Prospective Application of summary processing: Section 234E late fee payable by processing only from 01.06.2015; recalculation ordered.

Whether late fee under Section 234E can be imposed by summary processing is decided on the ground that the amendment authorising levy by processing is prospective; the principle applied is prospective application of statutory amendments and limits operability of summary processing to defaults processed under the amended clause only from 01.06.2015, resulting in relief where returns were processed earlier. Where returns were processed before that date, the operative effect is recomputation of the late fee confined to the period from 01.06.2015 until filing; delay in first appeal may be condoned to apply this remedial position on merits.

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Issues: (i) Whether late fee leviable under Section 234E of the Income-tax Act, 1961 can be imposed by processing TDS returns under Section 200A(1)(c) of the Income-tax Act, 1961 for defaults occurring prior to 01.06.2015, and (ii) Whether the matter should be remitted for recomputation of late fee limited to the period from 01.06.2015 until filing of the TDS return.

Analysis: Relevant enactments include Section 234E (late fee) introduced with effect from 01.07.2012 and the summary processing mechanism under Section 200A introduced earlier, with clause (c) of Section 200A(1) (authorising levy by processing) inserted effective 01.06.2015. Coordinate tribunal and High Court decisions reflect two views: one treating levy by processing prior to 01.06.2015 as ultra vires, and another treating Section 234E as a self-contained substantive liability independent of Section 200A(1)(c). A series of coordinate-bench tribunal precedents hold that the amendment authorising levy by processing is prospective and therefore late fee under Section 234E can be imposed by processing only from 01.06.2015. Where appeals involved pre-01.06.2015 processing, those precedents direct recalculation limiting levy to the period from 01.06.2015. In one appeal the first appellate authority dismissed on delay; principles favouring condonation of delay in the interests of substantial justice permit consideration on merits and application of the concluded position on prospective application of Section 200A(1)(c).

Conclusion: (i) The levy of late fee under Section 234E by summary processing under Section 200A(1)(c) is not applicable retrospectively and is to be applied only from 01.06.2015 onward; (ii) Appeals where returns were processed before 01.06.2015 are to be relieved of fees attributable to the period prior to 01.06.2015 and matters remitted for recomputation of late fee limited to the period from 01.06.2015 until the date of filing of the relevant TDS return. The result is partly in favour of the assessee.

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