2020 (7) TMI 34 - AT - Income Tax

Tribunal affirms penalty under Income Tax Act Section 234E, emphasizing mandatory nature. Financial hardship not a valid reason. Recovery through Section 200A upheld.

The Tribunal upheld the levy of penalty under Section 234E of the Income Tax Act, emphasizing its mandatory nature without discretion for reasonable ... Levy of late fee under Section 234E - mandatory nature of Section 234E - processing of TDS statements under Section 200A - duty to furnish quarterly TDS statements under Section 200(3) - no discretion to waive late feeLevy of late fee under Section 234E - mandatory nature of Section 234E - processing of TDS statements under Section 200A - duty to furnish quarterly TDS statements under Section 200(3) - Levy of late fee under Section 234E for delayed filing of the quarterly TDS statement is mandatory and not removable on the ground of reasonable cause; adjustment of such fee by the Assessing Officer while processing the TDS statement under Section 200A is lawful. - HELD THAT: - The assessee admitted delay of 315 days in filing the quarterly TDS statement for Quarter No.1 of F.Y. 2017-18. Section 200(3) imposes the duty to deliver prescribed statements and Section 200A(1)(c) expressly requires that the fee, if any, shall be computed in accordance with Section 234E while processing TDS statements. Consequently, where there is a default in furnishing statements, the levy under Section 234E is consequential on processing and mandatory in nature; the Assessing Officer has no discretion to waive or delete the fee for reasons of 'reasonable cause'. The Court further observed that an intimation under Section 200A can be challenged only insofar as the A.O. has not complied with the statutory provisions in computing or adjusting amounts; no such violation was alleged. In the absence of any contention that the A.O. contravened the statutory scheme of Sections 200(3), 200A or 234E, the adjustment of the late fee by the A.O. was held to be in accordance with law and therefore sustainable. [Paras 6, 7]The adjustment of late filing fee under Section 234E by the A.O. while processing the TDS statement under Section 200A is upheld and cannot be deleted on the ground of reasonable cause.Final Conclusion: The appeal is dismissed; the levy of late fee under Section 234E for the delayed filing of the Quarter No.1 TDS statement of F.Y. 2017-18, as adjusted in the intimation under Section 200A, is sustained. Issues Involved:1. Sustaining the levy of penalty under Section 234E of the Income Tax Act, 1961.2. Consideration of reasonable cause for delay in filing TDS statements.3. Legality of late fee recovery under Section 234E through intimation under Section 200A.4. The impact of financial hardship on the imposition of late fees.5. Interpretation of Section 200A and its applicability to late fee imposition.6. The scope of appeal against intimation issued under Section 200A.Detailed Analysis:1. Sustaining the Levy of Penalty under Section 234E:The primary issue is whether the Commissioner of Income Tax (Appeals) erred in sustaining the levy of penalty under Section 234E. The appellant argued that the penalty was imposed without considering the bona fide explanation and sufficient cause for the delay. The Tribunal upheld the penalty, emphasizing that the levy under Section 234E is mandatory and consequential, thus not subject to discretion based on reasonable cause.2. Consideration of Reasonable Cause for Delay in Filing TDS Statements:The appellant contended that the delay in filing the quarterly TDS statement was due to unavoidable circumstances, such as staff shortages and involvement in other public interest activities. Despite these explanations, the Tribunal held that the mandatory nature of Section 234E does not allow for the deletion of the late fee based on reasonable cause. The Tribunal noted that the delay of 315 days in filing the TDS statement was admitted by the appellant, and thus, the levy was justified.3. Legality of Late Fee Recovery under Section 234E through Intimation under Section 200A:The appellant argued that the late fee should have been deposited at the time of delivering the TDS statement and not later through intimation under Section 200A. The Tribunal clarified that Section 200A allows for the processing of TDS statements and the computation of fees under Section 234E. Therefore, the recovery of late fees through intimation is legal and in accordance with the provisions of the Act.4. The Impact of Financial Hardship on the Imposition of Late Fees:The appellant claimed that the imposition of late fees would cause genuine hardship as the funds are allocated for public education projects. The Tribunal, however, maintained that financial hardship does not exempt the appellant from the mandatory levy under Section 234E. The Tribunal emphasized that the nature of the levy is such that it does not consider the financial condition of the deductor.5. Interpretation of Section 200A and Its Applicability to Late Fee Imposition:The Tribunal examined Section 200A, which outlines the processing of TDS statements and the adjustments to be made, including the computation of fees under Section 234E. The Tribunal reiterated that the Assessing Officer (A.O.) is required to make these adjustments mandatorily, and there is no discretion involved. The Tribunal found that the A.O. acted within the legal framework by imposing the late fee.6. The Scope of Appeal Against Intimation Issued under Section 200A:The Tribunal noted that an intimation issued under Section 200A is appealable only if it violates the provisions of Section 234E or Section 200A. In this case, the appellant did not allege any such violation. Therefore, the Tribunal concluded that the adjustment made by the A.O. was in accordance with the law, and the appeal lacked merit.Conclusion:The Tribunal dismissed the appeal, upholding the orders of the lower authorities. The Tribunal concluded that the levy of late fees under Section 234E is mandatory and cannot be waived based on reasonable cause or financial hardship. The processing of TDS statements and the imposition of late fees through intimation under Section 200A were deemed legal and in compliance with the Income Tax Act.