2023 (3) TMI 206 - AT - Income Tax

Penalty Levied u/s 234E - belated submission of tax deducted at source statement - Scope of retrospective operation of provisions of section 234E - HELD THAT - It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. In the case of Fatheraj Singhvi vs. Union of India 2016 (9) TMI 964 - KARNATAKA HIGH COURT held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. In the circumstances, we direct the ACIT, CPC- TDS, Ghaziabad to delete the late fee being levied u/s 234E of the Act. - Decided in favour of assessee.

Summary

Issues involved:
Appeals against late fee levied under section 234E of the Income Tax Act for failure to file TDS statements for the assessment year 2015-16.

Analysis:

Issue 1: Late fee under section 234E
The appeals were filed against the late fee levied under section 234E for failure to file TDS statements for the assessment year 2015-16. The ACIT had imposed a late fee of Rs.2,80,200 for the quarters of the financial year 2014-15. The NFAC dismissed the appeal citing lack of reasonable cause for the delay. However, the tribunal considered the retrospective nature of the late fee provisions under section 234E. Referring to the Hon'ble Karnataka High Court's decision in Fatheraj Singhvi vs. Union of India, it was held that the late fees under section 234E can only be levied prospectively from 01.06.2015. The tribunal further clarified that demands made for late fees prior to this date were without legal authority. The tribunal also noted that the Bombay High Court upheld the constitutional validity of section 234E but did not address its retrospective application. Consequently, the late fee levied under section 234E was directed to be deleted by the ACIT.

Issue 2: Applicability to multiple appeals
The tribunal consolidated multiple appeals as they involved identical facts and issues related to late fee under section 234E for the assessment year 2015-16. The decision in the primary appeal (ITA No.63/PUN/2023) was applied mutatis mutandis to the remaining four appeals (ITA No.67 to 70/PUN/2023). Consequently, all five appeals were allowed, directing the deletion of late fees imposed under section 234E.

In conclusion, the tribunal allowed all appeals filed by the assessee against the late fee levied under section 234E for the assessment year 2015-16, based on the retrospective application of the late fee provisions as clarified by the Hon'ble Karnataka High Court. The tribunal directed the ACIT to delete the late fees imposed, emphasizing that demands made for late fees prior to 01.06.2015 were without legal authority.