The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the imposition of late fee under section 234E of the Income Tax Act, 1961 has prospective effect and the same cannot be levied without machinery provision of section 200A.
The appellant contended before the Tribunal that no other adjustment in the amount refundable to or recoverable from the tax deducted were permissible in accordance with the law as it existed prior to 1st June, 2015 thereby the enabling provision for levy of fees u/s 234E cannot be used without the machinery provision, section 200A.
After hearing arguments from both the sides, the Tribunal bench comprising Shri George George K, Judicial Member and Ms. Padmavathy S, Accountant Member has observed that the Karnataka High Court in the case of Shri Fatheraj Singhvi Vs. Union of India citation has dealt with similar issue wherein the High Court has allowed the appeal in favour of the assessee. The High Court while rendering the decision held that the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act.
Concluding the order in favour of the assessee, the Tribunal held that “We respectfully following the binding decision of the jurisdictional High Court in the case of Shri Fatheraj Singhvi (Supra) hold that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A. The appeal therefore is allowed in favour of the assessee.”
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