2022 (4) TMI 686 - AT - Income Tax

Late filing fee under section 234E - Whether fee under section 234E of the Act can be levied while processing of statements of tax deducted at source under section 200A(1) of the Act for the period prior to 1st June 2015, and thus whether clause (c) to section 200A sub section (1) of the Act, as substituted by Finance Act, 2015, is retrospective in nature? - HELD THAT - Whether clause (c) of section 200A(1), as substituted by Finance Act, 2015, w.e.f. 01.06.2015, whereby the A.O. was enabled to compute the fee under section 234E of the Act while processing of statement of tax deducted at source, is prospective in nature has came up for adjudication before the Hon ble High Courts of various States. The first decision was rendered by the Hon ble Karnataka High Court in Fatheraj Singhvi v/s Union of India, 2016 (9) TMI 964 - KARNATAKA HIGH COURT whereby the Hon ble High Court held that such an amendment is prospective in nature and thus intimation issued under section 200A of the Act for computation and intimation of payment of fee under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. Also see M/S. OLARI LITTLE FLOWER KURIES 2022 (2) TMI 1061 - KERALAHIGH COURT Thus the impugned orders passed by the learned CIT(A) is not sustainable and the late fee levied under section 234E vide intimation issued under section 200A of the Act, for the period prior to 01.06.2015, is directed to be deleted for the assessment years under consideration in present appeals. - Decided in favour of assessee.

Summary

Issues:
- Whether fee under section 234E of the Act can be levied while processing of statements of tax deducted at source under section 200A(1) of the Act for the period prior to 1st June 2015.
- Whether clause (c) to section 200A sub-section (1) of the Act, as substituted by Finance Act, 2015, is retrospective in nature.

Analysis:
1. The appeals were filed against orders passed by the Commissioner of Income Tax (Appeals) for the assessment years 2015-16 and 2016-17, involving the issue of levying fee under section 234E of the Act for late filing of TDS statements.
2. The appeals were heard together as they involved an identical issue. The assessee did not appear during the hearing, and the case proceeded based on submissions by the Departmental Representative and available records.
3. The main issue in the appeals was whether the fee under section 234E could be imposed for the period before 1st June 2015, and if the amendment to section 200A(1) by Finance Act, 2015, was retrospective.
4. The Karnataka High Court held that the amendment to section 200A(1) was prospective, while the Gujarat High Court viewed it as retrospective. The Kerala High Court agreed with the Karnataka High Court, declaring intimation under section 200A for fee under section 234E before 1st June 2015 as invalid.
5. The Tribunal, following the Karnataka High Court decision, directed the deletion of fees under section 234E for the period before 1st June 2015, considering the principle that a construction favoring the assessee must be adopted in tax provisions.
6. Consequently, the appeals by the assessee were allowed, and the late fees under section 234E for the relevant assessment years were directed to be deleted, based on the decisions of the Karnataka and Kerala High Courts.

This detailed analysis of the judgment highlights the key issues, arguments, and decisions made by various courts, leading to the final ruling in favor of the assessee based on the prospective nature of the amendment to section 200A(1) of the Act.