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2025 (5) TMI 389 - AT - Income TaxLevy of late fee u/s 234E - intimations u/s 200A - HELD THAT - On similar facts in the case of Om Prakash Sons vs ITO (TDS) Dehradun 2022 (4) TMI 1654 - ITAT DEHRADUN has held that amendments brought in the statute in section 200A by insertion of sub-clause (c) w.e.f. 01.06.2015 are prospective in nature and as such notices issued u/s 200A of the Act for computation and intimation of payment of late filing fee u/s 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. Similar view has been taken in the case of Olari Little Flower Kuries (P) Ltd. 2022 (2) TMI 1061 - KERALAHIGH COURT Therefore respectfully following the above decisions the levy of late fee u/s 234E of the Act amounting to Rs. 2, 05, 950/- for AY 2014-15 which is prior to 01.06.2015 is not sustainable and the same is deleted. Appeal of the assessee is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Power to levy late filing fees under section 234E for returns filed prior to 1.6.2015 Legal Framework and Precedents: Section 234E of the Income Tax Act imposes a late fee for delay in furnishing TDS statements. However, the amendment introducing this provision came into effect from 1st June 2015. Section 201(1A), which deals with consequences of failure to deduct or pay TDS, was also amended w.e.f. 1.6.2015 to include provisions for levy of late fees. Prior to this amendment, no express power existed to levy late fees under section 234E in orders passed under section 201(1A). Several judicial authorities, including the ITAT Dehradun Bench in Om Prakash & Sons vs ITO (TDS), and the Kerala High Court in Olari Little Flower Kuries (P) Ltd. v. Union of India, have held that the amendment to section 201(1A) is prospective and cannot be applied retrospectively to levy late fees for TDS returns filed before 1.6.2015. Court's Interpretation and Reasoning: The Tribunal observed that the amendment to section 201(1A) by insertion of sub-clause (c) w.e.f. 1.6.2015 is prospective. Therefore, any notices or demands raised under section 200A for computation and imposition of late fees under section 234E prior to this date are not maintainable. The Tribunal respectfully followed the coordinate bench decision in Om Prakash & Sons and the Kerala High Court ruling in Olari Little Flower Kuries. Key Evidence and Findings: The appellant's TDS return for AY 2014-15 was filed late due to the partner's ill health, and late fees along with interest were automatically charged under section 234E while passing the order under section 201(1A). The appellant contended that the order under section 201(1A) was never served electronically and that the fees charged were invalid as the relevant provisions were not in force at the time. Application of Law to Facts: Since the TDS return related to a period prior to 1.6.2015, the statutory framework did not empower the authorities to levy late fees under section 234E. The automatic levy of such fees in the order under section 201(1A) was therefore beyond the scope of the law applicable at the time. Treatment of Competing Arguments: The FAA had dismissed the appeal relying on the Gujarat High Court decision in Rajesh Kourani. However, the appellant relied on several decisions including those of the Kerala High Court and coordinate benches of the Tribunal that favored the assessee. The Tribunal gave precedence to the more recent and authoritative decisions which held the amendment to be prospective. Conclusion: The levy of late fees under section 234E for TDS returns filed before 1.6.2015 is not sustainable and must be deleted. Issue 2: Validity of imposing late filing fees under section 234E in order passed under section 201(1A) Legal Framework and Precedents: Section 201(1A) provides for consequences of failure to deduct or pay TDS, including recovery of such tax. The scope of permissible adjustments under this section does not explicitly include imposition of late filing fees under section 234E. Several decisions including Sibia Healthcare (P) Ltd., Dhanlaxmi Developers, Tanish Industries, Perfect Cropscience Pvt Ltd, and Fatehraj Singhvi & Ors. have held that charging late fees under section 234E in orders passed under section 201(1A) is invalid and beyond the scope of section 201(1A). Court's Interpretation and Reasoning: The Tribunal noted that the adjustment for levy of fees under section 234E is beyond the scope of permissible adjustments contemplated under section 201(1A). The absence of enabling provisions in section 201(1A) for such levy renders the imposition invalid. Application of Law to Facts: The appellant's late fees were levied automatically in the order under section 201(1A), which was not authorized by the statute for the relevant period. This constituted an impermissible adjustment. Treatment of Competing Arguments: The FAA's reliance on the Gujarat High Court decision was countered by the appellant's reliance on other High Courts and Tribunal decisions that held the levy invalid. The Tribunal aligned with the latter view. Conclusion: The levy of late filing fees under section 234E in orders passed under section 201(1A) prior to the amendment is invalid. Issue 3: Time limit for issuance of intimation or order under section 201(1A) Legal Framework: The appellant contended that the intimation under section 201(1A) raising demand can only be passed within one year from the end of the financial year in which the TDS statement is filed. Court's Interpretation: Though this issue was raised, the Tribunal did not elaborate extensively on this point in the order. The primary focus was on the lack of statutory power to levy late fees under section 234E for the period prior to 1.6.2015. Conclusion: No separate determination on this issue was made, as the appeal was allowed on other grounds. Issue 4: Treatment of conflicting decisions and application of principle favoring the assessee Legal Framework: The appellant invoked the Supreme Court decision in Vegetable Products Ltd., which held that when conflicting decisions exist, the decision favorable to the assessee should be followed. Court's Interpretation: The Tribunal acknowledged this principle and applied it by following the decisions of the Kerala High Court and coordinate benches of the Tribunal which favored the appellant, overruling the FAA's reliance on the Gujarat High Court decision. Conclusion: The principle of following decisions favorable to the assessee in case of conflicting precedents was applied to allow the appeal. 3. SIGNIFICANT HOLDINGS The Tribunal held as follows:
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