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

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 into effect from that date. The tribunal found that since the assessee filed TDS statements and deposited tax before the statutory deadline, no fee was leviable under section 234E. Following precedent from coordinate bench, the tribunal cancelled demands under section 234E and associated interest under sections 220(2) and 201(1A), as no default order was passed. The assessee's appeal was allowed.

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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.

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