2019 (11) TMI 1225 - AT - Income Tax

Levy u/s 234E - intimation u/s 200A - HELD THAT - Post 1st June 2015, in the course of processing of a TDS statement and issuance of intimation under section 200A in respect thereof, an adjustment could also be made in respect of the fee, if any, shall be computed in accordance with the provisions of section 234E . There is no dispute that what is impugned in the appeal before us is the intimation under section 200A as stated in so many words in the impugned intimation itself, and, as the law stood, prior to 1st June 2015, there was no enabling provision therein for raising a demand in respect of levy of fees under section 234E. While examining the correctness of the intimation u/s 200A, we have to be guided by the limited mandate of Section 200A, which, at the relevant point of time, permitted computation of amount recoverable from, or payable to, the tax deductor after making the following adjustments (a). after making adjustment on account of arithmetical errors and incorrect claims apparent from any information in the statement - Section 200A(1)(a) (b). after making adjustment for 'interest, if any, computed on the basis of sums deductible as computed in the statement . - Section 200A(1)(b) No other adjustments in the amount refundable to, or recoverable from, the tax deductor, were permissible in accordance with the law as it existed at that point of time. Adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order u/s 246A (a), and, therefore, the Ld. CIT (A) ought to have examined the legality of the adjustment made under this intimation in the light of the scope of the section 200A. The Learned CIT (A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. 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 and it is, thus, an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected - we delete the fee levied u/s 234E in the present appeal.

Summary

Issues:
Levy of late fee under section 234E of the Income Tax Act, 1961 during the processing of TDS statement under section 200A.

Analysis:
The appeal pertains to a partnership firm's challenge against the confirmation of late fee levy under section 234E for delayed filing of TDS return for the financial year 2012-13. The firm's contention was that the Assessing Officer (AO) did not have the authority to levy the fee under section 234E before the amendment to section 200A of the Act. The AO had charged a late fee of ?24,000 under section 234E based on the intimation dated 11th February, 2014. The firm relied on judgments from Chennai, Amritsar, and Ahmedabad benches of the Tribunal to support its argument.

During the appeal hearing, the firm was not present, but written submissions were considered. The Senior DR supported the order of the CIT (A) upholding the fee levy. The Tribunal examined the written submissions, relevant statutory provisions, and amendments to section 200A. It highlighted that prior to 1st June 2015, section 200A did not authorize the levy of fees under section 234E during TDS statement processing. The Tribunal emphasized that the scope of adjustments under section 200A was limited to arithmetical errors and incorrect claims apparent from the statement, along with interest computation.

The Tribunal noted that post the June 2015 amendment, section 200A allowed for the computation of the fee under section 234E during TDS statement processing. However, in this case, the intimation was issued before the amendment, and the levy of fees under section 234E was not within the permissible adjustments under section 200A at that time. Citing similar decisions from other benches, the Tribunal concluded that the fee levy under section 234E was beyond the scope of section 200A adjustments. As a result, the Tribunal allowed the appeal and deleted the fee levied under section 234E.

In the final verdict, the Tribunal allowed the appeal of the assessee, emphasizing that the levy of the late fee under section 234E during the processing of the TDS statement under section 200A was not legally permissible before the relevant amendment. The judgment was pronounced on 18th October 2019 by the ITAT Delhi.