2024 (3) TMI 1490 - AT - Income Tax

Late fee under s.234E for F.Y.2012-13 struck down where TDS return filed before 01.06.2015 as invalid

Vidya Sunil Mane Versus The Income Tax Officer, TDS, Kolhapur.

ITAT PUNE-AT held that late fee under s.234E for F.Y.2012-13, levied where the TDS return was filed on 24.09.2013 (i.e., before 01.06.2015), is not ... Late fee levied u/s 200A read with section 234E for the period prior to 01/06/2015 - whether late fee u/s 234E can be levied for F.Y.2012-13? - HELD THAT:- We are aware of the fact that there are contrary decisions on this issue. No direct decision on the impugned issue of the Hon’ble Jurisdictional High Court has been brought to our notice. In these facts and circumstances of the case, when there are contrary decisions of different Hon’ble High Courts, in the absence of decision of Hon’ble Jurisdictional High Court, the decision which is favourable to the assessee needs to be followed; as observed in the case of Vegetable Products Limited [1973 (1) TMI 1 - SUPREME COURT]. The decision of Hon’ble Karnataka High Court(supra) was followed by ITAT Pune Bench in the case of Medical Superintendent Rural Hospital [2018 (10) TMI 1587 - ITAT PUNE] In this case, Late Fee under section 234E has been levied for F.Y.2012-13. Admittedly, assessee had filed TDS Return on 24.09.2013 which is before 01.06.2015. Therefore, respectfully following the Hon’ble Karnataka High Court, Hon’ble Kerala High Court and ITAT Pune Bench(supra) it is held that Late Fee levied under section 234E in the case of the assessee for the period prior to 01.06.2015 is bad-in-law. Accordingly, the AO is directed to delete the Late Fee levied under section 234E of the Act. Accordingly, Ground No.1 and 2 of the assessee are allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether late fee under section 234E of the Income Tax Act can be levied in respect of TDS statements relating to periods prior to 01/06/2015. 2. Whether, in the presence of conflicting decisions of High Courts on the above question and absence of a contrary decision of the jurisdictional High Court, the Tribunal should follow the decision favorable to the assessee. 3. Whether interest under section 220(2) is contestable on the grounds raised (not argued by the assessee). ISSUE-WISE DETAILED ANALYSIS - Issue 1: Levy of late fee under section 234E for periods prior to 01/06/2015 Legal framework: Section 234E prescribes levy of fee for delay in furnishing statements of tax deducted at source, and section 200A (as amended) and related provisions govern processing/intimation of TDS statements; the operative effect of amendments from 01/06/2015 is central to the temporal scope of section 234E. Precedent Treatment: The record shows divergent High Court decisions on whether the statutory scheme permits levying section 234E for periods prior to 01/06/2015. Some High Courts have held demands/intimations under the post-amendment regime invalid for periods before 01/06/2015; other High Courts have taken an opposite view. No decision of the jurisdictional High Court on point was placed before the Tribunal. Interpretation and reasoning: The Tribunal examined whether the statutory amendment that came into force on 01/06/2015 could be applied retrospectively to compute or demand fee under section 234E for earlier periods. Where the amendment is held to be prospective only, intimation/demand for fee under the amended procedure for periods prior to the effective date lacks legal authority. In the absence of a binding decision of the jurisdictional High Court, the Tribunal applied the principle that, when High Courts are divided, the decision favorable to the assessee should be followed. Ratio vs. Obiter: The determination that section 234E cannot be levied for periods prior to 01/06/2015 (on the facts where TDS return was filed before that date) is treated as ratio decidendi for the appeals before the Tribunal. Observations about conflicting authorities and the applicable principle of following the favorable decision are applied as binding reasoning for the outcome in these appeals rather than mere obiter. Conclusion: Where TDS statements were filed prior to 01/06/2015, late fee under section 234E levied for such periods is held bad in law and is to be deleted. The Tribunal directed deletion of the fee in the facts before it. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Choice of precedent where High Courts are split and absence of jurisdictional High Court decision Legal framework: Judicially established principles govern which precedents a Tribunal should follow when High Courts differ and no binding decision exists from the jurisdictional High Court; appellate authority must apply settled rules on precedential value. Precedent Treatment: The Tribunal relied on a Supreme Court authority establishing that, in case of conflicting High Court decisions and absence of a contrary decision by the jurisdictional High Court, the decision favorable to the taxpayer may be followed. The Tribunal also noted its own earlier bench decision following the line favorable to the assessee. Interpretation and reasoning: Given divergent High Court rulings, the Tribunal applied the rule of following the decision advantageous to the assessee in the absence of authoritative contrary law from the jurisdictional High Court. This approach was used to resolve ambiguity and ensure a consistent outcome with prior favorable authorities and the Tribunal's earlier ruling. Ratio vs. Obiter: The reliance on the Supreme Court principle and application thereof to follow the favorable High Court decision constitutes the operative ratio for choosing which precedent to follow in these appeals. Commentary about other contrary decisions is explanatory and not essential to the outcome. Conclusion: The Tribunal adopted the favorable line of authority and its own prior bench decision in quashing the section 234E levy for periods before 01/06/2015 when no jurisdictional High Court decision to the contrary exists. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Interest under section 220(2) Legal framework: Section 220(2) pertains to interest on tax demands; contestation depends on specific arguments and evidence addressing the validity or quantum of interest. Precedent Treatment: No substantive argument was advanced before the Tribunal on this ground; therefore, no new precedent analysis was undertaken. Interpretation and reasoning: As the assessee's authorized representative did not press the ground relating to interest under section 220(2), the Tribunal declined to entertain or re-adjudicate that head of dispute on merits. Ratio vs. Obiter: The dismissal of this ground for non-argument is procedural and not a determination on the substantive legality of interest under section 220(2); it is obiter with respect to broader questions about the chargeability of such interest. Conclusion: Ground relating to interest under section 220(2) is dismissed for lack of contestation before the Tribunal. ADDITIONAL POINTS AND DISPOSITION Cross-reference: The Tribunal's conclusion on Issue 1 is applied mutatis mutandis to multiple similar appeals with identical facts and issues, resulting in partial allowance across those appeals. Relief granted: Deletion of late fee under section 234E for periods prior to 01/06/2015 where TDS returns were filed before that date; other general or unpressed grounds were dismissed.