Late filing fee adjustment via TDS statement processing exceeded statutory scope; pre-amendment levies disallowed on procedural grounds.

Whether a late-filing fee could be imposed by adjusting an intimation under Section 200A for TDS statements filed before 1 June 2015 turned on the statutory scope of Section 200A as it stood then. Section 200A prior to the 2015 amendment did not authorize computation or adjustment of fees under Section 234E; the 2015 amendment expressly added that power effective 1 June 2015. An intimation raising a demand by effecting a 234E adjustment before that effective date exceeded Section 200A's mandate and, coupled with the statutory limitation on issuing intimations, could not be cured later. Outcome: the impugned fee adjustments were held unsustainable and deleted (appeals allowed).

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Issues: Whether levy of late filing fee under Section 234E of the Income-tax Act, 1961 could be effected by adjustment in an intimation under Section 200A of the Income-tax Act, 1961 for statements filed prior to 1 June 2015.

Analysis: Section 234E (fee for defaults in furnishing statements) was inserted with effect from 1 July 2012. Section 200A, as it stood prior to the amendment effected by the Finance Act, 2015 (effective 1 June 2015), permitted processing of TDS statements only for specified adjustments such as arithmetical errors, incorrect claims apparent from the statement, and computation of interest; it did not provide for computation or adjustment of fees under Section 234E. The 2015 amendment to Section 200A expressly inserted computation of fee in accordance with Section 234E with effect from 1 June 2015. Where an intimation under Section 200A raises a demand by effecting an adjustment for Section 234E prior to the effective date of that amendment, that adjustment exceeds the statutory scope of Section 200A as it then stood. An intimation under Section 200A is appealable, and the legality of such an adjustment must be examined with reference to the limited mandate of Section 200A effective at the time the statement was processed. Additionally, where the statutory scheme limits the period within which an intimation can be issued (one year from the end of the financial year in which the statement is filed), a levy not effected within that period cannot be cured subsequently.

Conclusion: The levy of late filing fee under Section 234E by way of adjustment in an intimation under Section 200A for statements filed prior to 1 June 2015 is unsustainable; the appeals are allowed and the impugned fees are deleted in favour of the assessee.

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