Income Tax Department has no power to levy late fee and interest in respect of TDS as per intimation u/s 200A of IT Act prior to Amendment: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Jodhpur bench, held that the Income Tax Department has no power to levy late fee and interest in respect of Tax Deduction at Source (TDS) as per intimation under Section 200A of the Income Tax Act, 1961 prior to the amendment of the law.

The assessee, Dinesh Infrastructure Private, filed a TDS return for the fourth quarter (Q4) 26Q of the Financial year 2012-13. The return was processed by TDS Centralized Processing Cell on 23.12.2013, and a late filing fee amounting to Rs. 38,200/- was levied. The assessee requested for rectification of the order u/s 200A. The AO passed an order of correction on 10.12.2017. Again, the assessee applied for rectification u/s 154, for which the AO passed the order on 13.06.2019 without giving any relief as requested by the assessee.

Aggrieved by the order, the assessee filed an appeal before the CIT(A), who dismissed the appeal of the assessee. Thereafter, the assessee filed an appeal against the CIT(A) order before the tribunal. When the matter was considered before the tribunal, Raksha Birla, Counsel for the assessee, argued that the late fee confirmed by the CIT(A) needs to be reversed. Furthermore, the assessee argued that the department has the power to charge a fee under Section 234E of the Income Tax Act, which came into effect on 01.06.2015, and therefore, since the amendment is prospective, the same cannot be applied for the year under consideration.

On the contrary, S.M. Joshi, Counsel for Revenue, supported the decision of the lower authorities. It was observed by the tribunal that the power to levy the said late fees under Section 234E of the Income Tax Act came into effect from 01.06.2015. Therefore, this provision is prospective in nature. Thus, it was not applicable in the financial year 2012-13.

After reviewing the facts and records, the two-member bench of Rathod Kamlesh Jayantbhai (Accountant Member) and Dr. S. Seethalakshmi (Judicial Member) held that the late fees under Section 234E of the Income Tax Act could not have been levied in the intimation under Section 200A of the Income Tax Act for the delay in filing quarterly returns of TDS. The said power to levy fees has come into effect from 01.06.2015. Therefore, the bench allowed the appeal of the assessee.

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