2020 (9) TMI 1097 - AT - Income Tax

Late fees payable u/s 234E - intimation issued under section 200A(3) - default in not filing TDS returns in time - Rectification u/s 154 - Assessee stressed that no fee can be levied under section 234E of the Act for the periods prior to 01.06.2015, when the intimation under section 200A of the Act was issued - Scope of amendment - HELD THAT - The machinery provisions of charging the said fee as per clause (c) of Section 200A(1) of the Act was inserted by legislature with effect from 01.06.2015. We find that the said issue has been decided in the case of Fateh Raj Singhvi Ors. vs UOI 2016 (9) TMI 964 - KARNATAKA HIGH COURT and it is held that section 200A of the Act inserted with effect from 01.06.2015 had prospective effect and was not applicable for different quarters of assessment years prior to 01.06.2015. Power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. Provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E - intimation issued by the AO u/s 200A in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. The case of the assessee before us was that all original intimation/orders were issued by the AO before 01.06.2015. He pointed out that for the Assessment Year 2013-14, the orders were issued in year 2014 and for the balance appeals, orders were issued before June 2015. However, in all the cases, the AO has passed order under section 154 which are all dated 05.01.2019. Admittedly, the Revenue is not in appeal against the first finding of the CIT(A) that AO has no power to levy the fees for the period while processing the TDS returns before 01.06.2015. Once, the AO has no power to levy any late filing fee for the return processed prior to 01.06.2015, then no such power can be exercised by the AO while passing rectification order/s under section 154 of the Act for the respective periods prior to 01.06.2015. On this ground also, the assessee succeeds and there is no merit in the levy of late filing fees for the period prior to 01.06.2015. - Decided in favour of assessee.

Summary

Issues Involved:
1. Charging of fees under section 234E of the Income-tax Act, 1961, for periods prior to the amendment to section 200A(1)(c) of the Act effective from 01.06.2015.
2. Validity of charging fees under section 234E through rectification orders under section 154 of the Act issued after 01.06.2015.

Detailed Analysis:

1. Charging of Fees under Section 234E for Periods Prior to Amendment:
The primary issue in these appeals is the chargeability of late filing fees under section 234E of the Act for periods prior to the amendment to section 200A(1)(c) effective from 01.06.2015. The appellants argued that the amendment to section 200A(1)(c), which allowed for the computation of fees under section 234E during the processing of TDS returns, was prospective and not retrospective. They contended that for periods before 01.06.2015, there was no provision empowering the Assessing Officer (AO) to levy such fees while processing TDS returns.

The Tribunal referenced several decisions, including the Karnataka High Court's ruling in Fateh Raj Singhvi & Ors. vs UOI, which held that the amendment to section 200A(1) was prospective and not applicable to periods before 01.06.2015. The Tribunal also cited its own earlier decisions in cases such as Udit Jain vs ACIT and M/s Wits Interior Pvt. Ltd. vs ACIT, which supported the view that fees under section 234E could not be charged for periods prior to the amendment.

The Tribunal concluded that the Assessing Officer was not empowered to levy fees under section 234E for periods before 01.06.2015, even if the TDS returns were filed belatedly after this date. Consequently, the demand raised by charging late filing fees under section 234E in such cases was deemed invalid and was deleted.

2. Validity of Charging Fees through Rectification Orders under Section 154:
The second aspect of the issue was whether fees under section 234E could be charged through rectification orders under section 154 of the Act issued after 01.06.2015 for periods before this date. The CIT(A) had held that while fees could not be charged through intimations issued before 01.06.2015, they could be levied through rectification orders issued after this date.

The Tribunal disagreed with this view, stating that if the AO did not have the power to levy fees under section 234E while processing TDS returns for periods prior to 01.06.2015, then this power could not be exercised through rectification orders under section 154 for the same periods. The Tribunal emphasized that the amendment to section 200A(1) was prospective and did not apply to periods before 01.06.2015, regardless of when the rectification order was issued.

Conclusion:
The Tribunal allowed the appeals, holding that the Assessing Officer was not empowered to charge late filing fees under section 234E for periods prior to 01.06.2015, either through intimations issued under section 200A or through rectification orders under section 154. The demands raised by charging such fees were deleted. The Tribunal's decision was based on the principle that the amendment to section 200A(1) was prospective and did not apply to periods before its effective date.