Tribunal cancels late fee orders under Income Tax Act, following High Court ruling. Late fees for TDS statements pre-2015 deleted.

The Tribunal allowed the appeals, canceling the orders levying late fees under Section 234E of the Income Tax Act, 1961. It followed the Karnataka High Court's decision, holding that the Assessing Officer lacked the power to levy late fees for TDS statements filed before 1.6.2015. As a result, the late fees imposed for the assessment years 2013-14 and 2014-15 were directed to be deleted. The Tribunal's decision was announced on 26th April 2018.

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Issues Involved:
1. Levy of late fee under Section 234E of the Income Tax Act, 1961.
2. Enabling provision for the levy of late fee under Section 200A of the Income Tax Act, 1961.
3. Contradictory judgments from different High Courts regarding the levy of late fee under Section 234E.

Detailed Analysis:

1. Levy of Late Fee under Section 234E:
The appeals concern the levy of late fees under Section 234E of the Income Tax Act, 1961, for delayed filing of TDS statements for the quarters ending September, December, and March of the financial year 2012-13. The Assessing Officer (A.O.) levied late fees of Rs. 42,400/-, Rs. 24,000/-, and Rs. 39,200/- respectively for these quarters due to delays of 212 days, 120 days, and 196 days. The CIT(A) confirmed the late fees, relying on the decision of the Gujarat High Court in Rajesh Kourani Vs. UOI.

2. Enabling Provision for Levy of Late Fee under Section 200A:
The appellant argued that although Section 234E was introduced with effect from 1.7.2012, the enabling provision for levying late fees was inserted in Section 200A by the Finance Act, 2015, effective from 1.6.2015. Thus, the power to levy late fees under Section 234E was vested with the revenue only from 1.6.2015. The appellant cited the Karnataka High Court decision in Fatheraj Singhvi, which held that Section 200A enabling the A.O. to determine late fees under Section 234E is prospective and cannot be applied to TDS statements filed before 1.6.2015.

3. Contradictory Judgments from Different High Courts:
The Tribunal noted the conflicting judgments from the Karnataka High Court and the Gujarat High Court. The Karnataka High Court ruled in favor of the assessee, stating that late fees under Section 234E could not be levied before 1.6.2015, while the Gujarat High Court ruled in favor of the revenue. The Tribunal referenced the Andhra Pradesh High Court's decision in State of Andhra Pradesh Vs. Commercial Tax Officer, which held that in the case of conflicting judgments, the decision most favorable to the assessee should be adopted. Similarly, the Supreme Court in CIT Vs. Vegetable Products Limited endorsed this view.

Tribunal's Conclusion:
The Tribunal, after considering the arguments and the conflicting judgments, decided to follow the Karnataka High Court's decision, which is favorable to the assessee. It held that the A.O. is not empowered to levy late fees for TDS statements filed before 1.6.2015. The Tribunal directed the A.O. to delete the late fees levied for the assessment years 2013-14 and 2014-15.

Result:
The appeals filed by the assessee were allowed, and the orders levying late fees were canceled. The Tribunal's decision was pronounced in the open court on 26th April 2018.

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