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2021 (9) TMI 621 - AT - Income TaxLevy interest u/s 234E - interest levied prior to amendment w.e.f. 1.6.2015 - diversified views - HELD THAT - It is undisputed that period of TDS return is prior to the amendment. At that time there was no enabling provision for levying interest under section 234E. Several decisions from High Courts and ITAT were referred before learned CIT(A). Despite this the learned CIT(A) s rules that there is no ambiguity in law and he upholds the order of interest levy. There is no jurisdictional High Court decision on this issue. No effort has been done by learned CIT(A) to distinguish the case law of Vegetables Products Ltd. 1973 (1) TMI 1 - SUPREME COURT . The said case law provides that if two views are possible the view in favour of the assessee has to be adopted. Hence, if as per learned CIT(A) there are divergent views of Hon'ble High Courts, in absence of a Jurisdictional High Court decision, the learned CIT(A) should have followed the ratio from this Hon'ble Supreme Court decision and followed the high court decision in favour of the assessee. CIT(A) himself says, that the issue is debatable then the same takes the adjustment out of the jurisdiction of CPC Bangalore. As debatable issues cannot be decided under computerised adjustment. Hence to conclude since it has been held by higher courts that prior to enabling provision to levy interest under section 234E, the interest for earlier period return due cannot be upheld we set aside the order of learned CIT(A) and decide the issue in favour of assessee.
Issues Involved:
1. Levy of late fee under section 234E of the Income-tax Act, 1961. 2. Jurisdiction and authority of CPC-TDS to levy late fee under section 234E. 3. Applicability of section 200A for processing TDS statements for periods prior to 01.06.2015. 4. Validity of intimation under section 200A after the expiry of the prescribed period. 5. Responsibility under section 204 for depositing late fee under section 234E. 6. Debatability of the issue and its impact on CPC-TDS adjustments. 7. Judicial precedence and binding nature of Tribunal decisions. Detailed Analysis: 1. Levy of Late Fee under Section 234E: The primary issue was whether the late fee under section 234E could be levied for TDS statements filed for periods prior to 01.06.2015. The Tribunal noted that section 200A was amended effective from 01.06.2015 to include the levy of late fees under section 234E during the processing of TDS statements. However, this amendment was prospective and not retrospective. The Tribunal cited several judicial precedents, including the Karnataka High Court in *Fatheraj Singhvi & Ors. vs. Union of India & Ors.*, which held that the levy of late fees under section 234E for periods prior to 01.06.2015 was not permissible. 2. Jurisdiction and Authority of CPC-TDS: The Tribunal examined whether the CPC-TDS had the authority to levy late fees under section 234E for periods before the amendment. It was argued that the CPC-TDS acted beyond its jurisdiction by levying these fees. The Tribunal referred to the Centralized Processing of Statement of Tax Deducted at Source Scheme, 2013, which empowered the CPC-TDS to process returns under section 200A(2). However, the Tribunal concluded that this authority did not extend to levying late fees under section 234E for periods before 01.06.2015. 3. Applicability of Section 200A: The Tribunal emphasized that section 200A, as it stood before 01.06.2015, did not provide for the levy of late fees under section 234E. The Tribunal cited multiple High Court decisions, including the Karnataka High Court, which confirmed that the amendment to section 200A was prospective. Consequently, any intimation issued under section 200A for periods prior to 01.06.2015, levying late fees under section 234E, was deemed invalid. 4. Validity of Intimation under Section 200A: The Tribunal considered the proviso to section 200A, which states that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. The Tribunal found that the intimation sent after 31.03.2016 for FY 2013-14 was beyond the permissible period, rendering it invalid. 5. Responsibility under Section 204: The Tribunal addressed the argument that section 204, which defines the "person responsible for paying," does not cover section 234E. It was contended that no one could be held responsible for depositing late fees under section 234E. The Tribunal did not find this argument persuasive, focusing instead on the prospective nature of the amendment to section 200A. 6. Debatability and CPC-TDS Adjustments: The Tribunal noted that the issue of levying late fees under section 234E for periods prior to 01.06.2015 was debatable, as evidenced by conflicting High Court decisions. Therefore, such a debatable issue could not be resolved through computerized adjustments by CPC-TDS. The Tribunal emphasized that debatable issues are outside the jurisdiction of CPC-TDS adjustments. 7. Judicial Precedence and Tribunal Decisions: The Tribunal highlighted the binding nature of Tribunal decisions on lower authorities, as established by the Bombay High Court in *Bank of Baroda v. H.C. Shrivastava*. The Tribunal criticized the CIT(A) for not following the decisions of higher courts and the Supreme Court's principle that, in cases of conflicting judicial interpretations, the interpretation favoring the assessee should be adopted. Conclusion: The Tribunal concluded that the levy of late fees under section 234E for periods prior to 01.06.2015 was not permissible, as there was no enabling provision in section 200A before the amendment. The Tribunal set aside the CIT(A)'s order and decided the issue in favor of the assessee, allowing the appeals. The Tribunal emphasized the need for judicial discipline and adherence to higher court decisions.
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