2020 (11) TMI 821 - AT - Income Tax

Levying late fees u/s 234E - Late filing of TDS returns / statement - statement processed u/s 200A - delay in filing return for the period before 01.06.2015 - HELD THAT - As decided in case of Executive Engineer others 2019 (7) TMI 1678 - ITAT INDORE Assessee is eligible for relief for deletion of fee levied u/s 234E of the Act as the returns are processed before 1.6.2015. - Appeal of assessee allowed.

Issues Involved:
1. Legitimacy of levying fees under Section 234E of the Income Tax Act for TDS returns processed under Section 200A before the amendment effective from 01-06-2015.
2. Authority of revenue to collect fees under Section 234E in the absence of provisions in Section 200A before the amendment.
3. Requirement for fees under Section 234E to be collected before delivering TDS statements.
4. Consideration of reasonable cause for late submission of TDS statements.

Detailed Analysis:

1. Legitimacy of Levying Fees under Section 234E:
The primary issue addressed was whether the Revenue authorities were justified in levying late fees under Section 234E of the Income Tax Act in statements processed under Section 200A before the amendment brought by the Finance Act, 2015, effective from 01-06-2015. The Tribunal observed that the amendment to Section 200A, which included clauses (c) to (f) allowing the levy of fees under Section 234E, is prospective in nature. Therefore, the Revenue authorities were not empowered to levy fees under Section 234E for TDS returns processed before 01-06-2015. The Tribunal referenced consistent judicial pronouncements supporting this view, including the decision in the case of Executive Engineer & others, which held that the amendment is prospective, and fees under Section 234E cannot be levied for returns processed before 01-06-2015.

2. Authority of Revenue to Collect Fees:
The Tribunal noted that in the absence of clauses (c) to (f) in subsection (1) of Section 200A before the amendment by the Finance Act, 2015, there was no authority for the Revenue to collect fees under Section 234E. The CIT(A) had admitted the appeal under Section 246A(1)(a), implicitly accepting that the power to levy fees under Section 234E emanated from the provisions of Section 200A. However, the Tribunal held that the Revenue authorities were not justified in levying fees for periods before the amendment came into effect.

3. Requirement for Fees Collection Before Delivering TDS Statements:
The Tribunal addressed the argument that under Section 234E, fees were required to be collected from the deductor before delivering or causing to be delivered a statement in accordance with Section 200(3). The Tribunal found that no authority was vested with the Revenue to collect fees under Section 234E after allowing the assessee to deliver the statement. This reinforced the position that fees under Section 234E could not be levied for returns filed and processed before 01-06-2015.

4. Consideration of Reasonable Cause for Late Submission:
The Tribunal also considered the appellant's argument that there was a reasonable cause for the late submission of TDS statements within the specified time under Section 200(3). Consequently, no late fee under Section 234E should be levied. The Tribunal did not delve deeply into this issue, as the primary determination was based on the timing of the amendment and the processing of returns.

Conclusion:
The Tribunal concluded that the assessee is eligible for relief from the fees levied under Section 234E, as the returns were processed before 01-06-2015. The Tribunal directed the Revenue authorities to verify each case to ensure that any fees levied for the period before 01-06-2015 are deleted, while fees for defaults from 01-06-2015 onwards are confirmed. All six appeals of the assessee were allowed, and the order was pronounced in open court on 24.11.2020.

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