2022 (7) TMI 787 - AT - Income Tax

Levy of late fees u/s 234E - intimation u/s 200A - delay in filing the submission of the Quarterly Statement of TDS - HELD THAT - It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. The decision rendered by the Hon ble Bombay High Court in the case of Rashmikant Kundalia and Others 2015 (2) TMI 412 - BOMBAY HIGH COURT does not come to the rescue of the Revenue, inasmuch as, the Hon ble High Court had only upheld the constitutional validity of the provisions of section 234E of the Act. The Hon ble High Court had not gone into the issue of retrospective operation of provisions of section 234E of the Act. In the circumstances, we direct the ACIT, CPC (TDS), Ghaziabad to delete the late fee being levied u/s 234E of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Levy of late fee under Section 234E for delayed filing of TDS statements.
2. Jurisdiction and authority under Section 200A for levying late fees.
3. Retrospective vs. prospective application of the amendment to Section 200A.

Detailed Analysis:

Issue 1: Levy of Late Fee under Section 234E for Delayed Filing of TDS Statements

The appellant contested the levy of late fee under Section 234E of Rs. 93,600/- for the first quarter of the financial year 2015-16, arguing that the levy was not justified on facts and in law. The Assistant Commissioner of Income Tax (ACIT), CPC (TDS), Ghaziabad had issued an intimation under Section 200A read with Section 154 of the Income Tax Act, 1961, imposing the late fee. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this levy, stating that the appellant failed to demonstrate sufficient and reasonable cause for the delay in filing the TDS statement.

Issue 2: Jurisdiction and Authority under Section 200A for Levying Late Fees

The Tribunal examined whether the ACIT, CPC (TDS), had the authority to levy late fees under Section 234E for periods prior to the amendment of Section 200A effective from June 1, 2015. The Tribunal cited the Karnataka High Court's decision in Fatheraj Singhvi vs. Union of India, which held that the provisions of Section 234E are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only from June 1, 2015. Consequently, late fees under Section 234E could be levied only prospectively from this date.

Issue 3: Retrospective vs. Prospective Application of the Amendment to Section 200A

The Tribunal noted that the Karnataka High Court had clarified that the amendment to Section 200A, which introduced the mechanism for computing late fees under Section 234E, was prospective and not retroactive. Therefore, any demand for late fees for periods before June 1, 2015, would be without authority and invalid.

Judgment Analysis:

Appeal in ITA No.1172/PUN/2018 for A.Y. 2016-17:

The Tribunal followed the Karnataka High Court's decision and directed the ACIT, CPC (TDS), Ghaziabad to delete the late fee levied under Section 234E. The appeal was allowed as the late fee for the first quarter of the financial year 2015-16 was levied without proper authority.

Appeals in ITA Nos.1173 to 1176/PUN/2018 for A.Ys. 2016-17 and 2017-18:

For the remaining appeals, the Tribunal noted that the facts and issues were identical. The late fees were levied for delays in filing TDS statements for subsequent quarters of the financial year 2015-16 and for the financial year 2016-17. The Tribunal upheld the levy of late fees under Section 234E, stating that the delay in filing TDS statements automatically attracted the late fee and there was no discretion for the TDS Officer to waive it. The appeals were dismissed as the appellant did not deny the liability for the late fee.

Conclusion:

The appeal in ITA No.1172/PUN/2018 was allowed, and the late fee levied under Section 234E was deleted. The appeals in ITA Nos.1173 to 1176/PUN/2018 were dismissed, upholding the levy of late fees for delays in filing TDS statements for the relevant periods. The Tribunal's decision was pronounced on June 30, 2022.