Prospective operation of amendment: late TDS filing fee applies only for defaults from 01.06.2015; earlier charges deleted.

Delay in filing appeals before the Commissioner of Income Tax (Appeals)/NFAC was condoned after affidavit evidence met the reasonable-cause standard and the appeals were admitted. The Finance Act, 2015 amendment effective 01.06.2015 was held to operate prospectively; therefore the late fee charged for TDS returns processed under the TDS-processing provision is not leviable for returns processed before 01.06.2015. For defaults occurring on or after 01.06.2015 the late fee is leviable but must be computed only from 01.06.2015 until the date of processing for returns processed on or after that date.

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Issues: (i) Whether delay in filing appeals before the Commissioner of Income Tax (Appeals)/NFAC should be condoned; (ii) Whether late fee under Section 234E of the Income-tax Act, 1961 levied by CPC in processing TDS returns under Section 200A of the Income-tax Act, 1961 is chargeable for periods prior to 01.06.2015 and/or for defaults from 01.06.2015 onwards.

Issue (i): Whether delay in filing appeals before the Commissioner of Income Tax (Appeals)/NFAC should be condoned.

Analysis: The assessee filed an affidavit explaining the sequence of events, reliance on earlier legal advice, misunderstanding about scope of an earlier appellate order, subsequent discovery of the error on receipt of recovery notices, and steps taken thereafter. The facts were examined against the standard for 'reasonable cause' and relevant precedents on condonation of delay.

Conclusion: Delay in filing the appeals before the Commissioner of Income Tax (Appeals)/NFAC is condoned; the appeals are admitted for adjudication.

Issue (ii): Whether late fee under Section 234E of the Income-tax Act, 1961 levied by CPC in processing TDS returns under Section 200A of the Income-tax Act, 1961 is chargeable for periods prior to 01.06.2015 and/or for defaults from 01.06.2015 onwards.

Analysis: Applying the Tribunal's precedent and considering the Finance Act, 2015 amendment effective 01.06.2015, the question of liability to levy fee under Section 234E when returns are processed under Section 200A was examined. The Tribunal's consistent view and cited authorities treat the Finance Act, 2015 amendment as prospective, limiting the power to impose Section 234E fees to defaults occurring on or after 01.06.2015. Returns processed prior to 01.06.2015 do not attract Section 234E charges; for returns processed on or after 01.06.2015 the fee is leviable but must be computed only from 01.06.2015 until processing.

Conclusion: Fee under Section 234E levied by CPC for defaults in filing TDS returns prior to 01.06.2015 is deleted; fee under Section 234E is leviable only for defaults from 01.06.2015 onwards and must be computed from 01.06.2015 to the date of processing for returns processed on or after that date.

Final Conclusion: The appeals are partly allowed by condoning delay and directing deletion of Section 234E charges for periods prior to 01.06.2015 while confirming and directing reassessment of Section 234E charges, computed from 01.06.2015, for returns processed on or after 01.06.2015.

Ratio Decidendi: The amendment introduced by the Finance Act, 2015 taking effect from 01.06.2015 operates prospectively; therefore Section 234E fees can be imposed only for defaults occurring on or after 01.06.2015 and not for returns processed before that date.

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