2024 (7) TMI 656 - AT - Income Tax

Levy of late fee under the provisions of section 234E - Intimation u/s 200A - 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. The Hon ble Karnataka High Court 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. Thus, notices u/s 200A of the Act for computation and intimation for payment of fee u/s 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. Decided in favour of assessee.

Summary

Issues:
Appeals filed against orders for assessment year 2014-15, levy of late fee under section 234E, legality and authority of intimation under Section 200A, constitutional validity of Section 234E.

Analysis:
1. The appeals were filed against orders for the assessment year 2014-15 regarding the levy of late fees under section 234E. The Tribunal noted that identical facts and issues were involved in the appeals, leading to a common order for disposal.
2. The main issue in the present appeal was the levy of late fees under section 234E of the Income Tax Act. The ACIT had imposed penalties for belated submission of tax deducted at source statements for the financial year 2013-14. However, a significant amendment was made under section 200A of the Act effective from 01.06.2015, allowing the computation of fees under section 234E at the time of processing the return of income.
3. The Tribunal referred to the decision 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 were substantive and could only be levied prospectively from 01.06.2015. The Court emphasized the need to consider whether a provision confers substantive power or is merely regulatory to determine its retroactive nature.
4. Following the precedent set by the Co-ordinate Bench of Pune Tribunal in similar cases, the Tribunal directed the ACIT to delete the late fee levied under section 234E, as it was not valid for the period prior to 01.06.2015. Consequently, the appeals filed by the assessee for the assessment year 2014-15 were allowed.
5. The Tribunal's decision in ITA No.312/PUN/2024 was deemed applicable mutatis mutandis to the remaining three appeals of the assessee in ITA Nos.313 to 315/PUN/2024 for the same assessment year, resulting in the allowance of all four appeals.
6. In conclusion, all four appeals of the assessee were allowed, with the Tribunal setting aside the late fees levied under section 234E for the relevant period prior to 01.06.2015. The judgment was pronounced on the 10th day of July 2024.