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2022 (11) TMI 771 - AT - Income TaxRectification of mistake u/s 154 - levying late-fee u/s 234E which was not leviable for period prior to 01.06.2015 - HELD THAT - Late fee u/s 234E could not have been levied in the intimations u/s 200A for delay in filing quarterly returns of TDS for the period prior to 01.06.2015 Therefore, by levying late-fee which was not leviable, the Ld. AO has certainly committed a mistake apparent on record. Additionally, we also observe that under the scheme of Income-tax Act, 1961, the assesseee have two remedies against the intimation u/s 200A, viz. (i) file rectification-application u/s 154, or (ii) file appeal u/s 246A. We observe that the remedy to file rectification u/s 154 is not only one of the available remedies but also a simpler remedy and practically resorted to by many of the assessees, particularly in the matter of the late-fee u/s 234E wrongly levied by revenue-authorities. We find that it is not a case of revenue that the rectification-application u/s 154 against the intimation u/s 200A is absolutely barred in the scheme of the Act. We also observe that when the late-fee is not leviable in the law and on facts, by levying the same the assessees have been fastened with the liability beyond and against the scheme of the Act, which should not happen. In this regard, we gainfully refer a recent decision in the case of Akbar Mohammad, Nagaur 2022 (2) TMI 479 - ITAT JODHPUR Thus having observed that there was an apparent mistake in the intimations sent by Ld. AO u/s 154, we are inclined to accept that the Ld. CIT(A) is not justified in dismissing the appeals of assessees. Therefore, Ground No. 1 is allowed. Validity of charging late-fee u/s 234E in the intimations issued u/s 200A for delay in filing quarterly-returns of TDS relatable to the period prior to 01.06.2015 - HELD THAT - As section 200A(1) was amended w.e.f. 01.06.2015 by inserting clause (c) therein and it is only thereafter the authorities were enabled to charge latefee in the intimations u/s 200A. Therefore, it is very much clear that the authorities did not have any power to charge late-fee in respect of returns related to the period prior to 01.06.2015. See M/s. Keshav Industries Pvt. Ltd. 2020 (7) TMI 812 - ITAT INDORE Mr. Rajendra Prasad Tiwari 2020 (7) TMI 812 - ITAT INDORE Thus no hesitation in concluding that the late-fee levied u/s 234E levied by Ld. AO in the intimations made u/s 200A is illegal and deserves to be deleted. We, therefore, direct the Ld. AO to rectify intimations and delete the late-fee charged therein. Thus, the assessee succeeds in Ground No. 2 to 5.
Issues Involved:
1. Whether the levy of late filing fee under section 234E of the Income-tax Act, 1961, for periods prior to 01.06.2015, was justified. 2. Whether the rejection of rectification applications under section 154 by the Assessing Officer (AO) was correct. 3. Whether the appeals against the orders of rectification under section 154 were valid. 4. Whether the amendment to section 200A(1) of the Income-tax Act, 1961, effective from 01.06.2015, has retrospective effect. 5. Whether the decisions of various High Courts and ITAT favoring the assessee should be considered. Detailed Analysis: Issue 1: Levy of Late Filing Fee under Section 234E for Periods Prior to 01.06.2015 The assessees argued that the late filing fee under section 234E was levied for periods before 01.06.2015, during which there was no provision in section 200A to levy such a fee. This proposition was upheld by various courts, including the jurisdictional Bench of ITAT, Indore. The Tribunal observed that the late fee under section 234E could not have been levied in the intimations under section 200A for delays in filing quarterly returns of TDS for the period prior to 01.06.2015. Therefore, the levy of late-fee was deemed illegal and a mistake apparent on record. Issue 2: Rejection of Rectification Applications under Section 154 The assessees filed rectification applications under section 154 to the AO for redressal of grievances arising due to the illegal levy of late-fee. The AO rejected these applications, and the assessees appealed to the CIT(A). The Tribunal noted that the rejection of rectification applications by the AO was not justified as the late fee was not leviable by law. The Tribunal observed that the rectification application under section 154 was a valid remedy for the assessees. Issue 3: Validity of Appeals against Orders of Rectification under Section 154 The Tribunal acknowledged that the assessees filed appeals against the rejection of rectification applications under section 154, not against the original intimations under section 200A. The CIT(A) dismissed the appeals, stating there was no apparent mistake in the intimations under section 200A. The Tribunal disagreed, stating that the levy of late-fee was a mistake apparent on record. The Tribunal held that the appeals against the orders of rectification were valid and the CIT(A) was not justified in dismissing them. Issue 4: Retrospective Effect of Amendment to Section 200A(1) Effective from 01.06.2015 The assessees argued that the amendment to section 200A(1) effective from 01.06.2015, which empowered authorities to levy late-fee under section 234E, should not have retrospective effect. The Tribunal agreed, citing various judicial decisions, including those of the ITAT Indore Bench, which held that the amendment was prospective. Therefore, the late-fee charged for periods before 01.06.2015 was without authority of law and deserved to be quashed. Issue 5: Consideration of High Court and ITAT Decisions Favoring the Assessee The Tribunal noted that decisions from the Karnataka High Court, Kerala High Court, and other ITAT Benches supported the assessees' position that the amendment to section 200A was effective only from 01.06.2015. The Tribunal observed that where there is a cleavage of opinion between different High Courts, the one in favor of the assessee should be followed, as per the Supreme Court's decisions in CIT vs. Vegetable Products Ltd. and CIT vs. Vatika Township P. Ltd. The Tribunal held that these decisions should have been considered by the CIT(A). Conclusion: The Tribunal allowed the appeals, holding that the levy of late-fee under section 234E for periods prior to 01.06.2015 was illegal. The rejection of rectification applications under section 154 by the AO was not justified, and the appeals against the orders of rectification were valid. The amendment to section 200A(1) effective from 01.06.2015 did not have retrospective effect. The Tribunal directed the AO to rectify the intimations and delete the late-fee charged therein. The appeals of the assessees were allowed.
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