Section 234E fees cannot be levied for TDS returns filed before June 1 2015 despite later processing

ITAT Chandigarh held that fees under section 234E cannot be levied for TDS returns filed before 1.6.2015, even if processed after that date. The assessee filed TDS returns for Q2 and Q4 of FY 2013-14 on 3.01.2015 and 2.01.2015 respectively, which were processed on 1.01.2017. Since the returns were filed before 1.6.2015 and there was no continuing default after the effective date, the AO's jurisdiction under section 234E was prospective only. The levy of late filing fees was deleted and the assessee's appeal was allowed.

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Issues Involved:

1. Delay in filing appeals.
2. Imposition of fee under Section 234E.
3. Validity of notices under Section 200A for periods before 01.06.2015.
4. Applicability of Circular No. 19 of 2015.
5. Judicial precedence and adherence to higher court rulings.

Summary:

1. Delay in Filing Appeals:
The appeals were filed by the Assessee with a delay of one day. After considering the affidavit submitted by the assessee and the context of the COVID-19 pandemic, the delay was condoned based on the Supreme Court's decision in "IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION" reported at 441 ITR 722 (SC).

2. Imposition of Fee under Section 234E:
The Assessee contested the fee imposed under Section 234E for late filing of TDS returns. The Tribunal noted that the TDS returns for the relevant quarters were filed before 01.06.2015, and the fee under Section 234E was charged while processing the returns after the amendment to Section 200A effective from 01.06.2015.

3. Validity of Notices under Section 200A for Periods Before 01.06.2015:
The Tribunal referred to the Karnataka High Court's judgment in "Fatheraj Singhvi & Others vs UOI" which held that the provisions of amended Section 200A are prospective in nature. Therefore, the Assessing Officer (AO) was not empowered to levy fees under Section 234E for periods prior to 01.06.2015.

4. Applicability of Circular No. 19 of 2015:
The Assessee argued that Circular No. 19 of 2015 dated 27.11.2015, which provides that the provisions of Section 200A for determining fees under Section 234E are applicable prospectively from 01.06.2015, was not followed by the CIT(A). The Tribunal upheld this view, stating that the AO could not levy fees for periods before 01.06.2015.

5. Judicial Precedence and Adherence to Higher Court Rulings:
The Tribunal emphasized the importance of judicial discipline, citing the Supreme Court's ruling in "UOI vs Kamlakshi Finance Ltd" and the principle from "CIT vs Vegetable Products Ltd." that in case of conflicting decisions, the one in favor of the assessee should be followed. The Tribunal noted that there were no adverse decisions from the Punjab and Haryana High Court against the assessee on this issue.

Conclusion:
The Tribunal concluded that the AO did not have the jurisdiction to levy fees under Section 234E for periods prior to 01.06.2015 and directed the deletion of the fees imposed in both cases. The appeals were allowed.

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