2021 (12) TMI 784 - AT - Income Tax

Tribunal rules late fees pre-2015 invalid under Income-tax Act

The Tribunal held that the imposition of late fees under Section 234E of the Income-tax Act, 1961, for periods before 01.06.2015 was not sustainable as ... Levy of late fee u/s. 234E prior to 01.06.2015 - scope of amendment - Conflicting views/decisions - HELD THAT:- We are inclined to follow the ratio decidendi of the Hon’ble Karnataka High Court in the case of Fatehraj Singhvi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] and Shri Ayappa Educational Charitable Trust [2018 (1) TMI 90 - KARNATAKA HIGH COURT] in the light of the Hon’ble Supreme Court decision in Vegetable Products [1973 (1) TMI 1 - SUPREME COURT] that if there is no jurisdictional High Court’s decision on an issue then the view taken in favour of the assessee can be followed. Therefore, we are inclined to hold that the demand raised by the Income Tax Authorities for levying late fee u/s. 234E of the Act for the period prior to 01.06.2015 cannot be sustained and we order accordingly. However, we hasten to add that Hon’ble Karnataka High Court while passing the order had held the order to be prospective in operation and had clarified that if an assessee had made payment of fees u/s. 234E as per the demand/intimation u/s. 200A of the Act for the period prior to 01.06.2015 then it cannot claim the refund since the Hon’ble Karnataka High Court has held its order to be prospective in operation. - Decided in favour of assessee. Issues Involved:1. Imposition of late fees under Section 234E of the Income-tax Act, 1961, prior to 01.06.2015.2. Authority of the Assessing Officer (AO) under Section 200A to levy fees under Section 234E before the amendment effective from 01.06.2015.3. Conflicting judgments from different High Courts on the applicability and enforcement of Section 234E.Issue-wise Detailed Analysis:1. Imposition of Late Fees Under Section 234E Prior to 01.06.2015:The primary issue in these appeals is the imposition of late fees under Section 234E of the Income-tax Act, 1961, for delays in filing TDS statements before 01.06.2015. The assessee argued that the late fee levied by the AO was without any authority of law, as Section 200A did not provide for such a levy before the said date. The Tribunal noted that Section 234E, introduced on 01.07.2012, prescribes a fee for delays in filing TDS statements. However, the Tribunal emphasized that the provision for computing and levying this fee through Section 200A was only inserted with effect from 01.06.2015. Therefore, the Tribunal concluded that the imposition of late fees under Section 234E for periods prior to 01.06.2015 was not sustainable.2. Authority of the Assessing Officer Under Section 200A:The Tribunal examined whether the AO had the authority under Section 200A to levy fees under Section 234E before the amendment effective from 01.06.2015. The Tribunal referenced the Karnataka High Court's decision in Fatehraj Singhvi Vs. UOI, which held that the amendment to Section 200A, allowing for the computation of fees under Section 234E, was prospective and effective only from 01.06.2015. Thus, any demand for late fees for periods before this date was without legal basis. The Tribunal also noted the conflicting judgment from the Gujarat High Court in Rajesh Kourani Vs. Union of India, which upheld the levy of fees under Section 234E even without the enabling provision in Section 200A. However, the Tribunal opted to follow the Karnataka High Court's decision, favoring the assessee, in line with the Supreme Court's principle that in the absence of a jurisdictional High Court decision, the view favorable to the assessee should be adopted.3. Conflicting Judgments from Different High Courts:The Tribunal acknowledged the conflicting judgments from the Karnataka High Court and the Gujarat High Court on the issue. The Karnataka High Court, in Fatehraj Singhvi, held that the levy of fees under Section 234E could not be enforced for periods before 01.06.2015 due to the lack of an enabling provision in Section 200A. Conversely, the Gujarat High Court, in Rajesh Kourani, ruled that Section 234E was a charging provision, and fees could be levied even without the amendment to Section 200A. The Tribunal decided to follow the Karnataka High Court's decision, citing the Supreme Court's directive to favor the assessee in cases of conflicting judgments from non-jurisdictional High Courts.Conclusion:The Tribunal concluded that the demand for late fees under Section 234E for periods prior to 01.06.2015 could not be sustained. The Tribunal's decision was influenced by the Karnataka High Court's ruling that the amendment to Section 200A, which allowed for the computation and levy of fees under Section 234E, was prospective and effective only from 01.06.2015. Therefore, any imposition of late fees for delays in filing TDS statements before this date was without legal authority. The Tribunal allowed the appeals in favor of the assessee, emphasizing that any fees paid under protest could not be claimed for a refund, as per the Karnataka High Court's prospective application of its ruling.