2022 (3) TMI 1278 - AT - Income Tax

Late fee towards the delay in filing the TDS returns u/s 234(E) - Scope of regulatory provision being found in sec. 200A for computation of fees - AR submitted that the lower authorities have ignored the fact that prior to 1st June, 2015, there was no enabling provision for payment and levy of fee u/s 234E of the Act HELD THAT - We respectfully following the binding decision of the jurisdictional High Court in the case of Shri Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT hold that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A. The appeal therefore is allowed in favour of the assessee.

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Legality of levying fees under section 234E of the Income Tax Act prior to the amendment of section 200A.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The assessee filed appeals challenging the order of the CIT(A) NFAC dated 13/08/2021 for the assessment years 2013-14 and 2014-15. There was a delay of 84 days in filing these appeals before the Tribunal. The Tribunal considered the matter and admitted the petition for condonation of delay, referencing the Hon'ble Supreme Court's suo moto writ petition No.03/2020 along with M.P 21/2022, which excluded the period from 15/3/2020 to 28/02/2022 for the purpose of the period of limitation. Thus, the delay was deemed to be covered by this exclusion, and the appeals were filed in time for further adjudication.

2. Legality of Levying Fees under Section 234E:
The core issue was whether fees under section 234E could be levied for delays in filing TDS returns prior to the amendment of section 200A, which came into effect on 1st June 2015. The assessee contended that prior to this date, there was no enabling provision for the payment and levy of fees under section 234E. The CIT(A) had upheld the AO's order, relying on the Gujarat High Court's judgment in Rajesh Kourani Vs. Union of India, which held that section 234E is a charging provision.

The Tribunal, however, referred to the Karnataka High Court's judgment in Shri Fatheraj Singhvi Vs. Union of India, which dealt with a similar issue. The High Court held that section 234E, being a charging section, cannot be enforced without the machinery provision of section 200A. The judgment emphasized that the amendment to section 200A, which allows for the computation and intimation of fees under section 234E, is prospective and not retrospective. Therefore, any demand for fees under section 234E for periods prior to 1st June 2015 was without authority and invalid.

The Tribunal, following the binding decision of the jurisdictional High Court, concluded that the fees under section 234E could not be levied without the machinery provision of section 200A being in place. Consequently, the appeals were allowed in favor of the assessee.

Conclusion:
The Tribunal allowed the appeals, holding that the fees under section 234E could not be levied for periods prior to the amendment of section 200A, which came into effect on 1st June 2015. The delay in filing the appeals was condoned based on the Supreme Court's exclusion of the limitation period due to the COVID-19 pandemic.