Tribunal rules against retroactive late fees for TDS statements, favoring taxpayers

The Tribunal held that Revenue authorities were not justified in levying late fees under section 234E of the Income Tax Act for TDS statements processed under section 200A before 01.06.2015. The Tribunal found that the amendment was prospective, and therefore, fees under section 234E could not be charged before the effective date of the amendment. Consequently, all 56 appeals were allowed in favor of the assessee.

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Issues Involved:
1. Whether the Revenue authorities were justified in levying late fees under section 234E of the Income Tax Act while processing the statement of tax deducted at source under section 200A of the Act before the amendment effective from 01.06.2015.

Issue-wise Detailed Analysis:

1. Justification of Levying Late Fees Under Section 234E Before Amendment:

The core issue in all 56 appeals was whether the Revenue authorities were justified in levying late fees under section 234E of the Income Tax Act while processing the statement of tax deducted at source (TDS) under section 200A of the Act, before the amendment effective from 01.06.2015.

Brief Facts:
The appellant failed to file the TDS statement within the prescribed due date. As per section 234E, a fee is leviable for default in furnishing the TDS statement. The Revenue authorities charged the late fees while processing the TDS statement under section 200A. The appellant contended that before the amendment effective from 01.06.2015, the Revenue authorities lacked the power to levy late fees under section 234E in the statement processed under section 200A.

Appellant's Argument:
The appellant's senior counsel argued that the issue was covered in favor of the assessee by several decisions of the Coordinate Bench, which held that the amendment brought by the Finance Act 2015 w.e.f. 01.06.2015 was prospective. Therefore, no fee under section 234E could be levied for TDS statements processed under section 200A before this date.

Respondent's Argument:
The Departmental Representative failed to counter the submissions made by the appellant's counsel.

Tribunal's Findings:
The Tribunal noted that the issue had been consistently adjudicated by various benches of the Tribunal, which held that the amendment in section 200A effective from 01.06.2015 was prospective. Consequently, fees under section 234E could not be levied for TDS statements processed under section 200A up to 31.05.2015.

Reference to Previous Judgments:
- Sudershan Goyal vs. DCIT (TDS): The Agra Bench observed that before 01.06.2015, there was no enabling provision in section 200A to levy fees under section 234E. The Tribunal followed the principle that where there is a cleavage of opinion between different High Courts, the view favoring the assessee should be followed.
- Mentor India Limited vs. DCIT: The Jaipur Bench held that no fees under section 234E could be levied for TDS statements processed under section 200A before 01.06.2015, following the Karnataka High Court's decision in Fatehraj Singhvi vs. UOI.
- State Bank of India, Gwalior vs. CIT(A): The Agra Bench reiterated that prior to 01.06.2015, section 200A did not have the provision to levy fees under section 234E, thus favoring the assessee.

Conclusion:
The Tribunal concluded that the CIT(A) erred in confirming the levy of late fees under section 234E. The amendment brought by the Finance Act 2015 was prospective, and therefore, fees under section 234E could not be charged for TDS statements processed under section 200A before 01.06.2015. Consequently, all 56 appeals were allowed in favor of the assessee.

Final Order:
All 56 appeals of the assessee were allowed, and the order was pronounced in the open court on 13.11.2018.

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