2018 (2) TMI 1696 - AT - Income Tax

Late fee charged under section 234E for belated filing of TDS returns - Held that - Fee under section 234E could be levied in the relevant financial year in question even in the absence of a regulatory provision i.e. section 200A of the Act. It was thus open to the Revenue to charge the fee stipulated in section 234E of the Act even prior to the amendment brought under section 200A of the Act w.e.f. 01.06.2015. With the amendment, the adjustment has been brought within the fold of section 200A of the Act. Hence, as held, the amendment is clarificatory in nature. We note from the decision of the Hon ble Gujarat High Court that section 200A is not a source of substantive power. Substantive power to levy fee could be traced to section 234E of the Act. See RAJESH KOURANI Versus UNION OF INDIA 2017 (7) TMI 458 - GUJARAT HIGH COURT We decline to interfere with the action of the Revenue towards invoking section 234E of the Act for levy of late filing fee appealed against. - Decided against assessee.

Summary

Issues:
Late filing fee charged under section 234E for belated filing of TDS returns.

Analysis:
The appeal was filed against orders of the Commissioner of Income Tax(Appeals) regarding late filing fee charged under section 234E for delayed TDS statements. The only ground raised related to the late fee. The Authorized Representative argued that prior to 01.06.2015, section 200A did not allow late fee under section 234E. The Representative cited tribunal decisions supporting this view. However, the Departmental Representative supported the CIT(A) orders. The Tribunal considered the issue of late fee under section 234E before the amendment of section 200A on 01.06.2015. The Gujarat High Court held in Rajesh Kourani vs. Union of India that section 200A is a machinery provision and does not govern charging provisions. The High Court stated that section 234E could be levied even before the amendment. The Court noted that section 200A provides a mechanism for processing TDS statements and adjusting fees under section 234E.

The High Court explained that section 234E introduced a fee for late filing of statements to ensure compliance with tax deduction rules. Before 01.06.2015, section 200A did not reference the fee under section 234E. The Court clarified that section 200A is a machinery provision and cannot create a charge like section 234E. Even without section 200A, the Revenue could demand the fee under section 234E. The Court emphasized that section 200A does not grant substantive power to levy fees, which remains with section 234E. The Court dismissed the petitioner's argument citing a Supreme Court case on machinery provisions in a different context.

Based on the High Court's decision, the Tribunal declined to interfere with the Revenue's action in invoking section 234E for late filing fees. The Tribunal held that the amendment to section 200A was clarificatory, and substantive power to levy fees lies with section 234E. Consequently, the appeals against the late filing fees were dismissed.

This detailed analysis of the judgment highlights the interpretation of sections 200A and 234E in the context of late filing fees for TDS returns, as discussed in the appellate tribunal's decision and the Gujarat High Court's ruling.