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2025 (6) TMI 1796 - AT - Income TaxLevy of late fee u/s. 234E - furnishing of TDS quarterly statements belatedly - returns processed u/s. 200A of the Act prior to 01/06/2015 - HELD THAT - As relying on Pancharatna Buildcon Pvt. Ltd 2024 (12) TMI 460 - ITAT PUNE no late fee u/sec. 234E can be imposed for the periods prior to 01.06.2015. Assessee appeal allowed.
The core legal issue considered in this series of appeals is whether the late fee under section 234E of the Income Tax Act, 1961 (the "Act") can be levied for delay in furnishing quarterly TDS returns for the financial year 2012-13, where such returns were processed prior to 1 June 2015, the date when the amendment introducing section 200A(1)(c) enabling levy of late fee under section 234E came into effect.
The Tribunal also considered the related question of the validity of the levy of consequential interest under section 220(2) of the Act arising from the imposition of the late fee. A further procedural issue implicitly addressed was the maintainability of appeals filed after rejection of rectification applications under section 154 of the Act, especially when no appeal was filed against the original orders under section 200A. Regarding the first issue, the relevant legal framework includes:
The Tribunal's interpretation rested heavily on the timing of the statutory amendment. It emphasized that although section 234E was introduced by the Finance Act 2012, the enabling provision for CPC to levy the late fee through processing under section 200A(1)(c) was inserted only with effect from 1 June 2015. Therefore, levying late fee for defaults prior to this date lacks statutory authority (sine auctoritate) and is unsustainable in law. The Tribunal extensively relied on prior decisions, including:
In the instant appeals, the assessee filed quarterly TDS returns for FY 2012-13, which were processed before 1 June 2015. The CPC levied late fee under section 234E for delay in filing these returns. The assessee did not challenge the original orders under section 200A but filed rectification applications under section 154, which were rejected. Subsequently, the assessee filed appeals against the section 154 orders, which were also dismissed by the Commissioner of Income Tax (Appeals). The assessee then approached the Tribunal. On the facts, the Tribunal found the levy of late fee under section 234E for periods prior to 1 June 2015 to be without legal basis. The Tribunal noted that the learned Departmental Representative failed to produce any binding precedent supporting the Revenue's position. The Tribunal applied the ratio of the aforementioned coordinate bench decisions to the instant case. Regarding the procedural aspect, the Tribunal implicitly accepted the maintainability of appeals filed after rejection of rectification applications under section 154, even though the original orders under section 200A were not appealed. The Tribunal did not find any procedural bar to entertain these appeals on merits. The Tribunal also addressed the consequential interest levied under section 220(2) of the Act, which was computed on the late fee amount. Since the late fee itself was held to be invalid, the consequential interest was also deleted. In considering competing arguments, the Tribunal noted that the Revenue supported the lower authorities' orders but did not place any binding judicial precedent to counter the assessee's submissions. The Tribunal gave precedence to the settled position of law established by coordinate benches and High Courts, which uniformly held that section 234E could not be applied retrospectively before 1 June 2015. The Tribunal concluded by setting aside the orders of the Commissioner of Income Tax (Appeals) and directing deletion of the late fee under section 234E and consequential interest under section 220(2) for the relevant periods. The appeals filed by the assessee were allowed. Significant holdings include the following verbatim observations from the Tribunal's order in Pancharatna Buildcon Pvt. Ltd. (cited with approval): "Although the levy of fees u/s 234E for delay in furnishing statement has been brought into statute we.f. 1 July, 2012, the enabling provision of section 200A(1)(c) authorising such levy came into force w.e.f. 1st June, 2015 by Finance Act, 2015, consequently the fees levied for any default prior thereto being sine auctoritate hence unsustainable in the eyes of law." Core principles established are:
Final determinations on the issues are:
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