2022 (8) TMI 260 - AT - Income Tax

Late Fee under section 234E - levy of late fee in the course of intimation under section 200A - levy of late fee under section 234E in furnishing the statements of TDS was inserted vide Finance Act 2012, w.e.f 01.06.2015 - HELD THAT - On careful perusal of the decision of Hon'ble Jurisdictional High Court in Rajesh Kourani 2017 (7) TMI 458 - GUJARAT HIGH COURT we find that that jurisdiction high court in para-20 of the decision has clearly dissented with the decision of Hon'ble Karnataka High Court in Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT and held that even in absence of section 200A with introduction of section 234E, it was always open for the revenue to demand and collect the fee for late filing of the statements. Without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied is not acceptable. Any such view would amount to a charging section yielding to the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the revenue to charge the fee in terms of section 234E. By amendment, this adjustment was brought within the fold of section 200A. This would have one direct effect. An order passed under section 200A is rectifiable under section 154 and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the re-casted clause (c), this situation also would be obviated. Even prior to 1- 6-2015, it was always open for the revenue to calculate fee in terms of section 234E. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E. It is settled position under legal hierarchy that decision of Hon'ble jurisdictional High Court is having binding precedent, in absence of any decision of Hon'ble Apex Court. Thus, all the submissions which is raised by Ld. AR for the assessee is not helpful to him. Therefore, respectfully following the ratio of law that section 234E is a charging provision creating a charge for levying of fee for certain default in filing statement, and the fee prescribed under this section could be levied even without a regulatory provision being found in section 200A for computation of fee. - Appeal of assessee allowed.

Summary

Issues Involved:
1. Levy of late fee under section 234E of the Income Tax Act.
2. Applicability of section 200A for the computation and demand of fee under section 234E.
3. Retrospective effect of the amendments made to section 200A.

Detailed Analysis:

1. Levy of Late Fee under Section 234E:
The primary issue revolves around whether the late fee under section 234E, which was introduced by the Finance Act 2012 and became effective from 01.07.2012, can be levied for the delay in filing TDS statements for periods prior to 01.06.2015. The assessee contended that the fee could not be levied for periods before the amendment came into effect. The Tribunal noted that section 234E is a charging provision that creates a liability for late filing of TDS statements and can be levied independently of section 200A, which is merely a machinery provision for processing TDS statements.

2. Applicability of Section 200A for Computation and Demand of Fee:
The assessee argued that section 200A, which was amended with effect from 01.06.2015 to include the computation of fees under section 234E, should not apply retrospectively. The Tribunal referred to the Gujarat High Court's decision in Rajesh Kourani vs. Union of India, which held that even in the absence of a specific provision in section 200A, the fee under section 234E could still be levied. The Tribunal emphasized that section 200A is a procedural mechanism for processing TDS statements and does not create the charge itself, which is established by section 234E.

3. Retrospective Effect of Amendments to Section 200A:
The Tribunal considered the conflicting views of the Karnataka High Court in Fatheraj Singhvi vs. Union of India, which held that the amendment to section 200A has a prospective effect and cannot be applied to TDS statements filed before 01.06.2015. However, the Tribunal followed the Gujarat High Court's ruling, which dissented from the Karnataka High Court's view and upheld the levy of fees under section 234E for periods prior to the amendment. The Tribunal noted that the Gujarat High Court's decision is binding as it is the jurisdictional High Court and there is no contrary decision from the Supreme Court.

Conclusion:
The Tribunal concluded that section 234E is a charging provision that creates a liability for late filing of TDS statements, and this fee can be levied even without the specific regulatory provision of section 200A. The Tribunal dismissed the appeals, holding that the levy of late fees under section 234E for periods prior to 01.06.2015 is valid and enforceable. The Tribunal's decision was aligned with the Gujarat High Court's ruling in Rajesh Kourani vs. Union of India, which is binding in the absence of a Supreme Court ruling to the contrary. Consequently, all the appeals filed by the assessee were dismissed.