Tribunal invalidates fees levied by Assessing Officer before 01.06.2015, emphasizes substantial justice

The Tribunal held that the Assessing Officer lacked authority to levy fees under Section 234E for periods before 01.06.2015 while processing TDS statements. The demands for fees were deemed invalid and deleted, resulting in the appeals of the assessees being allowed. The delay in filing appeals was condoned by the Tribunal, emphasizing the importance of substantial justice over technicalities.

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Issues Involved:

1. Levy of fees for delay in filing the TDS return under Section 234E of the Income Tax Act, 1961.
2. Validity of the impugned levy of fees under Section 234E in the order passed under Section 200A of the Act.

Detailed Analysis:

1. Levy of Fees for Delay in Filing the TDS Return under Section 234E:

The Commissioner of Income Tax (Appeals)-3, Jaipur, confirmed the levy of fees for delay in filing the TDS return under Section 234E of the Income Tax Act, 1961. The assessee argued that the CIT(A) should have directed the waiver of the said fees, considering the facts and circumstances of the case. The CIT(A) relied on the Rajasthan High Court's decision in M/s Dundlod Shikshan Sansthan v. Union of India, which upheld the constitutional validity of Section 234E and the levy of fees for late filing of TDS returns. However, the Tribunal found that the CIT(A) misinterpreted the decision as it did not address the mechanism of levying fees under Section 234E while processing TDS statements under Section 200A.

2. Validity of the Impugned Levy of Fees under Section 234E in the Order Passed under Section 200A of the Act:

The assessee contended that the power to collect fees under Section 234E by the prescribed authority was vested only by the substitution of clause (c) to Section 200A(1) by the Finance Act, 2015, effective from 01.06.2015. Therefore, the Assessing Officer had no authority to charge the fees under Section 234E while issuing intimation under Section 200A before this date. The Tribunal agreed with the assessee, referencing several judgments, including the Karnataka High Court's decision in Fatheraj Singhvi v. Union of India, which held that the amendment to Section 200A is prospective. Consequently, the AO's action of levying fees under Section 234E for periods before 01.06.2015 was outside the scope of Section 200A and invalid.

Condonation of Delay:

The Tribunal also addressed the delay in filing the appeals. The assessee attributed the delay to the unavailability of the concerned employee responsible for TDS returns and filing appeals. The Tribunal found the explanation bona fide and condoned the delay, emphasizing that substantial justice should be preferred over technical considerations.

Conclusion:

The Tribunal concluded that the Assessing Officer was not empowered to charge fees under Section 234E while processing TDS statements for periods prior to 01.06.2015. The demands raised by charging the fees under Section 234E were deemed invalid and were deleted. The appeals of the respective assessees were allowed.

Order Pronounced:

The order was pronounced in the open Court on 29/10/2018.

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