Late fee under section 234E limited to defaults after Finance Act 2015 amendment; pre 2015 fees invalidated

Levy of late fee under section 234E applies only prospectively to defaults occurring after the Finance Act 2015 insertion effective 01-06-2015 because the processing provision for TDS statements was amended to enable that fee; consequence: fees cannot be imposed for defaults prior to 01-06-2015. Prior judicial decisions affirm non imposition for pre amendment periods, resulting in outcomes favourable to the assessee and preventing retrospective application of the 234E fee to earlier quarters.

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Issues: Whether late fee under Section 234E of the Income-tax Act, 1961 can be validly levied by CPC for TDS statements processed prior to 01-06-2015.

Analysis: Section 234E prescribes levy of late fee for delay in furnishing TDS statements; however, authorisation for levy by the processing mechanism is contained in Section 200A(1)(c) which came into force w.e.f. 01-06-2015. Where TDS returns were processed by CPC prior to 01-06-2015, imposition of fee under Section 234E lacks the enabling operation of Section 200A for such earlier periods. Coordinate bench decisions of the Tribunal and relevant High Court authorities have held that fees levied for defaults prior to the operative date of Section 200A(1)(c) are not sustainable and such levy is sine auctoritate. The appeals under challenge involved TDS returns processed before 01-06-2015 and no contrary binding precedent was placed before the Tribunal; accordingly the fee and consequential interest were deleted following the cited tribunal precedents.

Conclusion: The levy of late fee under Section 234E for TDS statements processed prior to 01-06-2015 is unsustainable; the impugned fee and consequential interest are deleted and the appeals are allowed in favour of the assessee.

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