The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the imposition of late fees under section 234E of the Income Tax Act of 1961 should not apply to cases where the filing of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) returns was not done prior to the amendment of Section 200A of the Income Tax Act.
The assessee, St. Alphonsa Timbers & Traders (Pvt.) Ltd. is a private limited company engaged in the business of wholesale import and sale of timbers. The assessee failed to file the TDS/TCS return of Quarter-4 for F.Y. 2012-13 on or before the due date prescribed in this regard.
Subsequently, the Assessing Officer (AO) passed an order under Section 154 read with Section 200A of the Income Tax Act on 27.01.2016, raising a total demand of Rs.7500/- (Rs.6200/- on account of late filing fee under Section 234E and Rs.1300/- as Interest under Section 220(2) of the Income Tax Act thereon).
Aggrieved by the order, the assesee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)], who dismissed the appeal of the assessee. Therefore, the assessee filed a second appeal before the tribunal.
S. Rajeev, the Counsel for the assessee submitted that no late filing fee could be levied for processing under Section 200A(1) Income Tax Act for any period prior to 01.6.2015.
Further, the counsel contended that amendment brought in by insertion of clause ‘C’ in Section 200A(1) of the Income Tax Act is prospective and that only post 01.06.2015, processing of return entailed levy of late fee as envisaged under Section 234E of the Income Tax Act .
J. M Jamuna Devi counsel for the revenue supported the decision of the lower authorities.
It was also observed by the tribunal that the late filing fee under Section 234E of the Income Tax Act has been levied for Quarter-4 ending for FY. 2012-13 Rs.6,200/- and late filing fee under Section 234E of the Income Tax Act for Quarter-2 for Financial Year 2012-13 at Rs.9,153/- has been levied.
Hence, after June 1, 2015, during the processing of a Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) statement and the issuance of an intimation under Section 200A/206CB of the Income Tax Act, an adjustment could also be made regarding the applicable “fee,” if any. This fee calculation would be carried out based on the provisions outlined in Section 234E of the Income Tax Act.
Prior to 1st June, 2015, there was no enabling provision therein for raising a demand in respect of levy of fees under Section 234E of the Income Tax Act.
Therefore, the two member bench of Sanjay Arora (Accountant Member ) and Aby T. Varkey (Judicial Member) deleted the levy of late ‘fee’ under Section 234E of the Income Tax Act being of Quarter-2 and Quarter-4 of the assessment year 2013-14 being prior to 01.06.2015
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