2020 (6) TMI 700 - AT - Income Tax

Levy of penalty u/s 234E - Rectification u/s 154 - creating charge for levy of fee for certain defaults in filing statements - fee levied even for the period prior to coming into operation of Section 200A - debatable issue - apparent mistake in the order of the AO levying late fee under Section 234E - HELD THAT - We found that the assessee received the order on 19.04.2014 for the A.Y. 2014-15 and has filed rectification petition with the CPC-TDS for correction of statements which is not disputed, and the same was processed and order under Section 154 of the Act was passed by CPC TDS on 13.03.2019. Aggrieved by the order, the Assessee has filed an appeal under Section 246 of the Act with the CIT (Appeals).Considering the provisions of law and the facts of the case, we found the assessee has challenged the order under Section 154 of the Act, which is permissible under the Law. As decided in case of Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent - Decided in favour of the assessee.

Summary

Issues:
Appeal against common order of Commissioner of Income Tax (Appeals) under Section 154 and 250 of the Income Tax Act, 1961; Challenge of levy of late fees under Section 234E; Applicability of decision of Hon'ble Karnataka High Court; Filing of rectification petition; Interpretation of provisions under Section 246(1)(c) of the Act.

Analysis:
The appeals were filed by the assessee against the common order of the Commissioner of Income Tax (Appeals) under Section 154 and 250 of the Income Tax Act, 1961. Since the appeals had common issues and facts, they were clubbed and heard together. The assessee did not appear during the hearing, and the tribunal proceeded based on the material on record and submissions of the Departmental Representative.

The grounds of appeal raised by the assessee included contentions about the incorrect legal position considered by the Commissioner of Income Tax (Appeals), citing judgments such as the one by the Karnataka High Court regarding the power to levy late fees under Section 234E. The assessee, engaged in the business of Health and Fitness equipment sales, challenged the late filing fees imposed by ACIT, CPC-TDS for Quarterly TDS Returns. The assessee relied on legal precedents to contest the levy of late fees under Section 234E, arguing that it was illegal.

The tribunal reviewed the facts of the case and found that the order under Section 200A of the Act was passed, and the assessee filed a rectification petition against it. The CPC-TDS then passed an order under Section 154 of the Act. The Commissioner of Income Tax (Appeals) dismissed the appeal, stating that the decision of the Karnataka High Court applied prospectively, and the late fees levy could not be challenged under Section 154 of the Act.

Regarding the filing of the rectification petition by the assessee, the tribunal noted that the order was appealable under Section 246(1)(c) of the Act. The tribunal analyzed the applicability of the Karnataka High Court decision in the case of Sri Fatehraj Singh & Others Vs. UOI, emphasizing the effective date of provisions under Section 200A(1)(c), (d), and (f) from 1.6.2015. The tribunal quoted relevant portions of the judgment to support its decision to set aside the late fees levy under Section 234E.

Based on the legal analysis and the precedents cited, the tribunal allowed the appeals filed by the assessee for various assessment years, directing the Assessing Officer to delete the levy of late fees under Section 234E of the Act. The tribunal applied the decision consistently across multiple appeals filed by the assessee, ultimately allowing all the appeals.

In conclusion, the tribunal granted relief to the assessee by setting aside the late fees levy under Section 234E based on the legal analysis and precedents cited during the proceedings.