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2022 (5) TMI 1006 - AT - Income TaxLate fees u/s. 234E - Scope of enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - whether late filing fee u/s. 234E of the Act has rightly been charged in the intimation issued u/s. 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015 - HELD THAT - We understand that earlier, there was no enabling provision in the Act u/s. 200A for raising demand in respect of levy of fee u/s. 234E. As such, as per the assessee, in respect of TDS statement filed for a period up to 31.03.2015, no late fee could be levied in the intimation issued u/s. 200A of the Act. On similar facts, the same issue has been adjudicated in the case of SHRI BHASKAR ROY 2021 (12) TMI 784 - ITAT KOLKATA respectfully following 'Shri Fatehraj Singhvi and Ors' 2016 (9) TMI 964 - KARNATAKA HIGH COURT accept the grievance of the assessee as genuine. Accordingly, the orders of the CIT(A) are reversed and the fee so levied under section 234E of the Act is cancelled. Appeal of assessee allowed.
Issues Involved:
1. Legality of levying fees under Section 234E of the Income-tax Act, 1961, prior to the amendment of Section 200A effective from 01.06.2015. 2. Interpretation of Section 234E as a charging provision and its enforceability without the regulatory mechanism under Section 200A. 3. Conflicting judgments from different High Courts on the applicability of Section 234E before 01.06.2015. Issue-wise Detailed Analysis: 1. Legality of Levying Fees under Section 234E Prior to the Amendment of Section 200A Effective from 01.06.2015: The primary issue in this case revolves around the legality of levying fees under Section 234E for defaults in filing TDS statements before the amendment of Section 200A, which took effect on 01.06.2015. The appellant argued that such a levy is beyond the permissible adjustments under Section 200A of the Act before its amendment. The Tribunal referred to the decision of the Hon'ble Karnataka High Court in the case of Fatehraj Singhvi Vs. UOI, which held that the amendment to Section 200A by inserting clause (c) is effective only from 01.06.2015. Consequently, no fees would be payable by the assessee for any period prior to this date. This view was supported by the coordinate bench of the Tribunal in Bhaskar Roy's case, which followed the Karnataka High Court's decision. 2. Interpretation of Section 234E as a Charging Provision and its Enforceability without the Regulatory Mechanism under Section 200A: The Tribunal also examined the interpretation of Section 234E as a charging provision. The Hon'ble Gujarat High Court in Rajesh Kourani Vs. Union of India had concluded that Section 234E is a charging provision for levying fees for defaults in filing statements and that such fees can be levied even without a regulatory provision in Section 200A for computation. However, the Tribunal noted that the Hon'ble Karnataka High Court in Fatehraj Singhvi held that Section 200A's amendment was prospective and not retroactive, meaning fees under Section 234E could not be levied for periods before 01.06.2015. The Tribunal agreed with the Karnataka High Court's view, emphasizing that Section 200A is a machinery provision and cannot create a charge independently of Section 234E. 3. Conflicting Judgments from Different High Courts on the Applicability of Section 234E Before 01.06.2015: The Tribunal acknowledged the conflicting judgments from the Karnataka and Gujarat High Courts. The Karnataka High Court's decision in Fatehraj Singhvi was in favor of the assessee, while the Gujarat High Court's decision in Rajesh Kourani was in favor of the revenue. The Tribunal, following the principle laid down by the Hon'ble Supreme Court in CIT Vs. Vegetable Products Ltd., decided to adopt the view favorable to the assessee in the absence of a jurisdictional High Court decision. Therefore, the Tribunal held that the demand raised by the Income Tax Authorities for levying late fees under Section 234E for the period prior to 01.06.2015 could not be sustained. Conclusion: The Tribunal concluded that the levy of fees under Section 234E for periods before 01.06.2015 is unsustainable. The order of the CIT(A) was set aside, and the appeal of the assessee was partly allowed. The AO was directed to take into account the Tribunal's findings for the purpose of levying fees under Section 234E in the instant case. The judgment was pronounced on 18th May 2022.
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