Section 234E late fee could not be levied during TDS processing under section 200A before the enabling amendment.

Late fee under section 234E of the Income-tax Act could not be levied while processing TDS statements under section 200A for periods before insertion of section 200A(1)(c), because the processing mechanism then in force did not authorise computation or adjustment of that fee. The subsequent amendment could not be applied retrospectively to validate the demand intimations, so the levy in the impugned intimations was held unsustainable.

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Issues: Whether late fee under section 234E of the Income-tax Act, 1961 could be levied while processing TDS statements under section 200A of the Income-tax Act, 1961 for periods prior to the insertion of section 200A(1)(c) of the Income-tax Act, 1961.

Analysis: Section 234E created liability for fee for delayed furnishing of TDS statements, but the mechanism for computing and adjusting that fee during processing under section 200A was introduced only when section 200A(1)(c) came into force. For the relevant assessment years, the processing provision did not authorise the Department to compute or levy the late fee at the stage of processing TDS returns. The amendment could not be applied retrospectively to validate the impugned intimations.

Conclusion: The levy of late fee in the impugned demand intimations was not sustainable and the challenge succeeded.

Ratio Decidendi: A fee under section 234E cannot be imposed during processing of TDS statements under section 200A for periods prior to the insertion of section 200A(1)(c), because the processing provision did not then authorise such computation or levy.

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