2023 (3) TMI 407 - AT - Income Tax

Late fee u/s. 234E - delay in filing the TDS statement - contradictory views on issue - intimation u/s. 200A - assessee s contention before the AO was that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. 1.7.2012 - HELD THAT - It is not in dispute that if the ratio laid down by the Hon ble Karnataka High Court in the case of Fatehraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015 and therefore levy of interest u/s.234E of the Act would not be valid, following the ratio laid down by the Hon ble Karnataka High Court. It is no doubt true that three Hon ble High Courts of Gujarat and Kerala have taken a view contrary to the view taken by the Hon ble Karnataka High Court in the case of Fatehraj Singhvi (supra). If there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court. See Subramaniam -vs.- Siemens India Ltd. 1983 (4) TMI 3 - BOMBAY HIGH COURT The Court further added that in cases where there is a conflict between the decisions of non-jurisdictional High Courts, the ITO must take the view which is in favour of the assessee and not against him. In CIT - vs.- Sunil Kumar 1994 (7) TMI 42 - RAJASTHAN HIGH COURT it was held that the decision of the Jurisdictional High Court is binding on the Income tax Authorities and the Tribunal within the jurisdiction of the Court and the contrary decision of another High Court is not relevant, and that a point decided by the Jurisdictional High Court can no longer be considered to be a debatable issue. In the case of Mahadev Cold Storage 2021 (6) TMI 506 - ITAT AGRA it was held that although a centralized NFAC had been created by the notifications, it had to be ensured that where an appellate order was passed by the NFAC, the decision of the jurisdictional high court with jurisdiction over the AO should be followed and applied by the NFAC. Relief should not be refused to the taxpayer merely because there was a conflicting decision of a non-jurisdictional high court. Thus we are of the view that the levy of interest u/s.234E of the Act in the present case cannot be sustained and the same is directed to be deleted and the appeal of the Assessee is allowed.

Summary

Issues:
- Validity of charging late fee under section 234E of the Income-Tax Act for delayed filing of TDS returns.
- Interpretation of provisions of section 200A of the Income-Tax Act in relation to levy of late fee.
- Conflict of decisions between different High Courts on the applicability of late fee under section 234E.

Analysis:
1. Validity of charging late fee under section 234E: The issue revolved around the late fee charged under section 234E of the Income-Tax Act for delayed filing of TDS returns. The Assessee contended that the provisions of section 234E, inserted by the Finance Act, 2012, were applicable only from 1.7.2012. The argument was supported by a decision of the Hon'ble High Court of Karnataka, which held that the amendment allowing fee computation under section 234E at the time of processing returns had prospective effect from 1.6.2015. The Assessee challenged the validity of the late fee charged under section 234E for TDS returns filed before 1.6.2015.

2. Interpretation of section 200A provisions: The Assessee argued that the levy of late fee under section 234E could only be done while processing TDS returns filed under section 200(3) of the Act, as per the provisions of section 200A(1)(c), (d), and (f). The Finance Act, 2015, substituted clauses (c) to (f) of section 200A(1), impacting the computation of late fee. The contention was that the authority could not levy late fee under section 234E for TDS returns filed before 1.6.2015, as the relevant provisions came into effect only from that date.

3. Conflict of decisions between High Courts: The judgment highlighted conflicting views between different High Courts on the applicability of late fee under section 234E. While the Hon'ble Karnataka High Court ruled in favor of the Assessee in a specific case, the Hon'ble Gujarat High Court and Hon'ble Kerala High Court held differing opinions. The NFAC/CIT(A) upheld the levy of late fee under section 234E based on interpretations from these High Courts. However, the Tribunal emphasized the importance of following the decision of the jurisdictional High Court, as per established legal principles, and ruled in favor of the Assessee based on the precedent set by the Hon'ble Karnataka High Court.

4. Legal Precedents and Binding Decisions: The judgment referred to various legal precedents emphasizing the binding nature of decisions from jurisdictional High Courts on lower authorities. It highlighted the significance of following the rulings of the jurisdictional High Court, even in the presence of conflicting decisions from other High Courts. The Tribunal's decision was guided by these principles, ultimately leading to the deletion of the late fee charged under section 234E in the present case.

5. Final Decision: Considering the arguments presented, the Tribunal allowed the appeal of the Assessee, directing the deletion of the late fee charged under section 234E of the Income-Tax Act. The decision was based on the application of legal principles, precedence set by the jurisdictional High Court, and the interpretation of relevant provisions under the Income-Tax Act.

By analyzing the issues related to the validity of late fee charges under section 234E, interpretations of section 200A provisions, conflicting High Court decisions, legal precedents, and the final decision of the Tribunal, the judgment provides a comprehensive overview of the legal aspects involved in the case.