2017 (12) TMI 1803 - AT - Income Tax

Levy of late fee u/s 234E - intimation issued under section 200A(1) - scope of amendment to section 200A(1) - HELD THAT - As decided in M/S. ASIAN PIPES PROFILES PVT. LTD. VERSUS ASSESSING OFFICER TDS WARD KALYAN AND M/S. DISHA DISTRIBUTORS 2017 (3) TMI 1482 - ITAT MUMBAI following the referred decision in the case of Gajanan Constructions and others 2016 (11) TMI 1247 - ITAT PUNE we hold that the amendment to section 200A(1) is prospective in nature and therefore the AO while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015 was not empowered to charge fees under section 234E. The intimations issued by the AO under section 200A of the Act in this appeal are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A in respect of defaults before 01.06.2015 and consequently allow the ground of appeal raised by the assessee. The amendment to section 200A(1) of the Act is prospective in nature and therefore the AO while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015 was not empowered to charge fees under section 234E - the intimation issued by the AO u/s 200A of the Act in this appeal is unsustainable and the demand raised by way of charging of the fees u/s 234E of the Act not being valid is deleted - we hold that the AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015 and consequently allow the grounds of appeal raised by the assessee.

Summary

Issues Involved:
1. Waiver of late fee levied under section 234E of the Income Tax Act.
2. Timing and conditions for payment of late fees under section 234E.
3. Recovery of late fees after acceptance of TDS statements without late fees.
4. Permissibility of processing TDS statements under section 200A for defaults in late fee payment.
5. Concept and purpose of TDS and its timely deposit.
6. Validity of order under section 200A imposing late fees under section 234E.
7. Applicability of 'The Income Declaration Scheme 2016' and 'The Direct Tax Dispute Resolution Scheme 2016'.
8. Condonation of delay in filing the appeal.

Detailed Analysis:

1. Waiver of Late Fee Levied under Section 234E:
The appellant argued that the Commissioner of Income Tax (Appeals) dismissed the request to waive the late fee levied under section 234E without considering the submissions on merits. The Tribunal found that the identical issue had been decided in favor of the assessee by the Coordinate Bench of ITAT, Mumbai, which held that the Assessing Officer (AO) is not empowered to charge fees under section 234E while processing TDS statements for defaults before 01.06.2015.

2. Timing and Conditions for Payment of Late Fees under Section 234E:
The appellant contended that subsection (3) of section 234E states that late fees should be paid before delivering a TDS statement. The Tribunal referenced the decision of the ITAT Pune Bench, which clarified that the power to charge fees under section 234E while processing TDS statements was only given to the AO after the amendment to section 200A, effective from 01.06.2015. Hence, the AO could not impose such fees for periods before this amendment.

3. Recovery of Late Fees after Acceptance of TDS Statements:
The appellant argued that once the TDS statement has been accepted without late fees, such fees cannot be recovered later. The Tribunal upheld this view, stating that the AO did not have the authority to charge late fees under section 234E while processing TDS returns filed before 01.06.2015.

4. Permissibility of Processing TDS Statements under Section 200A:
The appellant contended that section 200A does not permit processing TDS statements for defaults in late fee payments, except for specific errors or defaults. The Tribunal agreed, referencing the amendment to section 200A, which only allowed the AO to charge fees under section 234E from 01.06.2015 onwards.

5. Concept and Purpose of TDS:
The appellant argued that the basic concept of TDS is to deposit tax on the income of the deductee as it is earned, and since the tax was deposited timely, no late fees should be imposed. The Tribunal did not specifically address this argument but focused on the statutory authority and timing of the amendments.

6. Validity of Order under Section 200A:
The appellant sought cancellation of the order under section 200A imposing late fees under section 234E. The Tribunal concluded that the AO was not empowered to charge fees under section 234E for periods before 01.06.2015, thereby rendering the intimation issued under section 200A unsustainable.

7. Applicability of 'The Income Declaration Scheme 2016' and 'The Direct Tax Dispute Resolution Scheme 2016':
The appellant mentioned the schemes as potentially beneficial for settling dues. However, the Tribunal's decision did not hinge on these schemes but rather on the statutory interpretation of sections 200A and 234E.

8. Condonation of Delay in Filing the Appeal:
There was a delay of 17 days in filing the appeal, which the Tribunal condoned, citing the principles laid down by the Hon'ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Others. The Tribunal emphasized that substantial justice should prevail over technical considerations.

Conclusion:
The Tribunal allowed the appeal, holding that the AO was not empowered to charge fees under section 234E of the Act by way of intimations issued under section 200A for defaults before 01.06.2015. The demand raised by way of charging fees under section 234E was deleted, and the appeal by the assessee was allowed.