Tribunal overturns late filing fee for TDS statements pre-2015 citing conflicting High Court decisions

The Tribunal held that the CIT(A) erred in confirming the late filing fee under Section 234E for TDS statements filed before 01.06.2015. The appeals were allowed, directing the deletion of late filing fees and interest levied under Sections 234E and 220(2). The Tribunal emphasized following the principle favoring the assessee in cases of conflicting High Court decisions.

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Issues Involved:
1. Levy of late filing fee under Section 234E of the Income Tax Act.
2. Applicability of Section 200A(1)(c) for computation of fees under Section 234E before its amendment on 01.06.2015.
3. Validity of the CIT(A)'s order confirming the levy of late filing fee under Section 234E.
4. Rule of consistency in judicial decisions.
5. Constitutional validity of Section 234E.
6. Distinction between charging provisions and machinery provisions.

Detailed Analysis:

1. Levy of Late Filing Fee under Section 234E of the Income Tax Act:
The primary issue in these appeals is the levy of late filing fee under Section 234E by the Assessing Officer (AO), which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The appeals were decided based on the available records and after hearing the Department Representative (DR). The DR supported the CIT(A)'s order, arguing that the fee under Section 234E is applicable even before the amendment on 01.06.2015, as it is a charging provision, whereas Section 200A is a machinery provision.

2. Applicability of Section 200A(1)(c) for Computation of Fees under Section 234E Before 01.06.2015:
The CIT(A) confirmed the levy of late filing fee on the ground that Section 200A was amended by the Finance Act, 2015, w.e.f. 01.06.2015, empowering the AO to levy late filing fee under Section 234E. The Tribunal noted that the TDS statements in question were filed before 01.06.2015. The Tribunal referred to the decision of the Karnataka High Court in Fatehraj Singhvi vs. UOI, which held that the amendment to Section 200A(1) w.e.f. 01.06.2015 is prospective and not applicable for periods prior to this date. Therefore, no late filing fee could be charged under Section 234E for TDS statements filed before 01.06.2015.

3. Validity of the CIT(A)'s Order Confirming the Levy of Late Filing Fee under Section 234E:
The Tribunal found that the CIT(A) had confirmed the late filing fee based on the amended Section 200A, which was not applicable for periods before 01.06.2015. The Tribunal held that the AO was not empowered to charge late filing fees under Section 234E for TDS statements filed before 01.06.2015, even if the processing occurred after this date.

4. Rule of Consistency in Judicial Decisions:
The DR argued that the rule of consistency should not create anomalies, citing various judicial decisions. However, the Tribunal noted that in the absence of a decision from the jurisdictional High Court, conflicting decisions from different High Courts should be resolved in favor of the assessee, following the Supreme Court's decision in the case of Vegetables Products Ltd.

5. Constitutional Validity of Section 234E:
The DR cited several High Court decisions upholding the constitutional validity of Section 234E, arguing that the fee is compensatory and not penal. The Tribunal acknowledged these decisions but clarified that the issue before it was the applicability of the fee for periods before the amendment to Section 200A.

6. Distinction Between Charging Provisions and Machinery Provisions:
The DR emphasized the distinction between charging provisions (Section 234E) and machinery provisions (Section 200A), arguing that the former creates an automatic charge for late filing, while the latter provides the mechanism for processing TDS statements. The Tribunal, however, reiterated that the amendment to Section 200A, which includes the computation of fees under Section 234E, is prospective from 01.06.2015 and cannot be applied retroactively.

Conclusion:
The Tribunal concluded that the CIT(A) was not justified in confirming the late filing fee under Section 234E for TDS statements filed before 01.06.2015. The appeals were allowed, and the late filing fees and interest levied under Sections 234E and 220(2) were directed to be deleted. The Tribunal's decision aligns with the principle that in the case of conflicting High Court decisions, the one in favor of the assessee should be followed.

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