The Income Tax Appellate Tribunal(ITAT), Bangalore Bench has held that the demand for late fees under section 234E of the Income Tax Act,1961 is not sustainable for TDS filed before 1st June 2015.
The assessee, Shri Thomas Abraham challenged separate orders dated 25/03/2022 u/s. 250 passed by the National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Years 2013 – 14 to 2015 -16.
The assessee was delayed in filing the TDS statement and the AO by intimation u/s. 200A of the Income Tax Act,1961 levied late fee u/s. 234E of the Act. It was viewed that, under section 234E of the Act, if there was a delay in filing the statement of Tax Deduction Source (TDS) within the prescribed time then the person responsible for making payment and filing the return of TDS was liable to pay by way of fee a sum of Rs.200/- per day during which the failure continues.
The assessee contended that the provisions of section 234E of the Act were inserted by the Finance Act, 2012 w.e.f. 1.7.2012. Section 200A of the Act was a provision that deals with how a return of TDS filed u/s.200(3) of the Act has to be processed.
Further stated that AO could levy a fee under section 234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by the provisions of Sec.200A(1)(c), (d) & (f) of the Act which came into force from 1.6.2015.
In the decision of the High Court of Karnataka in the case of Fatehraj Singhvi v. UOI, it was held that “amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have been made for tax deducted at source for the assessment years before 1.6.2015.”
In light of the above-said decision, Shri Chandra Poojari, accountant member and Smt Beena Pillai, judicial member allowed the appeals filed by the assessee. The Assessee was represented by Shri N.V. Manohar Naidu and the Revenue was represented by Shri Venudhar Godesi.
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