2022 (9) TMI 828 - AT - Income Tax

Tribunal cancels late fees under Income Tax Act for 2014-15 & 2015-16

Dadasaheb Vitthalrao Urhe Versus ITO, TDS & DCIT, TDS, CPC, Ghaziabad

The Tribunal allowed all nine appeals of the assessee, directing the DCIT/ACIT, CPC-TDS to delete the late fees levied under section 234E of the Income ... Penalty of late fee u/s 234E - intimation passed u/s 200A r.w.s. 154 of the Act - as per AO assessee had failed to demonstrate sufficient and reasonable cause for delay in filing the quarterly statement of TDS of first quarter for financial year 2013-14 in Form No.24Q - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. As in the case of Fatheraj Singhvi vs. Union of India [2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. Thus we direct the DCIT/ACIT, CPC-TDS to delete the late fee being levied u/s 234E of the Act. Appeal of assessee allowed. Issues:Appeal against levy of late fees under section 234E of the Income Tax Act, 1961 for assessment years 2014-15 and 2015-16.Analysis:The appeals were filed against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2014-15 and 2015-16. The Tribunal disposed of all nine appeals collectively as they involved identical facts and issues. The main issue in the present appeal was the levy of late fees under section 234E of the Act by the DCIT/ACIT, CPC-TDS for belated submission of tax deducted at source statement during the financial year 2013-14. The Tribunal referred to the amendment made under section 200A of the Act effective from 01.06.2015, which provided the mechanism for computing the late fee. It cited the Karnataka High Court's decision in Fatheraj Singhvi vs. Union of India, emphasizing that late fees under section 234E could be levied only prospectively from 01.06.2015.The Tribunal further elaborated on the observations made by the Karnataka High Court regarding the substantive nature of section 234E and the need for prospective application of fee provisions. It highlighted that the demand notices for fees under section 234E prior to 1.6.2015 were without legal authority and hence, illegal and invalid. The Tribunal also mentioned similar rulings by the Pune Tribunal and clarified that the Bombay High Court's decision on the constitutional validity of section 234E did not address the retrospective operation of the provisions. Consequently, the Tribunal directed the DCIT/ACIT, CPC-TDS to delete the late fees levied under section 234E of the Act.In conclusion, the Tribunal allowed all nine appeals of the assessee, including ITA No.161/PUN/2021 for AY 2014-15 and ITA Nos.162 to 169/PUN/2021 for AYs 2014-15 and 2015-16, based on the reasoning and decision provided in the main appeal. The orders were pronounced on 15th September 2022.