Interpretation of Income Tax Act on Section 234E Fees for TDS Statement Delays

The Third Member, concurring with the Judicial Member, held that the fee under section 234E of the Income Tax Act could only be imposed for delays in filing TDS statements after 1st June 2015. Consequently, the appeals were allowed for statistical purposes, indicating that the fee could not be charged for periods preceding the specified date.

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Issues:
Challenge to levy of fee under section 234E of the Income Tax Act, 1961 for TDS statements prior to 1st June 2015.

Analysis:
The appeals were against a common order regarding the levy of fee under section 234E of the Income Tax Act, 1961 while processing TDS statements. The provision for this fee was introduced with the insertion of sub-clause (c) to sub-section (1) by the Finance Act, 2015, effective from 1st June 2015. The main contention was whether this provision applied retrospectively or prospectively. The Accountant Member believed it applied retrospectively, while the Judicial Member opined it applied prospectively post 1st June 2015. Due to this difference, the issue was referred to the Third Member. The Third Member framed the question of whether the fee under section 234E could be levied for periods before 1st June 2015 when there was no decision by the jurisdictional High Court and conflicting views from other High Courts.

The Third Member, concurring with the Judicial Member, held that the fee under section 234E could only be imposed for delays in filing TDS statements after 1st June 2015. Consequently, the appeals were allowed for statistical purposes, indicating that the fee could not be charged for periods preceding the specified date. The decision was pronounced in open court on 28th August 2019.

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