Tribunal rules late fee levy pre-2015 illegal, upholds appeals against rectification orders. Section 200A(1) not retrospective.

The Tribunal allowed the appeals, ruling that the levy of late-fee under section 234E before 01.06.2015 was illegal. The rejection of rectification applications under section 154 was deemed unjustified, and the appeals against the rectification orders were upheld. The amendment to section 200A(1) from 01.06.2015 was held not to have retrospective effect. The Tribunal instructed the AO to rectify the intimations and remove the late-fee charged. The assessees' appeals were successful.

---

---

Issues Involved:
1. Whether the levy of late filing fee under section 234E of the Income-tax Act, 1961, for periods prior to 01.06.2015, was justified.
2. Whether the rejection of rectification applications under section 154 by the Assessing Officer (AO) was correct.
3. Whether the appeals against the orders of rectification under section 154 were valid.
4. Whether the amendment to section 200A(1) of the Income-tax Act, 1961, effective from 01.06.2015, has retrospective effect.
5. Whether the decisions of various High Courts and ITAT favoring the assessee should be considered.

Detailed Analysis:

Issue 1: Levy of Late Filing Fee under Section 234E for Periods Prior to 01.06.2015
The assessees argued that the late filing fee under section 234E was levied for periods before 01.06.2015, during which there was no provision in section 200A to levy such a fee. This proposition was upheld by various courts, including the jurisdictional Bench of ITAT, Indore. The Tribunal observed that the late fee under section 234E could not have been levied in the intimations under section 200A for delays in filing quarterly returns of TDS for the period prior to 01.06.2015. Therefore, the levy of late-fee was deemed illegal and a mistake apparent on record.

Issue 2: Rejection of Rectification Applications under Section 154
The assessees filed rectification applications under section 154 to the AO for redressal of grievances arising due to the illegal levy of late-fee. The AO rejected these applications, and the assessees appealed to the CIT(A). The Tribunal noted that the rejection of rectification applications by the AO was not justified as the late fee was not leviable by law. The Tribunal observed that the rectification application under section 154 was a valid remedy for the assessees.

Issue 3: Validity of Appeals against Orders of Rectification under Section 154
The Tribunal acknowledged that the assessees filed appeals against the rejection of rectification applications under section 154, not against the original intimations under section 200A. The CIT(A) dismissed the appeals, stating there was no apparent mistake in the intimations under section 200A. The Tribunal disagreed, stating that the levy of late-fee was a mistake apparent on record. The Tribunal held that the appeals against the orders of rectification were valid and the CIT(A) was not justified in dismissing them.

Issue 4: Retrospective Effect of Amendment to Section 200A(1) Effective from 01.06.2015
The assessees argued that the amendment to section 200A(1) effective from 01.06.2015, which empowered authorities to levy late-fee under section 234E, should not have retrospective effect. The Tribunal agreed, citing various judicial decisions, including those of the ITAT Indore Bench, which held that the amendment was prospective. Therefore, the late-fee charged for periods before 01.06.2015 was without authority of law and deserved to be quashed.

Issue 5: Consideration of High Court and ITAT Decisions Favoring the Assessee
The Tribunal noted that decisions from the Karnataka High Court, Kerala High Court, and other ITAT Benches supported the assessees' position that the amendment to section 200A was effective only from 01.06.2015. The Tribunal observed that where there is a cleavage of opinion between different High Courts, the one in favor of the assessee should be followed, as per the Supreme Court's decisions in CIT vs. Vegetable Products Ltd. and CIT vs. Vatika Township P. Ltd. The Tribunal held that these decisions should have been considered by the CIT(A).

Conclusion:
The Tribunal allowed the appeals, holding that the levy of late-fee under section 234E for periods prior to 01.06.2015 was illegal. The rejection of rectification applications under section 154 by the AO was not justified, and the appeals against the orders of rectification were valid. The amendment to section 200A(1) effective from 01.06.2015 did not have retrospective effect. The Tribunal directed the AO to rectify the intimations and delete the late-fee charged therein. The appeals of the assessees were allowed.

---