2023 (6) TMI 868 - AT - Income Tax

Levy of late fee u/s 234E - delayed filing of quarterly statements of TDS - period prior to 01.6.2015 - HELD THAT - We note that only after 1st June, 2015 while processing of a TDS/TCS statement and issuance of intimation u/s 200A/206CB of the Act in respect thereof, an adjustment could have been made in respect of fee , if any shall be computed in accordance with the provisions of section 234E of the Act. Prior to 1st June, 2015, there was no enabling provision therein for raising a demand in respect of levy of fees u/s 234E of the Act. Therefore, no such levy could have been effected. See Olari Little Flower Kuries Pvt. Ltd. Vs. Union of India 2022 (2) TMI 1061 - KERALAHIGH COURT , M/s. Sarala Memorial Hospital 2018 (12) TMI 1818 - KERALA HIGH COURT ,.M/s. Mayi Industries Vs. Union of India and M/s. Anadiyil Hospital 2022 (2) TMI 1061 - KERALAHIGH COURT Ergo, we hold that the order levying late fee u/s 234E of the Act is bad in law and therefore, cancelled. Appeals of the assessee are allowed.

Summary

Issues:
The issues in this case involve the appeal by the assessee against the order confirming the levy of late fees under section 234E of the Income Tax Act, 1961 for Assessment Years 2013-14 & 2014-15.

Levy of Late Fee under Section 234E:
The main contention of the assessee was that the late fee imposed under section 234E of the Act is invalid as the cause of action occurred before 01.06.2015. The argument was based on the judgment in the case of M/s. Sarala Memorial Hospital Vs. Union of India, which held that the amendment to section 200A(1) is prospective in nature. The Kerala High Court affirmed this view in the case of M/s Olari Little Flower Kuries (P.) Ltd. v. UoI, stating that no late filing fee could be levied for processing under section 200A(1) for any period before 01.06.2015.

Judicial Opinions:
The Karnataka High Court in Fatheraj held that prior to 01.06.2015, there was no authority to compute and determine the fee under section 234E. However, the Gujarat High Court in Rajesh Kourani took a different stance, emphasizing that section 200A is a machinery provision and does not create a charge like section 234E. The Kerala High Court concurred with the Karnataka High Court's view, stating that the amendment in Finance Act, 2015 is prospective and does not apply to periods before 01.06.2015.

Decision and Rationale:
The Appellate Tribunal held that the levy of late fee under section 234E for the relevant quarters prior to 01.06.2015 is not valid. It was noted that the enabling provision for raising a demand for late fees under section 234E was introduced only after 1st June 2015. Therefore, the order levying late fees was deemed bad in law and subsequently cancelled. The appeals of the assessee were allowed, and the late fees for the relevant assessment years were directed to be deleted.

Conclusion:
The Appellate Tribunal ruled in favor of the assessee, citing the prospective nature of the amendment to section 200A(1) and the absence of an enabling provision for late fee levy before 01.06.2015. As a result, the late fees imposed under section 234E for the specified quarters were deemed invalid and directed to be deleted.