2022 (11) TMI 305 - AT - Income Tax

Levy of late fees u/s 234E - belated submission of tax deducted at source statement - 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 vs. Union of India, 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 DCIT, TDS (CPC), Ghaziabad to delete the late fee being levied u/s 234E of the Act. Assessee appeal allowed.

Summary

Issues:
Appeal against levy of late fee under section 234E of the Income Tax Act, 1961 for assessment years 2013-14, 2014-15, and 2015-16.

Analysis:
For the assessment year 2013-14, the appellant challenged the late fee imposed under section 234E by the DCIT, TDS (CPC), Ghaziabad. The appeal was dismissed by the ld. CIT(A) citing lack of reasonable cause for the delay. The main issue was the levy of late fees under section 234E, which the appellant contested. The Karnataka High Court's ruling in Fatheraj Singhvi vs. Union of India clarified that the late fees under section 234E can only be levied prospectively from 01.06.2015. The tribunal followed this precedent and directed the DCIT to delete the late fee imposed, as the demand notices were without legal authority for the period prior to 01.06.2015. The judgment emphasized that the constitutional validity of section 234E remains open for further examination by the Division Bench.

For the remaining appeals for assessment years 2014-15 and 2015-16, the tribunal applied the decision from the 2013-14 appeal mutatis mutandis. Consequently, all eleven appeals by the assessee were allowed based on the ruling regarding the prospective application of late fees under section 234E. The tribunal directed the deletion of late fees imposed by the DCIT in all cases.

In conclusion, the tribunal allowed all eleven appeals by the assessee, emphasizing the prospective application of late fees under section 234E as per the Karnataka High Court's ruling. The judgment maintained that the constitutional validity of section 234E remains open for further examination by the Division Bench.