2022 (11) TMI 29 - AT - Income Tax

Tribunal overturns late filing fee decision, citing technical error and lack of revenue loss

The Tribunal ruled in favor of the assessee, overturning the decision to impose late filing fees under section 234E of the Income Tax Act, 1961. The ... Late filing fee under section 234E of the Income Tax Act, 1961 - inadvertent technical error in filing TDS statement in wrong form - no loss to Revenue - mandatory nature of the fee vis-a -vis equitable relief in technical casesLate filing fee under section 234E of the Income Tax Act, 1961 - inadvertent technical error in filing TDS statement in wrong form - no loss to Revenue - mandatory nature of the fee vis-a -vis equitable relief in technical cases - Whether the levy of late filing fee under section 234E is sustainable where the assessee had deposited TDS and filed a TDS statement in time but in an incorrect form and subsequently rectified the filing, with no loss caused to the Revenue. - HELD THAT: - The Tribunal acknowledged that section 234E imposes a mandatory fee for late filing of TDS statements and that earlier authorities have characterized it as a fixed charge rather than a punitive penalty. However, the Tribunal found those principles inapplicable to the facts where the assessee had, within time, deposited the entire TDS amount and had initially filed a TDS statement albeit in the incorrect form (Form 26QB instead of Form 27Q) due to inadvertence. The assessee sought and obtained refund and re-deposited the TDS, and ultimately filed the correct Form 27Q; the Department had suffered no loss. The Tribunal distinguished decisions where no TDS return was filed at all, observing that those facts do not govern a case of mere technical or inadvertent error. Having regard to the absence of prejudice to Revenue and the technical nature of the lapse, the Tribunal held that imposing the late filing fee under section 234E in the present circumstances was not warranted and accepted the assessee's grievance. [Paras 9, 11, 12, 13, 15]Levy of late filing fee under section 234E deleted and the appeal allowed.Final Conclusion: The Tribunal allowed the appeal for AY 2016-17, set aside the confirmation of the late filing fee under section 234E in view of the inadvertent filing in the wrong form, the prompt rectification and re-deposit of TDS and the absence of any loss to the Revenue. Issues:Late filing fee under section 234E of the Income Tax Act, 1961.Analysis:The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals) confirming the charging of late filing fee of Rs. 3,64,600/- under section 234E for the late filing of TDS statement in Form No. 27Q for the assessment year 2016-17. The assessee had initially filed the TDS statement in Form 26QB instead of Form 27Q, leading to the imposition of late filing fee.The facts revealed that the assessee, engaged in the business of architecture, purchased a property and deducted TDS at the prescribed rate, deposited it, and filed the TDS statement in Form 26QB instead of Form 27Q. Upon realizing the mistake, the assessee requested a refund, redeposited the TDS, and filed the correct TDS return. The Income Tax Department imposed late filing fees under section 234E.The Ld. CIT(A) deleted the imposition of interest on late payment but upheld the late filing fee. The assessee contended that the late filing was due to inadvertent error and technical mistake, citing similar cases where late filing fees were not levied for such errors. The Ld. CIT(A) relied on legal precedents to justify the late filing fee, emphasizing that section 234E is mandatory and not punitive in nature.The Tribunal considered the circumstances and legal positions presented by both parties. It acknowledged the mandatory nature of late filing fees under section 234E but highlighted that the error in this case was technical and inadvertent. The Tribunal noted that no loss was caused to the Revenue, and the intention of the assessee was not to evade payment. Relying on previous judgments, the Tribunal concluded that the mere technical error did not warrant the levy of late filing fees under section 234E.In light of the arguments and precedents, the Tribunal accepted the grounds of appeal raised by the assessee, reversing the order under appeal and allowing the appeal. The Tribunal found merit in the grievance raised by the assessee and concluded that the late filing fee under section 234E was not justified in this case.In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that a technical inadvertent error in filing the TDS statement did not warrant the imposition of late filing fees under section 234E of the Income Tax Act, 1961.