2022 (11) TMI 847 - AT - Income Tax

Late fee levied u/s. 234E - Levy for period prior to 1/6/2015 - TDS returns pertaining to the period prior to 01/06/2015, if filed after 01/06/2015 and processed after 01/06/2015 - whether they attract the amended provisions of Finance Act, 2012 and the specific provision for levy of fee under section 234E of the Act which was inserted w.e.f 1/6/2015 - HELD THAT - As the assessee, viz., WS Industries India Limited, Visakhapatnam had deducted tax at source U/s. 195 of the Act. The due date for filing TDS returns is 15th May, 2014 but belatedly filed the returns on 2/08/2014 under the bonafide intention that the amended provisions will not attract for levy of late fee U/s. 234E of the Act. Since the period under consideration is the 4th Quarter of FY 2013-14 ie., prior to the amendment to section 200A(1) of the Act wherein clause (c) was inserted w.e.f 01/06/2015 and the assessee had already deposited the tax at source prior to the amendment to section 200A(1), the levy of late fee u/s. 234E for default in furnishing the statement beyond the stipulated time is not sustainable in law. Respectfully following the ratio laid down in case of Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT ; judgment of United Metals 2021 (12) TMI 1349 - KERALA HIGH COURT and various decisions of the Tribunal levying of late fee under section 234E for the period prior to 1/6/2015 is not sustainable in law. Thus, in the instant case since the period of default was before the said date ie., 01/06/2015, there is no merit in charging late filing fee u/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 154 r.w.s 200A of the Act. Since hold that the no late filing fee is to be charged, the consequential interest charged U/s. 220(2) of the also does not survive - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of levy of late fee under Section 234E of the Income Tax Act for TDS returns filed before 01/06/2015 but processed after 01/06/2015.
2. Applicability of amended provisions of Section 200A for computation of fee under Section 234E.
3. Consideration of conflicting judgments from different High Courts on the applicability of Section 234E.

Detailed Analysis:

1. Legality of Levy of Late Fee under Section 234E for Returns Filed Before 01/06/2015 but Processed After 01/06/2015:
The main contention was whether the late fee under Section 234E could be levied for TDS returns pertaining to periods before 01/06/2015 but filed and processed after this date. The Tribunal noted that the enabling provision for computation of fee under Section 200A was inserted only w.e.f 01/06/2015. Therefore, the charging section, i.e., Section 234E, could not be enforced for periods before 01/06/2015. The Tribunal relied on the judgment of the Hon'ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India, which held that the provisions of Section 234E could not be applied retroactively.

2. Applicability of Amended Provisions of Section 200A for Computation of Fee under Section 234E:
The Tribunal observed that the amendment in Section 200A, which included the computation of fee under Section 234E, was effective from 01/06/2015. This meant that any TDS returns filed for periods before this date could not attract the late fee under Section 234E, even if they were processed after the amendment date. The Tribunal cited the Hon'ble Kerala High Court in United Metals vs. ITO (TDS), which supported this view, stating that the amendment could not be applied retroactively.

3. Consideration of Conflicting Judgments from Different High Courts:
The Tribunal noted the conflicting judgments from different High Courts. The CIT(A) had relied on the judgments of the Hon'ble Bombay High Court in Rashmikat Kundalia vs. Union of India and the Hon'ble Gujarat High Court in Rajesh Kourani vs. Union of India, which upheld the levy of late fee under Section 234E. However, the Tribunal preferred the judgment of the Hon'ble Karnataka High Court in Fatheraj Singhvi, which was favorable to the assessee, following the principle established by the Hon'ble Supreme Court in CIT vs. Vegetable Products Ltd that in case of conflicting judgments, the view favorable to the assessee should be followed.

Separate Judgments Delivered:
The Tribunal delivered separate judgments for different assessment years, but the core issue and the legal reasoning remained consistent across all appeals.

Conclusion:
The Tribunal allowed the appeals for the assessment years 2014-15 and 2015-16, directing the deletion of the late fee levied under Section 234E for TDS returns filed before 01/06/2015 but processed after this date. For the assessment year 2016-17, the Tribunal upheld the levy of late fee, as the returns were filed and processed after the effective date of the amendment.