is allowed.

Summary

Issues:
Late filing fee/penalty under section 234E for the assessment year 2014-15.

Analysis:
The appeal was filed against the order imposing a late filing fee of ?12,200 under section 234E. The assessee argued that the fee can only be levied if there is an enabling provision under section 200A, which came into effect from 1st June 2015. However, the CIT(A) referred to a judgment by the Bombay High Court and ruled against the assessee.

The Department relied on judgments by the Delhi High Court and the Bombay High Court, arguing that the fee under section 234E is automatic in case of a delay in filing the tax statement.

The Tribunal found a delay in filing statements for various quarters for the financial years 2012-13. Section 200 and 200A deal with the processing of tax deducted at source statements. The relevant provision of section 200A was substituted by the Finance Act 2015, which included the computation of fees under section 234E.

Section 234E imposes a fee when a statement is not filed within the prescribed time under section 200(3). The demand in this case was based on the failure to furnish the statement for tax deduction at source. The Tribunal noted that the statement should be filed after the tax payment, as per rule 31A (4A).

The Karnataka High Court clarified that the levy of fee under section 200A with section 234E can only be applied from 1st June 2015 onwards. Since the statement was filed before this date, the Tribunal ruled that no fee was leviable under section 234E. The demand was canceled, and the appeal of the assessee was allowed.

In conclusion, the Tribunal allowed the appeal of the assessee, stating that no fee was leviable under section 234E for the violation of section 200(3) as the statement was filed promptly after tax payment.