2018 (9) TMI 1168 - AT - Income Tax

Tribunal Overturns Late Fee Imposition for Income Tax Act; Pre-2015 Fees Invalid

The Tribunal allowed the appeal, overturning the imposition of late fee under section 234E of the Income Tax Act for the 4th Quarter of the Financial Year ... Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- Identical issue has come up for consideration before the Tribunal in the case of Little Servants of Divine Providence Charitable Trust vs. ITO(TDS)[2016 (9) TMI 960-ITAT, Cochin] wherein as held 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. 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. Imposition of late fee under section 234E of the Income Tax Act for the 4th Quarter of the Financial Year 2012-2013.2. Legality of charging late fees under section 234E prior to 1st June 2015.3. Constitutional validity of charging late fees for late filing of e-TDS returns.Issue 1: Imposition of Late Fee under Section 234E:The appeal was against the CIT(Appeals)'s order dismissing the appeal for the 4th Quarter of the Financial Year 2012-2013 and sustaining the imposition of late fee amounting to Rs. 80,150 under section 234E of the Income Tax Act. The CIT(A) held the assessee liable for the late fee under section 234E for delayed filing of the TDS statement. The Tribunal noted an identical issue previously considered in the case of Little Servants of Divine Providence Charitable Trust vs. ITO(TDS), where it was established that post 1st June 2015, adjustments could be made for late fees under section 234E during the processing of TDS statements. The Tribunal referred to other cases supporting the deletion of late fees under section 234E and ultimately allowed the appeal, deleting the late fee imposed.Issue 2: Legality of Charging Late Fees under Section 234E Prior to 1st June 2015:The Tribunal referred to the case of Sibia Healthcare (P) Limited vs. Deputy Commissioner of Income Tax, where it was held that the levy of late fees under section 234E was beyond the permissible adjustments contemplated under section 200A before 1st June 2015. The Tribunal also mentioned the decisions of the Amritsar Bench, Ahmedabad Bench, and Chennai Bench of the Tribunal, all supporting the view that the levy of late fees under section 234E before 1st June 2015 was not valid. Based on these precedents and legal interpretations, the Tribunal deleted the late fee under section 234E in the present case.Issue 3: Constitutional Validity of Charging Late Fees for Late Filing of e-TDS Returns:The Karnataka High Court's decision in the case of Fatheraj Singhvi & Ors. vs. Union of India was referenced, emphasizing that the intimation of demand notices under section 200A without authority of law regarding the computation and demand of fee under section 234E rendered the constitutional validity challenge of section 234E as an academic exercise. The High Court clarified that the constitutional validity of section 234E would remain open for further consideration. The Tribunal, aligning with the Karnataka High Court's decision, deleted the late fee under section 234E in the present case, as it was established that there could be no levy of late fee under section 234E for the period prior to 1st June 2015.In conclusion, the Tribunal allowed the appeal, setting aside the imposition of late fee under section 234E of the Income Tax Act for the 4th Quarter of the Financial Year 2012-2013, based on the legal precedents and interpretations regarding the legality of charging late fees under section 234E before 1st June 2015 and the constitutional validity of such charges for late filing of e-TDS returns.