2016 (4) TMI 129 - AT - Income Tax

Tribunal Cancels Late Fee for Assessee in 2014-15 Appeal

The Tribunal allowed the appeal of the assessee and deleted the levy of late fee imposed under section 234E for the quarter-1 of the assessment year ... Fee for defaults in furnishing statements under Section 234E - processing of statements of tax deducted at source and issuance of intimation under Section 200A - scope of permissible adjustments under Section 200A prior to amendment - intimation under Section 200A as an appealable orderFee for defaults in furnishing statements under Section 234E - processing of statements of tax deducted at source and issuance of intimation under Section 200A - scope of permissible adjustments under Section 200A prior to amendment - intimation under Section 200A as an appealable order - Levy of late filing fee under Section 234E could not be effected by way of intimation under Section 200A as the law stood prior to amendment w.e.f. 1 June 2015, and the impugned fee is unsustainable. - HELD THAT: - As the Tribunal explained, Section 200A, in its pre amendment form, permitted only specified adjustments in processing TDS statements - namely, correction of arithmetical errors and incorrect claims apparent from the statement, and computation of interest on sums deductible as computed in the statement. No other adjustments were permissible under Section 200A at that time. The fee under Section 234E was introduced as a separate levy and, before the Finance Act 2015 amendment (effective 1 June 2015), Section 200A did not provide an enabling mechanism to compute or adjust such a fee while issuing an intimation under Section 200A. The impugned intimation dated 11.12.2013 purported to raise a demand by adjusting for Section 234E fees, which was beyond the limited mandate of Section 200A. The CIT(A) upheld the levy on the basis of Section 234E itself without addressing whether Section 200A empowered the raising of that demand by intimation; that was the determinative legal question. Further, even if an enabling provision were assumed, the statutory time limit for issuance of an intimation under Section 200A (within one year from the end of the financial year in which the statement was filed) had expired in the facts of this case. In these circumstances the impugned levy was held unsustainable and was deleted. [Paras 4, 5]Impugned levy of late filing fee under Section 234E imposed by intimation dated 11.12.2013 is deleted and the appeal is allowed.Final Conclusion: The Tribunal allowed the assessee's appeal and deleted the late filing fee levied under Section 234E by the intimation issued prior to the amendment of Section 200A, holding that such a levy could not be effected by an intimation under Section 200A as it stood then; appeal allowed. Issues:Late filing fee under section 234E of the Income Tax Act for the quarter 1 of the Asstt. Year 2014-15.Analysis:The appeal was filed against the order of the ld.CIT(A) upholding the late filing fee of Rs. 5,600/- for the quarter 1 of the Asstt. Year 2014-15 imposed by the AO under section 234E of the Income Tax Act. The counsel for the assessee argued that the late payment under section 234E was levied before the amendment to section 200A of the Income Tax Act. The Tribunal followed the order of the ITAT, Amristar Bench in the case of Sibia Healthcare P. Ltd. Vs. DCIT, and reproduced the relevant part of the order. The Tribunal highlighted that the issue required adjudication on a short legal issue within a narrow compass of material facts.The Tribunal discussed the provisions of sections 234E and 200A of the Income Tax Act. Section 234E deals with the fee for defaults in furnishing statements, while section 200A relates to the processing of statements of tax deducted at source. The Tribunal emphasized that post 1st June 2015, an adjustment could be made in the processing of TDS statements in accordance with the provisions of section 234E. However, prior to this amendment, the scope of adjustments under section 200A was limited to arithmetical errors, incorrect claims, and interest computation based on sums deductible.The Tribunal concluded that the adjustment in respect of the levy of fees under section 234E was beyond the permissible adjustments contemplated under section 200A, as it stood before the June 2015 amendment. The intimation under section 200A was deemed appealable, and the CIT(A) should have examined the legality of the adjustment in light of the scope of section 200A. As the levy was made before the enabling provision under section 200A came into effect, it was deemed unsustainable in law. The Tribunal upheld the assessee's grievance and deleted the impugned levy of fee under section 234E.The Departmental Representative did not present any other judgment to negate the Tribunal's finding. Consequently, following the precedent set by previous orders, the Tribunal allowed the appeal of the assessee and deleted the levy of late fee imposed under section 234E for the quarter-1 of the assessment year 2014-15. The appeal of the assessee was allowed, and the order was pronounced on 1st April 2016 at Ahmedabad.This detailed analysis of the judgment highlights the legal arguments, statutory provisions, and the Tribunal's reasoning in deciding the appeal against the levy of late filing fees under section 234E of the Income Tax Act.