2024 (12) TMI 68 - AT - Income Tax

Levy of fee u/s 234E - Interest u/s 220(2) on default amount also been imposed - assessee submits that the provisions of sec 200A(1)(c)(d)(f) have come into force by Finance Act, 2015 only with effect from 01.06.2015 and there was no authority or competence or jurisdiction in respect of the assessment of the earlier period - HELD THAT - As relying on SHRI BHASKAR ROY 2021 (12) TMI 784 - ITAT KOLKATA we are inclined to hold that the demand raised by the Income-tax Authorities for levying late fee u/s. 234E of the Act for the period prior to 1-6-2015 cannot be sustained and we order accordingly. Decided in favour of assessee.

Summary

Issues:
Challenge to levy of additional fee u/s 234E and interest u/s 220A for the period prior to 01.06.2015.

Detailed Analysis:

1. Challenge to Imposition of Fee and Interest:
The appeal pertains to the Assessment Year 2013-14 and challenges the order passed under section 250 of the Income Tax Act by the Commissioner of Income-tax (Appeals) dated 30.07.2024. The appellant, an individual with income from business, filed a TDS return for Quarter 2 of FY 2012-13 and paid TDS along with interest u/s 201A. Subsequently, a fee u/s 234E @ Rs. 200 per day totaling Rs. 33,882 and interest u/s 220(2) amounting to Rs. 41,912 were imposed through a revised order u/s 154 of the Act. The appellant contested this before the Ld. CIT(A) but was unsuccessful, leading to the current appeal.

2. Legal Arguments:
The appellant's counsel argued that the provisions of sec 200A(1)(c)(d)(f) of the Act, which allow for the computation of the fee u/s 234E, only came into force from 01.06.2015. Therefore, prior to this date, there was no authority to impose such fees for earlier assessment years. Citing decisions from the Hon'ble Karnataka High Court and ITAT Kolkata, the appellant contended that the demand for the fee u/s 234E for the period before 01.06.2015 lacked legal basis.

3. Counter-Arguments:
In response, the Department's representative argued that section 234E imposes a fee to regularize late filing of TDS statements, which is a fixed charge for extra services provided by the Department. Referring to decisions from the Hon'ble Gujarat High Court and Bombay High Court, it was contended that the constitutional validity of sec 234E has been upheld, emphasizing the necessity of the fee for late filing.

4. Analysis and Decision:
The ITAT Kolkata analyzed the contentions and legal provisions in detail. Referring to the case law and statutory provisions, the Tribunal noted that the provisions of section 200A(1)(c), (d), and (f) came into force only from 01.06.2015. Consequently, any demand for fees under section 234E for periods preceding this date lacked legal backing. Relying on precedents and the principle of quid pro quo, the Tribunal held that the demand raised by the Income Tax Authorities for levying late fees u/s 234E for the period before 01.06.2015 was unsustainable. The appeal was allowed, setting aside the orders of the Assessing Officer and CIT(A) regarding the imposition of additional fees and interest.

5. Conclusion:
In conclusion, the ITAT Kolkata allowed the appeal, finding the imposition of additional fee and interest for the period before 01.06.2015 to be legally untenable. The decision was based on the absence of statutory authority to levy such fees before the specified date. The appellant's challenge was upheld, and the orders of the lower authorities were set aside.

This detailed analysis showcases the legal arguments, counter-arguments, and the Tribunal's decision regarding the challenge to the imposition of fees and interest under the Income Tax Act.