Section 234E fee for pre-01.06.2015 TDS statements is unsustainable without section 200A enabling machinery

Fee under section 234E for a TDS statement relating to a period before 01.06.2015 was unsustainable because section 200A did not then contain an enabling mechanism for computation and determination of that fee through intimation. The Tribunal applied the view that section 234E creates the liability, but recovery through processing of the TDS statement is not permissible for the earlier period in the absence of operative machinery provisions. The consequential interest was also not maintainable, and the demand raised while processing the return was set aside.

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Issues: Whether levy of fee under section 234E of the Income-tax Act, 1961, and consequential interest for a TDS statement pertaining to a period prior to 01.06.2015 was sustainable when the enabling provisions in section 200A came into force only from that date.

Analysis: The appeal turned on the settled position that, for periods prior to 01.06.2015, the machinery provisions in section 200A did not authorise computation and determination of fee under section 234E through intimation. The determination followed the view that section 234E creates the fee liability, but the absence of an operative enabling mechanism in section 200A for the relevant earlier period prevents recovery through the processing of the TDS statement. The Tribunal followed the earlier coordinate bench view adopting the interpretation favourable to the assessee where no contrary jurisdictional decision existed.

Conclusion: The levy of fee under section 234E for the period prior to 01.06.2015 was held unsustainable, and the consequential interest was also not maintainable.

Final Conclusion: The addition made while processing the TDS return for the earlier period was set aside, and the assessee obtained relief from the impugned demand.

Ratio Decidendi: In the absence of an enabling provision in section 200A authorising computation of fee under section 234E for the period prior to 01.06.2015, such fee demand cannot be sustained.

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