2021 (7) TMI 376 - AT - Income Tax

Tribunal Invalidates Late Fee Pre-2015

The Tribunal held that the levy of late fee under Section 234E for periods prior to 01/06/2015 was not valid. The late fee imposed was deemed excessive ... Late filing fee u/s. 234E - intimation u/s 200A - Late filing of TDS returns / statement - contention that fee u/s 234E is not leviable before 01.06.2015, i.e., the date when clause (c) was inserted in section 200A(1) for the computation of the said fees at the time of processing - conflicting decisions by different High Courts - HELD THAT:- Identical issue has been examined in the case of Supreme Brahmaputra (JV) [2020 (9) TMI 289 - ITAT DELHI] when there are conflicting decisions, the view taken in favour of the assessee should be followed, the impugned order passed by the ld. CIT (A) confirming the late fee levied by the AO u/s 200A read with section 234E as the defaults are prior to 01.06.2015, is not sustainable in the eyes of law, hence fee levied u/s 234E is ordered to be deleted. Consequently, the appeal filed by the assessee is allowed. Issues Involved:1. Legality of the levy of late fee under Section 234E of the Income Tax Act, 1961.2. Jurisdiction of the Assessing Officer to levy late fee under Section 200A(1)(c) read with Section 234E for periods prior to 01/06/2015.3. Validity of the impugned order in the absence of statutory provision.4. Reasonableness and excessiveness of the late fee imposed.5. Technical nature and bona fide grounds for the delay in filing TDS statements.Issue-wise Detailed Analysis:1. Legality of the levy of late fee under Section 234E:The appellant argued that the CIT(A) was not justified in confirming the levy of an aggregate late fee of Rs. 1,29,860/- for FY 2014-15 under Section 234E. The Tribunal noted that the charging section for the levy of late fee under Section 234E is a statutory provision effective from 2012. However, the machinery provision under Section 200A of the Act, which empowers the AO to make adjustments on account of the levy of late fee under Section 234E, was introduced by the Finance Act, 2015, effective from 01/06/2015.2. Jurisdiction of the Assessing Officer:The Tribunal examined whether the AO had the jurisdiction to levy a late fee for periods prior to 01/06/2015. It was found that before the amendment by the Finance Act, 2015, there was no enabling/machinery provision under Section 200A of the Act for making such adjustments. This position was supported by the Tribunal's decision in the case of Supreme Brahmaputra (JV) vs. TDS CPC, Ghaziabad, where it was held that there was no delay in filing the appeals, and the amendment to Section 200A(1) was procedural and prospective in nature.3. Validity of the impugned order:The Tribunal referred to various judgments, including those of the Hon’ble Karnataka High Court in Fatehraj Singhvi vs. UOI and the Hon’ble Gujarat High Court in Rajesh Kourani vs. UOI, which had conflicting views on the matter. The Tribunal followed the principle that in the absence of a jurisdictional High Court decision, the decision in favor of the assessee should be followed, as held by the Supreme Court in Vegetable Products Ltd. Consequently, the Tribunal held that the levy of late fee under Section 234E for periods prior to 01/06/2015 was not valid.4. Reasonableness and excessiveness of the late fee:The appellant contended that the TDS had been deposited along with interest and that there was no deliberate non-compliance. The Tribunal noted that the appellant had deposited the TDS and interest for the delayed period and had filed the quarterly TDS statement beyond the due date. However, the Tribunal found that the late fee imposed was excessive and unreasonable given the circumstances.5. Technical nature and bona fide grounds for delay:The appellant claimed that the delay in filing the TDS statement was technical and based on bona fide grounds, including the lack of a full-time qualified accountant and ignorance of the penal provisions due to low business turnover and cash loss during the year. The Tribunal accepted these grounds, noting that the appellant had already complied by depositing the TDS and interest.Conclusion:The Tribunal concluded that the impugned order confirming the late fee levied by the AO under Section 200A read with Section 234E for defaults prior to 01/06/2015 was not sustainable in law. The late fee levied under Section 234E was ordered to be deleted, and the appeal filed by the assessee was allowed. The Tribunal's decision was pronounced in open court on 9th July 2021.