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2020 (9) TMI 287 - AT - Income TaxLevy of late fees payable u/s 234E - charging of fees payable under section 234E of the Act prior to amendment to section 200A(1)(c) of the Act vide Finance Act 2015 w.e.f. 01.06.2015 while processing the TDS returns - whether where the return for the TDS deduction was filed under respective sections of the Act for the period prior to 01.06.2015 though belatedly but no late filing fee can be charged under section 234E? - HELD THAT - Undoubtedly the provisions of section 234E were inserted by the Finance Act 2012 under which the liability was imposed upon the deductor in such cases where TDS statements / returns were filed belatedly to pay the fees as per said section. In cases where the assessee has failed to deposit the said fees then in order to enable the AO to collect the said fees chargeable under section 234E it is incumbent upon the Legislature to provide mechanism for the Assessing Officer to charge and collect such fees. In the absence of enabling provisions the Assessing Officer while processing the TDS statements even if the said statements are belated is not empowered to charge the fees under section 234E of the Act. The amendment was brought in by the Finance Act 2015 w.e.f. 01.06.2015 and such an amendment where empowerment is given to the Assessing Officer to levy or charge the fees cannot be said to be clarificatory in nature and hence applicable for pending assessments. Legislature itself recognized that under the existing provisions of section 200A of the Act i.e. prior to 01.06.2015 the Assessing Officer at the time of processing the TDS statements did not have power to charge fees under section 234E of the Act and in order to cover up that the amendment was made by way of insertion of clause (c) to section 200A. It cannot be said that insertion made by section 200A(1)(c) of the Act is retrospective in nature where the Legislature was aware that the fees could be charged under section 234E of the Act as per Finance Act 2012 and also the provisions of section 200A of the Act were inserted by Finance (No.2) Act 2009 under which the machinery was provided for the Assessing Officer to process the TDS statements filed by the assessee. The insertion categorically being made w.e.f. 01.06.2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns / statements prior to 01.06.2015. 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 of the Act. 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 (the Act) for periods prior to the amendment to section 200A(1)(c) of the Act effective from 01.06.2015. 2. Validity of the order passed under section 154 of the Act for charging late fees under section 234E after 01.06.2015 for periods prior to the amendment. Issue-Wise Detailed Analysis: 1. Charging of Late Fees Under Section 234E for Periods Prior to 01.06.2015: The central issue across the appeals is the charging of late fees under section 234E of the Act for the periods before the amendment to section 200A(1)(c) of the Act, which came into effect from 01.06.2015. The appellants argued that the amendment enabling the computation of fees under section 234E during the processing of TDS returns was prospective and not retrospective. Therefore, late fees under section 234E could not be levied for TDS statements filed for periods before 01.06.2015. The Tribunal referenced several decisions, including the Karnataka High Court's ruling in Fateh Raj Singhvi & Ors. vs UOI, which held that section 200A of the Act, inserted with effect from 01.06.2015, had prospective effect and was not applicable for assessment years prior to 01.06.2015. The Delhi Bench of the Tribunal consistently held similar views in cases like Udit Jain vs ACIT, M/s Wits Interior Pvt. Ltd. vs ACIT, and M/s Samikaran Learning Private Ltd. vs TDS Officer. The Tribunal emphasized that the machinery provisions for charging late fees under section 234E were only effective from 01.06.2015, and thus, fees could not be levied for periods before this date. The Tribunal also addressed the Revenue's argument that section 234E was a charging provision, and the machinery provisions under section 200A were merely procedural. The Tribunal rejected this argument, reiterating that the amendment to section 200A was prospective and not retrospective. 2. Validity of Orders Passed Under Section 154 for Charging Late Fees After 01.06.2015: The second issue was whether the CIT(A) correctly held that late fees under section 234E could be charged via rectification orders under section 154 of the Act issued after 01.06.2015, even if the TDS returns pertained to periods before the amendment. The Tribunal found that the CIT(A) overlooked the fact that the notices under section 200A were issued for periods prior to 01.06.2015. It held that even if the returns were filed or processed after 01.06.2015, late fees could not be charged for periods before the amendment. The Tribunal referenced multiple decisions, including the Pune Bench's ruling in Maharashtra Cricket Association vs DCIT, which supported the view that the amendment to section 200A(1)(c) was prospective. The Tribunal concluded that the Assessing Officer was not empowered to charge late fees under section 234E for periods before 01.06.2015, even if the TDS returns were processed after the amendment date. Conclusion: The Tribunal allowed the appeals, holding that the intimation issued by the Assessing Officer under section 200A of the Act for periods prior to 01.06.2015 did not stand, and the demand raised by charging late fees under section 234E was invalid. The Tribunal's decision was based on the prospective nature of the amendment to section 200A(1)(c) of the Act, effective from 01.06.2015. The Tribunal also clarified that appeals against orders passed under section 154 should be computed from the date of the rectification order, not the date of intimation.
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