2023 (6) TMI 808 - AT - Income Tax

Invalidation of Late Fees Pre-2015 under Income Tax Act

M/s. St. Alphonsa Timbers & Traders (Pvt.) Ltd. Versus ITO (TDS) Kochi.

The Tribunal held that the imposition of late fees under section 234E of the Income Tax Act for quarters of Assessment Year 2013-14 before 01-06-2015 was ... Levy of late ‘fee’ before 01.06.2015 u/s 234E - Rectification of mistake u/s 154 suo moto made by the AO/TDS, CPC, Ghaziabad raising the demand inter alia the late ‘fee’ u/s 234E - HELD THAT:- AO while passing the order u/s 154 of the Act has not given any reasons as to the mistake apparent on the face of the record. Anyway, since the late ‘fee’ for non-filing the statement of TDS/TCS [under section 200A(1)/206CB of the Act respectively] are no-longer res-integra the action of AO/CPC u/s 154 of the Act cannot be sustained. As decided in KERALA GRAMIN BANK VERSUS THE INCOME TAX OFFICER (TDS) , KOZHIKODE/PALAKKAD [2023 (3) TMI 405 - ITAT COCHIN] no hesitation in allowing assessee’s appeals inasmuch the processing is for a period prior to 01/6/2015. Appeals filed by the assessee are allowed. Issues Involved:1. Legality of the order u/s 234E for AY 2013-14.2. Jurisdiction to impose late fee u/s 234E before 01-06-2015.3. Applicability of judicial precedents on similar issues.4. Hardship caused by the fee charged.Summary:1. Legality of the order u/s 234E for AY 2013-14:The assessee company appealed against the orders confirming the imposition of late fees u/s 234E of the Income Tax Act, 1961 for Q2 and Q4 of AY 2013-14. The appeals challenged the orders as void ab initio, contending that there was no charging provision for such fees for the assessment year 2013-14.2. Jurisdiction to impose late fee u/s 234E before 01-06-2015:The assessee argued that the amendment to Sec. 200A, which gave the assessing authority the power to impose late fees u/s 234E, came into effect only from 01-06-2015. Thus, the authority lacked jurisdiction to impose such fees for periods before this date. The Tribunal noted that the Hon'ble Jurisdictional High Court in M/s. Sarala Memorial Hospital Vs. Union of India held that the amendment was prospective, and no late fees could be levied for periods prior to 01-06-2015.3. Applicability of judicial precedents on similar issues:The Tribunal referenced the Hon'ble Kerala High Court's decisions, which affirmed that no late filing fee could be levied for periods before 01-06-2015. The Tribunal also considered the conflicting judgments from the Karnataka and Gujarat High Courts but followed the jurisdictional High Court's binding decision. The Tribunal concluded that the levy of late fees u/s 234E for periods before 01-06-2015 was without authority and thus invalid.4. Hardship caused by the fee charged:The assessee claimed that the fee charged caused significant hardship. The Tribunal acknowledged this and noted that the AO, while passing the order u/s 154 r.w.s. 200A, did not provide reasons for the mistake apparent on the record. The Tribunal held that the action of the AO/CPC u/s 154 could not be sustained, as the issue of late fees for non-filing TDS/TCS statements before 01-06-2015 was no longer res integra.Conclusion:The Tribunal directed the deletion of the late fees u/s 234E for Q2 and Q4 of AY 2013-14, as the levy was prior to 01-06-2015 and thus invalid. The appeals of the assessee were allowed. The order was pronounced in open court on 05/06/2023.