2022 (7) TMI 1423 - AT - Income Tax

Levy of interest u/s. 234E for filing TDS returns belatedly - intimation u/s. 200A - Scope of provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. 1.7.2012 - HELD THAT - As relying on the case of Fatehraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT wherein held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s. 234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s. 234E of the Act could have been made for tax deducted at source for the assessment years prior to 1.6.2015. All the appeals filed by the assessee are allowed and the interest u/s. 234E as tabulated hereinabove cannot be sustained.Appeals filed by the assessee stands allowed.

Summary

Issues involved:
Levy of interest under section 234E for filing TDS returns belatedly.

Detailed Analysis:
1. The present appeals were filed against separate orders dated 25/03/2022 by the National Faceless Appeal Centre (NFAC), Delhi concerning Assessment Years 2013-14 to 2015-16. The main issue raised in the appeals was the levy of interest under section 234E for filing TDS returns late.

2. The Assessee had filed TDS statements for various quarters in Form No. 26Q for different quarterly years in FY 2012-13 to 2014-15. The CPC TDS, Bengaluru processed the statements and the Ld.AO levied late fee under section 234E due to the delay in filing.

3. The Assessee contended that the provisions of section 234E were inserted by the Finance Act, 2012 w.e.f. 1.7.2012, and the authority could not levy the fee for statements filed prior to 1.6.2015. The Assessee challenged the validity of charging the fee under section 234E.

4. The Ld.CIT(A) considered the submissions and relied on the decision of the Hon'ble Gujarat High Court in the case of Rajesh Kourani v. Union of India, which held that section 200A is a machinery provision and section 234E can be levied even without section 200A. The Ld.CIT(A) upheld the levy of late filing fees under section 234E.

5. The Coordinate Bench of the Tribunal in another case observed that the levy of interest under section 234E would be illegal for TDS returns filed before 1.6.2015, based on the decision of the Hon'ble Karnataka High Court in the case of Fateeraj Singhvi. The Tribunal allowed the appeals filed by the assessee, stating that the interest under section 234E cannot be sustained for the relevant period.

6. Therefore, based on the above analysis and legal interpretations, the appeals filed by the assessee were allowed, and the interest under section 234E for the specified period was deemed unsustainable. The decision was pronounced on 29th July, 2022.