Tribunal rules late fees invalid for pre-June 2015 TDS filings, allowing assessee's appeal

The Tribunal held that the Assessing Officer could not levy late fees under Section 234E for TDS statements filed before 1st June 2015. Intimations issued under Section 200A for the financial year 2012-13, prior to the amendment date, were deemed invalid. The late fees imposed were directed to be deleted, resulting in the appeal of the assessee being allowed. The order was pronounced on 5th February 2020.

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Issues Involved:
1. Levy of late fee under Section 234E of the Income Tax Act.
2. Validity of intimation issued under Section 200A of the Income Tax Act prior to the amendment effective from 1st June 2015.

Issue-wise Detailed Analysis:

1. Levy of Late Fee under Section 234E of the Income Tax Act:
The primary issue in this case revolves around the levy of a late fee under Section 234E of the Income Tax Act for delays in furnishing quarterly TDS statements. The assessee argued that the Assessing Officer (AO) was not empowered to levy such fees while processing TDS returns prior to the amendment to Section 200A(1)(c) of the Act, which came into effect on 1st June 2015. The Tribunal referenced a decision by the Pune Bench, which held that the AO could not charge late fees under Section 234E while processing TDS statements before this amendment. This view was supported by various case laws, including the Karnataka High Court’s decision in Sri Fatheraj Singhvi & Ors. Vs. Union of India, which found that levying late fees under Section 234E was not valid for intimation raising demands before 1st June 2015.

2. Validity of Intimation Issued under Section 200A Prior to 1st June 2015:
The Tribunal examined whether the amendment to Section 200A(1) by the Finance Act, 2015, which enabled the AO to levy fees under Section 234E, was prospective or retrospective. It was concluded that the amendment was prospective and not applicable to pending assessments. The Tribunal cited the Supreme Court’s decision in CIT Vs. Vatika Township Pvt. Ltd., which established that unless a contrary intention appears, legislation is presumed not to have retrospective operation. The Tribunal further noted that the explanatory memo for the Finance Bill, 2015, recognized that the existing provisions of Section 200A did not allow for the determination of fees under Section 234E at the time of processing TDS statements. Therefore, the amendment effective from 1st June 2015 was intended to empower the AO to levy such fees, and it could not be applied retrospectively.

The Tribunal also referenced several other decisions, including those by the Mumbai Bench in cases like Asian Pipes & Profiles Pvt. Ltd. Vs. Assessing Officer, TDS Ward, and M/s. Sachhiyay Gold & Others v. TDS CPC, which upheld the view that fees under Section 234E could only be charged for delays occurring after 1st June 2015. Additionally, a Third Member Bench decision in Emsons Exim Pvt. Ltd. v. ITO (TDS) confirmed that fees under Section 234E could only be levied for periods after the amendment date, further supporting the prospective nature of the amendment.

Conclusion:
The Tribunal concluded that the AO was not empowered to levy late fees under Section 234E for TDS statements filed before 1st June 2015. Consequently, the intimations issued under Section 200A for the financial year 2012-13, which were passed before the amendment date, were invalid. The Tribunal directed the deletion of the late fees levied in these cases, thereby allowing the appeal of the assessee.

Order Pronounced:
The appeal of the assessee was allowed, and the order was pronounced in the open court on 5th February 2020.

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