2023 (5) TMI 37 - AT - Income Tax

Levy of late filing fees u/s 234E - assessee filed returns of the TDS belatedly - intimation u/s 200A - Levy for period pertaining to the period prior to 1.6.2015 - HELD THAT - As there was no provision u/s 200A of the Act for levying/demanding of fees u/s 234E of the Act while processing TDS return u/s 200A of the Act. It was only on 01.06.2015 that the statute was amended and clause (c) was inserted to section 200A, whereby, it was provided that while processing TDS return u/s 200A of the Act, fees, if any, shall be computed in accordance with the provisions of section 234E of the Act. As decided in Fatehraj Singhvi vs. Union of India 2016 (9) TMI 964 - KARNATAKA HIGH COURT when the statute confers no express power u/s 200A before 01.06.2015 on the authority either to compute any fees u/s 234E or to raise demand in this respect while processing return u/s 200A, the demand for the period prior to 01.06.2015, raised in an intimation u/s 200A, could not be sustained. Thus in this case as the penalty levied in this appeal pertinent to period prior to the Amendment of 01.06.2015, therefore, the penalty levied u/s 234E of the Act, is not sustainable and the same is accordingly ordered to be deleted. Decided in favour of assessee.

Summary

Issues involved: Appeal against levy of late filing fees u/s 234E of the Income Tax Act along with interest u/s 220(2) for delayed filing of TDS statements.

Issue 1: Late filing fees u/s 234E

The assessee filed TDS returns belatedly, leading to the demand for late filing fees u/s 234E of the Act. The Income Tax Authorities raised this demand under an intimation issued u/s 200A of the Act for the period prior to 01.06.2015. The amendment on 01.06.2015 inserted clause (c) to section 200A, enabling the computation of fees in accordance with section 234E during TDS return processing. The counsel relied on the Karnataka High Court's decision that the amendment is prospective from 01.06.2015, thus pre-2015 demands under section 234E in an intimation u/s 200A are not valid.

Issue 2: Interpretation of Section 200A and 234E

The counsel cited the Kerala High Court's decision and Tribunal benches following the Karnataka High Court's ruling that pre-2015 demands for fees u/s 234E in section 200A intimation are not legally sustainable. In contrast, the DR referenced the Gujarat High Court's decision that section 200A is a machinery provision for processing TDS statements, while section 234E is a charging provision for levying fees, independent of section 200A's regulatory provisions.

Issue 3: Precedent and Jurisdiction

The counsel invoked the Supreme Court's ruling that in case of conflicting High Court decisions, the one favoring the assessee should be followed. As the penalty in question pertained to the period before the 01.06.2015 amendment, relying on the Karnataka and Kerala High Court decisions, the penalty u/s 234E was deemed unsustainable and ordered to be deleted. The identical findings were applied to the other appeal.

In conclusion, both appeals by the assessee were allowed, and the penalties under section 234E were deemed unsustainable for the period before the 01.06.2015 amendment. The decision was based on the interpretation of section 200A, the conflicting High Court precedents, and the legal principles governing the levy of late filing fees under the Income Tax Act.