2024 (12) TMI 460 - AT - Income Tax

Section 234E late fee cannot be imposed for periods before June 1, 2015, tribunal rules

The ITAT Pune held that late fee under section 234E cannot be imposed for periods prior to 01.06.2015. The assessee was charged late fee and interest ... Late fee u/s 234E - failure of the assessee to file the quarterly returns of T.D.S. within the prescribed time and charged interest u/s. 220(2) - HELD THAT:- It is an admitted fact that because of late filing of the quarterly TDS return in Form-26Q, for the period Q3 of F.Y. 2012-2013 the Dy. Director of Income Tax, Centralized Processing Cell-TDS, Vaishali, Ghaziabad has imposed late fee u/s. 234E of the Act and thereby, computed interest u/s. 220(2). We find the CIT(A) upheld the action of the CPC on the ground that as per the statutory provisions inserted by the Finance Act, 2012 payment of late fee for filing TDS late is mandatory. Therefore, the demand raised for levy u/sec. 234E for the period prior to 01.06.2015 is very well valid and the levy of late fee u/sec. 234E of the Act cannot be assailed. We find under identical circumstances, the Coordinate Bench of the Tribunal in the case of Dhairya sheel Pralhad Pawar, Kolhapur [2023 (2) TMI 1354 - ITAT PUNE] has held that no late fee u/sec.234E can be imposed for the periods prior to 01.06.2015. Since admittedly in the instant case, the AO/CPC-TDS has levied late fee u/sec.234E for the period prior to 01.06.2015. Direct the AO CPC to delete the late fee u/sec.234E and the consequential interest u/sec.220(2). Appeal of assessee is allowed. Issues Involved:1. Levy of late fees under Section 234E of the Income Tax Act, 1961.2. Levy of interest under Section 220(2) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Levy of Late Fees Under Section 234E:The primary issue in these appeals was the imposition of late fees under Section 234E for delayed filing of TDS statements for the assessment years 2013-14 to 2015-16. The assessee argued that the late fee under Section 234E should not be applicable for periods before June 1, 2015, as the enabling provision for its computation under Section 200A was introduced only from that date. The assessee contended that since the TDS statements were accepted without the late fee initially, the demand for such fees later was unjustified. The CIT(A) upheld the late fee imposition, reasoning that Section 234E, effective from July 1, 2012, mandated such fees, and its demand was incorporated in the intimation under Section 200A from June 1, 2015. However, the Tribunal referred to prior decisions, including those of the Coordinate Bench, which held that the late fee under Section 234E could not be imposed for periods before June 1, 2015. Consequently, the Tribunal directed the deletion of the late fee for the periods in question, aligning with the judicial precedents.2. Levy of Interest Under Section 220(2):The second issue concerned the levy of interest under Section 220(2) due to the delayed payment of the late fees. The assessee challenged this levy, arguing that since the late fee itself was not maintainable for periods prior to June 1, 2015, the consequential interest should also not be applicable. The Tribunal agreed with this position, noting that the interest under Section 220(2) was consequential to the late fee under Section 234E. Since the late fee was not applicable for the periods in question, the interest levied was also set aside.Conclusion:The Tribunal allowed the appeals filed by the assessee, directing the deletion of both the late fee under Section 234E and the consequential interest under Section 220(2) for the periods prior to June 1, 2015. The decision was based on the interpretation that the enabling provision for the levy of late fees came into effect only from June 1, 2015, and thus, any levy for periods before this date was unsustainable. The judgment was consistent across all 14 appeals, with the Tribunal applying the same rationale to each case.