2024 (2) TMI 578 - AT - Income Tax

Fees under Section 234E cannot be levied for assessment years before June 1, 2015 effective date

Techmobia Digital Solutions Pvt. Ltd. Versus DCIT, Circle-76 (1), Delhi

ITAT Delhi held that fees under section 234E of Income Tax Act, 1961 cannot be levied for assessment years prior to June 1, 2015, as the provision came ... Levy of fees u/s 234E - alleged default in furnishing TDS statements - as argued provisions of section 234E has come into statue w e f 01.06.2015 and the same is not applicable for the impugned assessment years - HELD THAT:- The issue of levy of charge u/s 234E of the Income Tax Act, 1961 stands decided by the order of the Co-ordinate Bench of ITAT in [2018 (10) TMI 355 - ITAT DELHI], wherein held that no fee was leviable to the assessee u/s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay. Accordingly, the demand on account of 234E is cancelled.In any case, the levy of fee u/s 200A in accordance with the provision of section 234E has come into the statute w.e.f. 1.6.2015. Since the challan and statement has been filed much prior to this date, therefore, no such tax can be levied u/s 200A. Interest u/s 220(2) cannot be levied when fee u/s 234E itself is not leviable. Charging of interest u/s 201(IA), the same cannot be charged as admittedly no order u/s 201(1) has been passed holding the assessee to be “assessee in default” and, therefore, such an interest is also deleted.” We have examined the issue and the provision of Section 201, Section 200(3) and Section 234E. Since, the issue is in parity with the issues adjudicated in the above said order, the same ratio applies. Hence, the appeal of the assessee is hereby allowed. Issues Involved:The appeal challenges the levy of fees under section 234E of the Income Tax Act, 1961 by the National Faceless Appeal Centre (NFAC), Delhi for alleged default in furnishing TDS statements.Levy of Fees under Section 234E:The appellant contested the levy of fees under section 234E, arguing that the provisions came into effect after the relevant assessment years and should not apply retrospectively. The appellant also cited previous judgments supporting the prospective operation of section 234E. The Co-ordinate Bench of ITAT had previously addressed a similar issue, where it was argued that the fee under section 234E was not applicable as the statement was filed along with the tax deposited, thus no default existed. The appellant emphasized that the fee under section 234E is only leviable when the statement is not filed as prescribed under section 200(3) after tax payment. The appellant's counsel highlighted that the objective of section 234E was to address situations where tax was deducted but the statement was not uploaded, leading to a loss of credit for the taxpayer. In this case, the tax was paid and the statement was filed promptly, ensuring no inconvenience to the department. The appellant contended that the fee under section 234E should not be levied in such circumstances.Judgment and Decision:Upon considering the arguments presented, the Tribunal found that no fee was chargeable to the assessee under section 234E as there was no violation of section 200(3). The statement was filed immediately after tax payment, and the relevant provision of section 200(3) along with rule 31A(4A) only required the filing of the 'challan cum statement' after tax payment. The Tribunal referenced a ruling by the Hon'ble Karnataka High Court to support its decision that the fee under section 234E could not be levied for periods prior to the provision's effective date. Consequently, the demand on account of section 234E was canceled. Additionally, interest under section 220(2) was deemed inapplicable since the fee under section 234E was not chargeable. The Tribunal also noted that interest under section 201(IA) could not be imposed as no order under section 201(1) had declared the assessee as 'assessee in default.' Therefore, the appeal of the assessee was allowed, and the demand on account of section 234E was set aside.Separate Judgment:The appeal was heard and decided by the Tribunal, comprising Dr. B. R. R. Kumar, Accountant Member, and Shri Yogesh Kumar US, Judicial Member. The order was pronounced in the open court on 18/01/2024.