2020 (9) TMI 190 - AT - Income Tax

Levy of late filing fee u/s 234E - intimation under Section 200A - delayed filing of the TDS statements - HELD THAT - Where power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015 such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015 was not empowered to charge fees under section 234E . Hence the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law.- Decided in favour of assessee.

Issues Involved:
1. Charging of late fees under section 234E of the Income-tax Act, 1961 prior to the amendment to section 200A(1)(c) effective from 01.06.2015.
2. Validity of fees charged under section 234E post 01.06.2015 through rectification orders under section 154.
3. Jurisdiction and authority of the Assessing Officer to levy fees under section 234E for periods prior to 01.06.2015.
4. Constitutional validity and prospective application of section 200A(1)(c).

Detailed Analysis:

1. Charging of Late Fees Under Section 234E Prior to Amendment:
The primary issue was whether fees under section 234E could be charged for periods before the amendment to section 200A(1)(c) effective from 01.06.2015. The Tribunal noted that the machinery provisions for charging such fees were introduced only with effect from 01.06.2015. Therefore, for TDS statements filed for periods prior to this date, late fees under section 234E could not be levied. This position was supported by the Karnataka High Court in the case of Fateh Raj Singhvi & Ors. vs UOI, which held that the amendment was prospective and not applicable to prior periods.

2. Validity of Fees Charged Post 01.06.2015 Through Rectification Orders:
The second issue was whether fees could be charged through rectification orders under section 154 for periods before 01.06.2015 but processed after this date. The Tribunal held that even if the TDS returns were filed or processed after 01.06.2015, the fees under section 234E could not be charged for periods before the amendment. This was because the enabling provision to charge such fees was introduced only from 01.06.2015.

3. Jurisdiction and Authority of the Assessing Officer:
The Tribunal examined whether the Assessing Officer had the authority to levy fees under section 234E for periods before 01.06.2015. It concluded that the Assessing Officer was not empowered to charge these fees before the amendment, as the machinery provisions under section 200A(1)(c) were introduced only from 01.06.2015. This was consistent with the decisions of various benches of the Tribunal and the Karnataka High Court.

4. Constitutional Validity and Prospective Application:
The Tribunal also addressed the constitutional validity of section 234E and its prospective application. The Bombay High Court in Rashmikant Kundalia upheld the constitutional validity of section 234E but did not address the retrospective application. The Tribunal, relying on the Karnataka High Court's decision, held that the amendment to section 200A(1)(c) was prospective. Therefore, any intimation issued under section 200A for periods before 01.06.2015 was invalid if it included fees under section 234E.

Conclusion:
The Tribunal concluded that the Assessing Officer was not empowered to charge fees under section 234E for periods prior to 01.06.2015, even if the TDS returns were filed or processed after this date. The amendment to section 200A(1)(c) was prospective, and any intimation or rectification order charging such fees for earlier periods was invalid. The appeals were allowed, and the fees charged under section 234E were deleted.

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