ITAT deletes Late Fee on TDS Default since effective date of amendment of S. 234E is 01.06.2015 [Read Order]

While directing an order for a late fee on TDS default, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the fee cannot be made prior to 1^st June 2015 which is the effective date for the amendment of the provisions of section 234E of the Income Tax Act, 1961.

The Assessee was aggrieved by the imposition of penalty by the Assessing Officer on the ground of TDS default. The penalty was levied by invoking the provisions of section 234E of the Income Tax Act, 1961.

As per section 234E of the Income Tax Act, 1961, any late fee should have been deposited just at the time of delivering the TDS statement and not later than this.

The Finance Act, 2015 applicable w.e.f. 01.06.2015, provided that Sub-Sec. 200A is amended to provide that statement of tax deduction at source or correction statement made u/s. 200 shall be processed and sum deductible under Chapter XVII shall be computed after also taking into account the fee, if any, payable in accordance with the provisions of section 234E. The sum payable or refundable shall be determined after adjusting the aforesaid computed sum against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee.

Based on the above, the assessee contended that the levy of the penalty is not sustainable under the law since the provision is applicable only after 1^st June 2015.

The Tribunal also noted that the High Court of Karnataka in the case of Fatheraj Singhvi & Ors considered a similar issue and has accepted the contention of the assessee that when no express authority was conferred by the statute under Section 200A prior to 01.06.2015 for computation of any fee under Section 234E nor the determination thereof, the demand or the intimation for the previous period or previous year prior to 01.06.2015 could not have been made.

The Tribunal, relying on the Apex Court decision in Vegetable Products Ltd, also observed that if there is a divergence of opinion between different Hon’ble High Courts on an issue, the one in favor of the assessee needs to be followed.

“In light of the effective date of amendment i.e. 01.06.2015, and considering the decision of the Hon’ble High Court of Karnataka, we direct the Assessing Officer to delete the fee levied u/s 234E of the Act in both the appeals of the assessee,” the Tribunal said.