Tribunal dismisses Revenue's appeal on late TDS filing fee under Income Tax Act

The Tribunal dismissed the Revenue's appeals challenging the deletion of the fee levied under Section 234E of the Income Tax Act for late TDS filing, citing low tax effect and lack of specified exceptions in the CBDT Circular. The Tribunal did not address the merits of the case, and the appeals were dismissed without adjudication.

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Issues Involved:
1. Deletion of fee levied under Section 234E of the Income Tax Act, 1961.
2. Validity of the application of provisions of Section 234E by the Assessing Officer (TDS) and/or CPC-TDS authority.
3. Distinguishability of fee levied under Section 234E from a penalty and its appealability under Section 246A of the Income Tax Act, 1961.
4. Applicability of the exceptions to the monetary limits for filing appeals as per CBDT Circular No. 3/2018.

Detailed Analysis:

1. Deletion of Fee Levied Under Section 234E:
The Revenue challenged the deletion of the fee levied under Section 234E for the late filing of the TDS statement for the third quarter of FY 2016-17. The fee was levied by the DCIT, CPC-TDS, Ghaziabad, and subsequently deleted by the CIT(A)-3, Jaipur. The CIT(A) held that the fee levied was not in accordance with the law, treating it as a penalty and an adjustment made in the TDS statement, which is not appealable under Section 246A.

2. Validity of Application of Provisions of Section 234E:
The Revenue argued that the fee levied under Section 234E is constitutionally valid and mandatory for the late filing of TDS statements as per the amendment by the Finance Act, 2015, effective from 01.06.2015. The Revenue cited judgments from the Rajasthan High Court and the Bombay High Court, which upheld the constitutional validity of Section 234E.

3. Distinguishability of Fee from Penalty and Appealability:
The Revenue contended that the fee under Section 234E is not a penalty as referred to in Chapter XXI of the Act and is not an adjustment made under Section 200A(1)/206CB(1). Therefore, it is not appealable under Section 246A. The CIT(A) had erred in treating the fee as a penalty and deleting it.

4. Applicability of Exceptions to Monetary Limits for Filing Appeals:
The Revenue argued that the appeal falls under the exceptions to the monetary limits specified in CBDT Circular No. 3/2018. The exceptions cited were:
- Exception 10(a): Where the constitutional validity of the provisions of an Act or Rule is under challenge.
- Exception 10(e): Where the addition is based on information received from external sources in the nature of law enforcement agencies.

The Tribunal found that the CIT(A) did not challenge the constitutional validity of Section 234E in his order. He merely referred to the submission of the assessee regarding an SLP admitted against the Bombay High Court's decision. Therefore, Exception 10(a) does not apply.

Regarding Exception 10(e), the Tribunal held that the Central Processing Centre (CPC) is part of the Income Tax Department and not an external law enforcement agency. Thus, the exception is not applicable.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue on account of low tax effect, as the matters were not covered by any of the specified exceptions in the CBDT Circular No. 3/2018. The contentions on the merits of the case were left open and not adjudicated upon. The appeals in ITA No. 519/JP/2019 and ITA No. 595/JP/2019 were dismissed due to the low tax effect.

Order Pronounced:
The order was pronounced in the open Court on 14/08/2020.

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