2022 (8) TMI 439 - AT - Income Tax

Late fees u/s 234E read with section 200A - statement in Form-26Q could not be filed within the prescribed period of times and therefore CPC imposed late fee u/s. 234E - AR submitted that admittedly the year involved in these appeals is Assessment Year 2014-15 whereas the effect of charging late fee u/s. 234E came into existence w.e.f. 01.06.2015 - HELD THAT - We find that it is undisputed fact that the assessee has been charged late fee u/s. 234E for various returns filed in the Form-26Q for late filing of the statements. These cases relate to Assessment Year 2014-15. The various Hon'ble High Courts including the Hon'ble Karnataka High Court and Hon'ble Kerala High Court have held that the provisions of Section 234E are applicable w.e.f. 01.06.2015. See SRI. FATHERAJ SINGHVI AND OTHERS VERSUS UNION OF INDIA AND OTHERS 2016 (9) TMI 964 - KARNATAKA HIGH COURT - Also see M/S. UNITED METALS VERSUS THE INCOME TAX OFFICER (TDS) KOCHI (2) , ERNAKULAM, THE UNION OF INDIA, NEW DELHI 2021 (12) TMI 1349 - KERALA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Late fee u/s 234E of IT Act charged for FY 2014-15 - Applicability from 01.06.2015 - Prospective amendment - Natural justice principles violated.

Analysis:
1. The appeals involved challenges against the levy of late fees under Section 234E of the IT Act and interest under Section 220(2) for the FY 2014-15. The appellant contended that the late fee under Section 234E could not be charged for periods before 01.06.2015. The argument was based on the retrospective nature of the amendment and the mechanism for computation of fees introduced from 01.06.2015 onwards.

2. The appellant cited various case laws, including decisions from Hon'ble High Courts and Tribunals, to support their claim that the late fee under Section 234E was applicable only from 01.06.2015. The appellant highlighted judgments like Fatheraj Singhvi Vs. Union of India, United Metals Vs. ITO TDS, and others to establish the prospective nature of the amendment and the inapplicability of the late fee for the relevant assessment year.

3. On the other hand, the respondent argued in favor of the applicability of Section 234E for the year under consideration, emphasizing that the provision was in force from 1.07.2012. The respondent also pointed out that the assessment orders by CPC were passed after 01.06.2015, justifying the imposition of late fees under Section 234E.

4. The Tribunal examined the facts and legal precedents presented by both parties. It noted that various High Courts, including the Karnataka High Court and the Kerala High Court, had held that Section 234E was applicable from 01.06.2015. The Tribunal extensively quoted the Karnataka High Court's observations on the retrospective nature of the amendment and the prospective effect of the substitution made in Section 200A.

5. Referring to judgments like United Metals vs. ITO TDS and Dr. Saumya Singh vs. ACIT, the Tribunal affirmed the position that the late fee under Section 234E could not be charged for periods before 01.06.2015. Relying on these precedents, the Tribunal allowed the appeals filed by the assessee, concluding that the late fee imposed was not valid for the relevant assessment year.

6. Ultimately, the Tribunal ruled in favor of the appellant, setting aside the orders imposing late fees and interest under Sections 234E and 220(2) for the FY 2014-15. The decision was based on the interpretation of the retrospective and prospective application of the relevant statutory provisions, as clarified by the judicial pronouncements cited during the proceedings.