2022 (11) TMI 545 - HC - Income Tax

Court rules late fees under Income Tax Act Section 234E prospective, quashes demands

The court ruled in favor of the petitioner, an assessee under the Income Tax Act, in a case concerning the imposition of late fees under section 234E for ... Late fee u/s 234E - delay in filing the statement of TDS remittance - HELD THAT:- In the decision in M/s.Sarala Memorial Hospital v. Union of India and Another [2018 (12) TMI 1818 - KERALA HIGH COURT] an identical question arose for consideration. After considering the statutory provisions of section 234E and section 200A of the Act and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the jurisdiction to levy late fee under section 234E arises only from 01-06.2015 and not earlier. As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of jurisdiction of the respondents to impose late fee. Since in matters where total lack of jurisdiction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis. In view of the above, the demand in intimations for the period from 2012-13 to 2013-14 are bereft of authority and cannot be legally sustainable. Issues:Late fee under section 234E of the Income Tax Act for delayed filing of TDS remittance statement.Analysis:The petitioner, an assessee under the Income Tax Act, deducted TDS for payments made and remitted it to the Income Tax Department. However, a delay occurred in filing the statement of returns regarding the TDS remittance. The second respondent levied late fee under section 234E of the Act due to the delay in filing the statement. The petitioner was called upon to pay the late filing fee for the periods from 2012-13 to 2013-14 based on the provisions of section 234E of the Act, which imposes a fee for default in furnishing statements. The petitioner argued that until 01.06.2015, they could not be held liable to pay late fees as per section 200A(1)(c) of the Act, which was incorporated only from that date.The respondents objected to the petitioner's claim, stating that the demands for late filing fees were raised through appealable orders issued from 2013 to 2016, which the petitioner did not challenge. They argued that the delay should defeat the petitioner's claim and that the demands had become final and accepted by the petitioner. The court considered the contentions of both parties and referred to a previous judgment where it was held that the amendment to the Act regarding late fee under section 234E would take effect only from 1st June, 2015, making it prospective in nature. The court found that the jurisdiction to levy late fee under section 234E arises only from 01-06-2015 and not earlier.Regarding the contention on delay, the court noted that the challenge raised by the petitioner was based on the lack of jurisdiction of the respondents to impose late fees. The court held that in cases of alleged total lack of jurisdiction, delay cannot be a ground to deny relief. Referring to a previous case where similar intimations were quashed, the court ruled that the demands for late fee under section 234E for the period from 2012-13 to 2013-14 lacked authority and were not legally sustainable. Consequently, the court quashed the intimations demanding late fees for the specified period.In conclusion, the writ petition was allowed, and the court quashed the intimations demanding late fees under section 234E for the period from 2012-13 to 2013-14 until 01.06.2015, as they were found to be without authority and legally unsustainable.