2020 (10) TMI 1023 - AT - Income Tax

Appeal success: Late fee under Income Tax Act deleted for pre-2015 defaults.

M/s. Gazebo Industries Ltd. Versus Asst. Commissioner of Income-tax (TDS) CPC, Gaziabad

The appeal was allowed, and the late fee levied under section 234E of the Income Tax Act was directed to be deleted. The Tribunal held that the Assessing ... Levy of fees u/s. 234E - delay in filing Form No.26Q - passing the intimation u/s. 200A - scope od amendment - HELD THAT:- As decided in SRI. FATHERAJ SINGHVI AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2016 (9) TMI 964 - KARNATAKA HIGH COURT] Amendment to section 200A(1) of the Act is prospective in nature and therefore the AO while processing the TDS statements/ returns in the present three appeals for the period prior to 01.06.20 15 was not empowered to charge fees under section 234E of the Act. Therefore, the intimations issued by the AO under section 200A of the Act in these appeals are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. In this view of the matter, we hold that the AO is not empowered to charge fees under section 234E of the Act by way of intimations issued under section 200A of the Act in respect of defaults before 01.06.2015 - Decided in favour of assessee. Issues:Levy of fees under section 234E of the Income Tax Act while processing quarterly TDS statement and passing intimation under section 200A of the Act for Assessment Year 2015-16.Analysis:The appeal was filed against the order of the Commissioner of Income Tax (Appeals) sustaining the levy of fees under section 234E of the Act. The main contention was whether the late fee under section 234E could be charged prior to the amendment to section 200A(1)(c) by the Finance Act, 2015. The Coordinate Bench of the Pune Bench held that before 1.06.2015, the Assessing Officer did not have the power to charge late fees under section 234E while processing TDS returns. The insertion of clause (c) to section 200A(1) by the Finance Act, 2015 empowered the Assessing Officer to levy fees under section 234E. The Bombay High Court upheld the constitutional validity of this provision.The Tribunal analyzed various case laws and held that the amendment to section 200A(1) of the Act is prospective in nature and not applicable to pending assessments before 1.06.2015. The Assessing Officer was not empowered to charge fees under section 234E for defaults before this date. The amendment clarified the power of the Assessing Officer to charge fees under section 234E only after 1.06.2015. The Tribunal referred to judgments by the Karnataka High Court and the Bombay High Court supporting this view.Following the Pune Bench's decision, the Mumbai Bench held that the Assessing Officer could not charge fees under section 234E for defaults before 1.06.2015. This view was upheld in subsequent cases as well. The Tribunal directed the Assessing Officer to delete the late fee levied under section 234E of the Act. The delay in pronouncement was attributed to the COVID-19 lockdown, in line with Rule 34(5) of the ITAT Rules and the Bombay High Court's orders.In conclusion, the appeal was allowed, and the late fee levied under section 234E was directed to be deleted. The Tribunal's decision was based on the prospective nature of the amendment to section 200A(1) of the Act and the lack of power for the Assessing Officer to charge fees under section 234E for defaults before 1.06.2015.