Appeals allowed against interest levy for late TDS returns; conflicting Tribunal decisions resolved

The appeals were filed against orders concerning the levy of interest under section 234E for late filing of TDS returns. The Assessee argued that the fee could not be charged for statements filed before a specific date. The CIT(A) upheld the levy based on a court decision, but another Tribunal case found the levy illegal for returns filed earlier. Consequently, the appeals were allowed, and the interest under section 234E for the relevant period was deemed unsustainable.

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Issues involved:
Levy of interest under section 234E for filing TDS returns belatedly.

Detailed Analysis:
1. The present appeals were filed against separate orders dated 25/03/2022 by the National Faceless Appeal Centre (NFAC), Delhi concerning Assessment Years 2013-14 to 2015-16. The main issue raised in the appeals was the levy of interest under section 234E for filing TDS returns late.

2. The Assessee had filed TDS statements for various quarters in Form No. 26Q for different quarterly years in FY 2012-13 to 2014-15. The CPC TDS, Bengaluru processed the statements and the Ld.AO levied late fee under section 234E due to the delay in filing.

3. The Assessee contended that the provisions of section 234E were inserted by the Finance Act, 2012 w.e.f. 1.7.2012, and the authority could not levy the fee for statements filed prior to 1.6.2015. The Assessee challenged the validity of charging the fee under section 234E.

4. The Ld.CIT(A) considered the submissions and relied on the decision of the Hon'ble Gujarat High Court in the case of Rajesh Kourani v. Union of India, which held that section 200A is a machinery provision and section 234E can be levied even without section 200A. The Ld.CIT(A) upheld the levy of late filing fees under section 234E.

5. The Coordinate Bench of the Tribunal in another case observed that the levy of interest under section 234E would be illegal for TDS returns filed before 1.6.2015, based on the decision of the Hon'ble Karnataka High Court in the case of Fateeraj Singhvi. The Tribunal allowed the appeals filed by the assessee, stating that the interest under section 234E cannot be sustained for the relevant period.

6. Therefore, based on the above analysis and legal interpretations, the appeals filed by the assessee were allowed, and the interest under section 234E for the specified period was deemed unsustainable. The decision was pronounced on 29th July, 2022.

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