2020 (8) TMI 510 - AT - Income Tax

Tribunal Upholds Income Tax Late Fee Levy, Emphasizes AO's Authority

Child Development Project Office-Shrinagar Versus A.C.I.T., CPC (TDS), Gaziabad.

Child Development Project Office-Shrinagar Versus A.C.I.T., CPC (TDS), Gaziabad. - TMI Issues Involved:1. Levy of late fee under Section 234E of the Income Tax Act, 1961.2. Validity of appeal filed by the assessee.3. Reasonableness and bona fide cause for delay in filing TDS statements.4. Applicability and constitutionality of Section 234E.5. Authority of the Assessing Officer (A.O.) to levy late fees under Section 234E while processing TDS statements under Section 200A.Detailed Analysis:1. Levy of Late Fee Under Section 234E:The primary issue revolves around the levy of late fee under Section 234E of the Income Tax Act, 1961. The assessee filed the quarterly TDS statement for the first quarter of F.Y. 2017-18 belatedly, and the A.O. levied a late fee of Rs. 69,200 while processing the statement under Section 200A. The Tribunal noted that the levy of late fee under Section 234E is mandatory and consequential in nature. The A.O. is bound to compute and adjust the late fee while processing the TDS statements if there is a delay.2. Validity of Appeal Filed by the Assessee:The appeal filed by the assessee was delayed by 170 days, and there was no application for condonation of delay. Consequently, the Tribunal considered the appeal invalid. However, the Tribunal proceeded to address the issues raised, noting that the matter was covered by consistent decisions of the Tribunal.3. Reasonableness and Bona Fide Cause for Delay:The assessee argued that the delay in filing the TDS statement was due to a technical default and not due to any mala fide intention. The tax was deducted and deposited on time, and there was no loss to the revenue. The Tribunal acknowledged the explanation but emphasized that the levy of late fee under Section 234E is mandatory and cannot be waived on the grounds of reasonableness or bona fide cause.4. Applicability and Constitutionality of Section 234E:The assessee contended that the late fee should not be recovered if it was not deposited at the time of delivering the TDS statements. The Tribunal referred to the Bombay High Court's decision in the case of Rashmikant Kundalia, which upheld the constitutional validity of Section 234E, stating that the fee is not in the guise of a tax and is constitutionally valid. The Tribunal also noted that the Supreme Court had admitted a Special Leave Petition (SLP) against the Bombay High Court's order, but no stay was granted on the recovery of the fee.5. Authority of the A.O. to Levy Late Fees:The Tribunal referred to the amendment effective from 01/06/2015 in Section 200A, which empowers the A.O. to make adjustments on account of late fee under Section 234E while processing TDS statements. The Tribunal reiterated that the A.O. has no discretion in this matter and must levy the late fee if there is a delay in filing the TDS statement. The Tribunal upheld the orders of the lower authorities, stating that the adjustment made by the A.O. was in accordance with the mandatory provisions of Sections 200A and 234E.Conclusion:The Tribunal dismissed the appeal of the assessee, affirming that the levy of late fee under Section 234E is mandatory and consequential. The A.O. is required to make adjustments for late fees while processing TDS statements, and the same cannot be deleted on the grounds of reasonableness or bona fide cause. The Tribunal upheld the orders of the lower authorities, finding no error or illegality in their decisions.