2019 (12) TMI 1540 - AT - Income Tax

ITAT Mumbai rules late fees under Section 234E before 01.06.2015 amendment date void.

Sila Projects Management Services Pvt. Ltd. (Formerly known as CM & D Sila Development Service India Pvt. Ltd.), CM & D Sila Development Services India Pvt. Ltd. Versus ACIT (TDS) -CPC, Ghaziabad & ITO (TDS) -1 (1) (4), Mumbai.

The ITAT Mumbai ruled in favor of the assessee in the case concerning the levy of late fees under Section 234E for A.Y. 2014-15. The ITAT held that the ... Levy of late fee u/s 234E by way of processing TDS statement u/s 200A - assessee has argued that according to Section 200A of the Act which unable the AO to charge fee u/s 234E of the Act was prospectively made effective w.e.f. 01.06.2015, therefore, no fee u/s 234E could have been levied for the assessment years prior to 01.06.2015 - HELD THAT:- It is not in dispute that the assessee has filed the statement of tax deducted at source in ‘Form No.26Q’ for the F.Y.2014-15 delayed. AO has levied the late fees u/s 234E and interest in sum on the basis of an intimation u/s 200A - As in the case of Fatehraj Singhavi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] had observed that the notice u/s 200A of the Act computing fee u/s 234E of the Act would be effective in respect of the period of tax deduction subsequent to 01.06.2015. Since levy of fees u/s 234E of the Act was made available in Section 200A therefore, we are of the considered view that no fees u/s 234E could have been charged in the course of processing of the statement of tax deducted at source u/s 200A for the period prior to 01.06.2015, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable, hence, we set aside the finding of the CIT(A) on these issues and delete the fees levied statutory dues provisions u/s 234E of the Act. Accordingly, all the issues are decided in favour of the assessee against the revenue. Issues:- Appeal against levy of late fee u/s 234E of the Income Tax Act for A.Y. 2014-15- Interpretation of Section 200A of the Act regarding the charging of late fees- Authority of ACIT-TDS, CPC to levy late fee u/s 234E- Applicability of the amendment enabling levy of fees u/s 234E from 01.06.2015Analysis:1. Appeal against levy of late fee u/s 234E for A.Y. 2014-15:The assessee contested the late fee u/s 234E of Rs. 16,360 levied by the ACIT, Central Processing Cell TDS for delayed filing of the TDS statement. The argument was based on Section 200A of the Act, effective from 01.06.2015, which the assessee believed did not permit the levy of late fees for periods before this date. The representative relied on the Karnataka High Court's decision in Fatehraj Singhavi Vs. Union of India (2016) to support this contention. However, the Department's representative supported the CIT(A)'s order upholding the late fee. The ITAT Mumbai examined previous judgments, including the ITAT Chandigarh's decision in Sonalac Paint & Coating Ltd. Vs. DCIT (2018), and concluded that the late fee levied prior to 01.06.2015 was without legal authority. As the present case pertained to A.Y. 2014-15 before the amendment date, the ITAT set aside the CIT(A)'s decision and deleted the late fee.2. Interpretation of Section 200A regarding late fee charge:The ITAT considered the provisions of Section 200A of the Act and its application to the charging of late fees u/s 234E. It was noted that the amendment enabling the levy of late fees was effective from 01.06.2015. The ITAT emphasized that prior to this date, the charging of late fees under Section 234E while processing TDS returns under Section 200A lacked legal authority. Rulings from various ITATs were cited to support the conclusion that the ACIT-TDS, CPC had erred in levying fees under Section 234E for periods before 01.06.2015. Therefore, the ITAT ruled in favor of the assessee and set aside the demand raised by the AO under Section 234E.3. Authority of ACIT-TDS, CPC to levy late fee u/s 234E:The ITAT scrutinized the authority of the ACIT-TDS, CPC to levy late fees u/s 234E. It was observed that the ACIT-TDS, CPC's action in charging late fees for quarters prior to 01.06.2015 was deemed to be without jurisdiction and against the law. Citing precedents such as the ITAT Amritsar's decision in Tata Rice Mills Vs. ACIT (CPC), TDS Ghaziabad, the ITAT Mumbai held that the levy of late fees under Section 234E in such cases was not legally permissible. Consequently, the ITAT set aside the CIT(A)'s decision and vacated the demand raised under Section 234E.4. Applicability of the amendment enabling levy of fees from 01.06.2015:The ITAT clarified that the amendment enabling the levy of late fees u/s 234E was effective from 01.06.2015. As the present case related to A.Y. 2014-15 prior to this amendment date, the ITAT concluded that no late fees could be charged for periods preceding 01.06.2015. By aligning with previous decisions and legal interpretations, the ITAT ruled that the CIT(A)'s findings were unjustifiable, leading to the deletion of the fees levied under Section 234E. All appeals with similar issues were allowed based on this interpretation.In conclusion, the ITAT Mumbai's judgment in the referenced case addressed the issues related to the levy of late fees u/s 234E for A.Y. 2014-15, the interpretation of Section 200A, the authority of ACIT-TDS, CPC to charge late fees, and the applicability of the amendment enabling such fees from 01.06.2015. The ITAT ruled in favor of the assessee, setting aside the late fee demands and emphasizing the legal limitations on charging late fees for periods preceding the specified amendment date.