Late Fee for Default / Delay in submitting TDS Statement is Mandatory, can’t be avoided even Assessee has reasonable cause: ITAT [Read Order]

The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the levy of late fee under section 234E of the Income Tax Act, 1961 for the delay or default in submitting the TDS statement is mandatory under the law and having a ‘reasonable cause’ for such default is not a valid excuse to avoid the levy.

The assessee is the Principal of Secondary School and responsible for deducting tax at source, depositing the same to the government account, and submitting quarterly TDS statement as required U/s 200(3) read with the proviso of the said Section. A late fee under section 234E was levied against the Assessee since there is a delay of 315 days in filing the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18 and consequently the A.O.

The assessee claimed that due to some transfer postings of the Lower Division Clerk (LDC) as well as the teachers, looking after the matter, there was a delay in submitting the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18. It was claimed that since there was a reasonable cause for the delay, the levy should be deleted.

The Tribunal noted that Clause (c) of subsection (1) of Section 200A of the Act provides for adjustment on account of the fee if any to be computed in accordance with the provisions of Section 234E of the Act.

“Therefore, in case, there is a default or delay in submitting the TDS statements, a late fee is levied as contemplated U/s 234E of the Act and the A.O. while processing the statements of TDS shall make the adjustment on this account. Thus, so far as the nature of levy U/s 234E of the Act is concerned, it is mandatory in nature and the A.O. has no discretion to take its own decision but he has to make the adjustment on account of levy of late fee as provided U/s 234E of the Act in case there is a delay in submitting the TDS statement. The levy has to be computed in accordance with the rate prescribed U/s 234E of the Act,” the Tribunal said.

Overruling the contentions of the assessee, the Tribunal observed that “As far as the merit of the appeal is concerned, we do not find any substance or merit in this appeal as the delay in filing the quarterly statement is accepted by the assessee. The only plea raised by the assessee before the ld. CIT(A) as well as before us is the explanation for such delay in filing quarterly statements. However, since the levy of late fee as prescribed U/s 234E of the Act is mandatory and consequential, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. It is pertinent to mention that though the intimation issued U/s 200A of the Act is an appealable order, however, the said order can be challenged only on the ground that the adjustment made by the A.O. or intimation issued U/s 200A of the Act is not in accordance with the provisions of Section 234E or Section 200A of the Act. Only if the A.O. has failed to comply with the mandatory provisions of these Sections while making the adjustment and issuing the intimation, the same can be challenged in the appeal. In absence of any such allegation that the A.O. has violated any of the provisions of Section 234E or Section 200A of the Act, the adjustment made by the A.O. on account of late filing fee U/s 234E of the Act cannot be deleted.”