2025 (8) TMI 823 - AT - Income Tax

AO lacked authority under Section 200A to levy Section 234E late fees on TDS before June 1, 2015

Income Tax officer (TDS), Cuttack Versus Maa Tarini Transport Pvt., Keonjhar

The ITAT Cutack held that prior to 1.6.2015, the AO lacked authority under section 200A to levy late fees under section 234E while processing TDS ... Charging of late fees u/s 234E - scope of regulatory provision being found in section 200A for computation of fee - whether AO has every authority to levy fee either by a separate order or while processing the statement u/s 200A - CIT(A) deleted the levy of fees - HELD THAT:- Finance Act 2015, with effect from 1.6.2015, amended Section 200A sub-section(1) by substituting clauses (c) to (e) to (f) thereby enabling charging of fee under section 234E. Therefore, prior to 1.6.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of the statement filed by the appellant with regard to tax deducted at source by levying fee under section 234E. Thus, while processing statement u/s.200A, the AO could not have made any adjustment by levying fee u/s.234E prior to 1.6.2015. We find that the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench in the case of TB & ID Hospital [2018 (8) TMI 1550 - ITAT CUTTACK] Appeals of the revenue stand dismissed. The appeals filed by the revenue challenge the deletion of late fees levied under section 234E of the Income Tax Act for the assessment year 2014-15. Section 234E mandates payment of fees for failure to file prescribed statements under section 200(3). The revenue relied on High Court decisions affirming that section 234E is a charging provision, permitting levy of fees even absent explicit regulatory provisions in section 200A for fee computation. However, the appellate tribunal upheld the deletion of fees by the Commissioner of Income Tax (Appeals), noting that prior to the Finance Act 2015 amendment effective 1.6.2015, section 200A did not empower the Assessing Officer to levy fees under section 234E while processing statements. This view aligns with precedents from coordinate benches and various ITAT decisions, which held that fees under section 234E could not be charged before the amendment date. The tribunal acknowledged conflicting High Court rulings but emphasized the absence of any binding decision from the jurisdictional High Court supporting the revenue's stance. Consequently, it concurred with the CIT(A)'s reasoning that 'while processing statement u/s.200A, the AO could not have made any adjustment by levying fee u/s.234E prior to 1.6.2015.' The appeals were dismissed, affirming that the levy of late fees under section 234E was not justified for the period before the statutory amendment.