Late Fee and Interest in respect of the TDS Statements cannot be Levied prior to 01/06/2015: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Hyderabad Bench, has recently, in an appeal filed before it, held that late fee and interest in respect of the TDS statements cannot be levied prior to 01/06/2015.

The aforesaid observation was made by the Hyderabad ITAT, when  appeals was preferred before it by the assessee, as against the orders passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi ( CIT(A)), in the case of Anjani PRS Blends Private Limited (the assessee) ,for the assessment years 2013-14 & 2014-15.

The only issue to be adjudicated in these appeals being the charging of late filing fee u/s 234E of the Income Tax Act, 1961 while issuing the intimation u/s 200A of the Income Tax Act, the facts of the case pertaining to the issue were that theassesseewas a private limited company, engaged in the business of manufacturing of raw material used for plastic products.

The assesseewas under a legal obligation to deduct tax at source and deposit the same with Government within the prescribed time. However, the assesseereceived noticed under section 200A of the Income Tax Act, levying late filing fee for the assessment year 2012-13.

Aggrieved by the same, the assessee appealed against such levy before the CIT(A), but the CIT(A) declined to delete the levy of fee and charging of interest, thereby stating that when the assessee files the TDS statements beyond the due date, such a levy of late fee and the interest is consequential and mandatory. And it is being agitated by the same, that the assessee has preferred the instant appeal before the Hyderabad ITAT.

With Shri P. Vinod, the AR for the assessee , canvassing before the ITAT Bench that where the legislature has inserted clause (c) to section 200A(1) of the Income Tax Act w.e.f 01/06/2015, then in respect of the TDS statements which were filed under the respective sections of the Income Tax Act for the period prior to 01/06/2015, no late filing fee could be charged u/s 234E of theIncome Tax Act in the intimation issued u/s 200A of the Income Tax Act,he further submitted that the CIT(A) has overlooked the fact that notices under section 200A of the Income Tax Act, were issued for computing and charging late filing fees under section 234E of the Income Tax Act for the period of taxdeducted prior to 1st day of June, 2015 and hence that the same cannot be charged by issue of notices after 1st day of June, 2015, even where the returns were filed belatedly by the deductor after 1st June, 2015, where it clearly related to the period prior to 01/06/2015.

Per contra, Shri Kumar Aditya, the DR submitted that the assessee furnished the returns late and, therefore that, as rightly pointed by the CIT(A), the levy of late fee and penalty under section 200A of the Income Tax Act is consequential and mandatory.

Hearing the opposing contentions of either sides and perusing the materials available on record, the ITAT Panel consisting of Rama KantaPanta, the Accounting Member, along with K. Narasimha Chary, the judicial member observed:

“It is, therefore, clear that the only issue that falls for our consideration is whether late fee and consequential interest could be levied in respect of the TDS statements relating to the period prior to 01/06/2015. We find that the said issue has been adjudicated by the Hon’ble Karnataka High Court in the case of FatherajSinghvi&Ors vs. Union of India (2016) 289 CTR 0602.”

“The Hon’ble High Court of Karnataka thus explained the position of charging of late filing fees under section 234E of the Act and the mechanism for computation of fees and failure for payment of fees under section 200A of the Act in the light of amendment w.e.f. 01/06/2015, and held such amendment to be prospective in nature and, therefore, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 01/06/2015 were not maintainable. The same were accordingly quashed.”, the ITAT Panel added.

Thus, allowing the assessee’s appeals, theHyderabad ITAT held:

“Same is the view of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. UOI reported in (2017) 83 taxmann.com 137. Further, a Co-ordinate Bench of this Tribunal in the case of Nirmala Infra Projects India (P) Ltd., Vs. Dy. CIT in ITA Nos. 666 to 669/Hyd/2022, dated 12/12/2022 while noticing the above decisions, reached a conclusion that the levy of late fee and the interest in respect of the TDS statements prior to 01/06/2015 cannot be sustained. We accordingly direct the learned Assessing Officer to delete the same.”

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