2020 (12) TMI 555 - AT - Income Tax

Tribunal: AO lacked authority to levy late fees pre-2015 amendment

Elchico Hotels And Restaurants Private Limited Versus DCIT, CPC (TDS), Allahabad

The Tribunal held that prior to the amendment to Section 200A w.e.f. 01.06.2015, the Assessing Officer (AO) lacked the authority to levy late fees under ... Levy of late fee u/s 234E - delay in delivering the quarterly TDS statement as well as TDS return for the respective quarters of this assessment year - whether delay in filing the TDS statement and TDS return would not attract the adjustment while issuing the intimation u/s 200A? - HELD THAT:- Prior to the Amendment to section 200A w.e.f. 01.06.2015, the AO was not given the power to levy for late fee while processing the TDS statement/TDS return. The assessee delivered the TDS statement as well as return much prior to the amendment brought into Statute w.e.f. 01.06.2015 and even the AO has issued intimation prior to such amendment therefore, the adjustments made by the AO without any enabling provision is invalid and unjustified. Once the amendment is held to be prospective, the AO gets the jurisdiction/power to make the adjustment only w.e.f. 01.06.2015 and therefore, prior to 01.06.2015 it was not within the jurisdiction of the AO to make the adjustments on account of levy of late fee u/s 234E of the Act. Accordingly, the adjustments made by the AO while issuing intimation u/s 200A(1) of the Act, is not sustainable and the same is deleted. There are identical facts for the AY 2013-14 wherein the assessee submitted the TDS statement and TDS return on 02.09.2013 which is prior to the amendment w.e.f 01.06.2015. Hence in the absence of any continuous delay, even after the 01.06.2015 the adjustment made by the AO is not justified and the same is deleted. - Decided in favour of assessee. Issues Involved:1. Validity of adjustments made by the AO on account of levy of late fee under Section 234E due to delay in delivering the quarterly TDS statement and TDS return.2. Jurisdiction and authority of the AO to levy late fee under Section 234E prior to the amendment to Section 200A(1) by Finance Act 2015 w.e.f. 01.06.2015.Issue-wise Detailed Analysis:1. Validity of Adjustments Made by the AO on Account of Levy of Late Fee under Section 234E:The primary issue in these appeals was the validity of adjustments made by the Assessing Officer (AO) on account of the levy of late fee under Section 234E due to delays in delivering the quarterly TDS statements and TDS returns for the assessment years 2013-14 to 2015-16. The assessee argued that the AO acted beyond the mandate of the Income Tax Act by imposing such penalties without any enabling provision under Section 200A of the Act to impose such penalties under Section 234E up to 01.06.2015, as amended by the Finance Act 2015.The Tribunal noted that prior to the amendment brought into statute by the Finance Act 2015 w.e.f. 01.06.2015, there was no enabling provision under Section 200A for making such adjustments and raising demands in respect of the levy of late fee under Section 234E of the Act. The Tribunal relied on the decision of the Hon’ble Karnataka High Court in the case of Sri Fatheraj Singhvi & Ors vs. Union of India, which held that the amendment to Section 200A(1) is prospective and not retrospective. Therefore, the AO had no jurisdiction to make the adjustment while issuing the intimation under Section 200A of the Act prior to the said amendment.2. Jurisdiction and Authority of the AO to Levy Late Fee under Section 234E Prior to the Amendment to Section 200A(1):The Tribunal observed that Section 234E is a charging provision and could not be applied until and unless it is expressly provided in the machinery provision. Clause (c), (d), and (f) of Section 200A(1) came into effect only w.e.f. 01.06.2015. The Tribunal held that the adjustment made by the AO on account of levy of late fee under Section 234E while issuing the intimation under Section 200A prior to the insertion of Clause (c) w.e.f. 01.06.2015 is not valid and the same was cancelled.The Tribunal further relied on a series of decisions, including the decision of the Agra Benches of Tribunal in the case of State Bank of India vs. ITO and the decision of the Delhi Benches of Tribunal in the case of Shri Ashok Kumar vs. ACIT, which held that the amendment in provision under Section 200A is prospective and not retrospective.Conclusion:The Tribunal concluded that prior to the Amendment to Section 200A w.e.f. 01.06.2015, the AO was not given the power to levy late fee while processing the TDS statement/TDS return. Since the assessee delivered the TDS statement and return much prior to the amendment brought into statute w.e.f. 01.06.2015 and even the AO issued intimation prior to such amendment, the adjustments made by the AO without any enabling provision were invalid and unjustified. Consequently, the adjustments made by the AO on account of levy of late fee under Section 234E were deleted for the assessment years 2013-14 to 2014-15. However, for the assessment year 2015-16, the appeals were dismissed as not pressed by the assessee, acknowledging the amendment's applicability post 01.06.2015.Order:The appeals for the assessment years 2013-14 to 2014-15 (Appeal No.217 to 224 of 2018) were allowed, and the adjustments made by the AO on account of levy of late fee under Section 234E were deleted. The appeals for the assessment year 2015-16 (Appeal No.225 to 228 of 2018) were dismissed as not pressed.