2016 (3) TMI 455 - AT - Income Tax

Tribunal cancels late filing fee, cites procedural error

The Tribunal allowed the Assessee's appeal, directing the deletion of the late filing fee under Section 234E and acknowledging the procedural irregularity ... Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee. Issues Involved:1. Legality of the order passed under Section 200A of the Income Tax Act, 1961.2. Non-issuance of show cause notice before passing the order.3. Legitimacy of the charges for late payment of TDS and late filing fees under Section 234E of the Income Tax Act, 1961.Detailed Analysis:1. Legality of the Order Passed Under Section 200A:The Assessee contested the order passed by the Deputy Commissioner of Income Tax, Centralized Processing Cell-TDS, Ghaziabad, under Section 200A of the Income Tax Act, 1961. The primary contention was that the order, dated 19/05/2014, confirming the penalty for late filing of TDS return for the third quarter of the financial year 2013-14, was illegal and bad in law. The Tribunal referred to the decision in the case of Siddhi Vinayak Developers vs. DCIT, which held that the late filing fee under Section 234E could only be levied after 01/06/2015. Since the impugned order was passed before this date, it was deemed unsustainable in law.2. Non-Issuance of Show Cause Notice:The Assessee argued that the order under Section 200A was passed without issuing a show cause notice, thus violating the principles of natural justice. The Tribunal acknowledged this procedural lapse, emphasizing that the lack of an opportunity to be heard rendered the order invalid.3. Legitimacy of Charges for Late Payment of TDS and Late Filing Fees Under Section 234E:The Assessee challenged the charges of Rs. 510 for late payment of TDS and Rs. 17,061 for late filing fees under Section 234E. The Tribunal's analysis was guided by the precedent set in the case of Sibia Healthcare Private Limited vs. DCIT, which clarified that the adjustment for late filing fees under Section 234E could not be made under Section 200A before 01/06/2015. The Tribunal noted that the Finance Act 2015, effective from 1st June 2015, amended Section 200A to include the computation of fees under Section 234E. However, since the order in question was issued prior to this amendment, the levy of fees was beyond the permissible scope of adjustments under Section 200A at that time. Consequently, the Tribunal directed the deletion of the late filing fee of TDS return under Section 234E.Conclusion:The Tribunal allowed the Assessee's appeal, directing the deletion of the late filing fee under Section 234E and acknowledging the procedural irregularity of not issuing a show cause notice. The Tribunal's decision was based on established judicial precedents and the statutory amendments effective from 1st June 2015. The appeal was thus allowed, and the impugned order was quashed.