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2020 (9) TMI 288 - AT - Income TaxFees charged u/s 234E - default in not filing TDS returns in time - intimation under section 200A - whether where the return for the TDS deduction was filed under respective sections of the Act, for the period prior to 01.06.2015 though belatedly, but no late filing fee can be charged under section 234E? - whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) of the Act is clarificatory or is prospective in nature and is not applicable to the pending assessments? - HELD THAT - The machinery provisions of charging the said fee as per clause (c) of Section 200A(1) of the Act was inserted by legislature with effect from 01.06.2015. We find that the said issue has been decided by the Hon ble Karnataka High Court in the case of Fateh Raj Singhvi Ors. vs UOI 2016 (9) TMI 964 - KARNATAKA HIGH COURT and it is held that section 200A of the Act inserted with effect from 01.06.2015 had prospective effect and was not applicable for different quarters of assessment years prior to 01.06.2015. Where power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case, the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the AO under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee.
Issues Involved:
1. Charging of fees under section 234E of the Income-tax Act, 1961, prior to the amendment to section 200A(1)(c) effective from 01.06.2015. 2. Validity of fees charged under section 234E in rectification orders passed under section 154 after 01.06.2015. 3. Applicability of decisions from various High Courts on the issue. 4. Procedural and substantive aspects of section 200A and 234E. 5. Jurisdictional High Court's stance on the issue. Issue-Wise Detailed Analysis: 1. Charging of Fees under Section 234E Prior to 01.06.2015: The primary issue is whether late fees under section 234E can be charged for periods before the amendment to section 200A(1)(c) effective from 01.06.2015. The assessee argued that since the amendment was not retrospective, fees for late filing of TDS returns prior to this date could not be levied. The Tribunal referenced several decisions, including the Karnataka High Court's ruling in Fateh Raj Singhvi & Ors. vs UOI, which held that the amendment to section 200A was prospective and not applicable to periods before 01.06.2015. This position was supported by multiple Tribunal decisions, including Udit Jain vs ACIT and Medical Superintendent Rural Hospital vs DCIT. 2. Validity of Fees Charged in Rectification Orders Post-01.06.2015: The second aspect is whether fees under section 234E can be charged via rectification orders under section 154 issued after 01.06.2015 for periods before this date. The Tribunal found that even if the rectification orders were issued post-amendment, the fees could not be charged for periods prior to 01.06.2015. The CIT(A) had erred in upholding such charges, overlooking the prospective nature of the amendment. 3. Applicability of High Court Decisions: The Tribunal considered the conflicting decisions from various High Courts. The Gujarat High Court in Rajesh Kourani vs UOI upheld the levy of fees under section 234E even for periods before the amendment. However, following the principle laid down by the Supreme Court in CIT vs Vegetable Products Ltd., in the absence of a jurisdictional High Court ruling, the decision favoring the assessee (Karnataka High Court) was preferred. 4. Procedural and Substantive Aspects of Section 200A and 234E: The Tribunal emphasized the distinction between procedural and substantive provisions. Section 234E is a charging provision, while section 200A is a machinery provision. The amendment to section 200A(1)(c) was procedural, enabling the computation of fees under section 234E during the processing of TDS returns. Since this procedural mechanism was introduced only from 01.06.2015, it could not be applied retrospectively. 5. Jurisdictional High Court's Stance: The Tribunal noted that the Delhi High Court had not yet ruled on this specific issue. Therefore, in line with the Supreme Court's guidance, the Tribunal followed the Karnataka High Court's decision, which was in favor of the assessee. Conclusion: The Tribunal concluded that the Assessing Officer was not empowered to charge late fees under section 234E for periods prior to 01.06.2015, even if the TDS returns were processed or rectification orders were issued after this date. The intimation and demands raised under section 200A for such periods were invalid and were thus deleted. This decision aligns with the principle of prospective application of amendments and favors the assessee in the absence of a jurisdictional High Court ruling to the contrary.
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