Levy of Late Fee u/s 234E is mandatory and can’t be deleted on ground of ‘Reasonable Cause’: ITAT

The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the imposition of late fee under section 234E of the Income Tax Act, 1961 is mandatory and consequential in nature and the same cannot be deleted on the ground of having “reasonable cause” on the part of the assessee for such default.

Before the Tribunal, the assessee challenged the levy of late fee under section 234E of the Act while issuing the intimation under section 200A of the Act of quarterly TDS statement filed by the assessee belatedly.

the assessee also contended that as per provision of Sec. 234 E late fee cannot be recovered for TDS statements which were due for F.Y 2016-17 as well on TDS statements late fee cannot be recovered for F.Y 16-17 if not collected at the time of delivering TDS statements to the deptt. Provision of Sec. 234 E has been made applicable with effect from 1 st July 2012. It states that the “Amount of late fee shall be paid before delivering a TDS statement”. It means that any late fee should have a fee deposited just at the time of delivering TDS statements and not later than this. The authorized TIN-NSDL center which accepted the TDS statements also accepted there without late fee, as well as the software utility of the TDS deptt. It self accepted these without late fees.

Dismissing the plea of the assessee, the Tribunal held that after the amendment w.e.f. 01/06/2015 in Section 200A of the Act, the A.O. is empowered to make adjustment on account of fee, if any, in accordance with the provisions of Section 234E of the Act.

“Once there is a default on the part of the assessee in submitting the quarterly TDS statement, the provisions of Section 234E of the Act are attracted and therefore while processing the quarterly TDS statement, the A.O. is bound to make the adjustment on account of late fee as provided U/s 234E of the Act. The levy of the late fee prescribed U/s 234E of the Act is mandatory and consequential in nature, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. The order of the A.O. can be challenged only if the A.O. has failed to comply with the mandatory provisions of Section 200A r.w.s. 234E of the Act while making adjustments and issuing the intimation. In absence of any such allegation by the assessee that the A.O. has violated any of the provisions of Section 200A as well as Section 234E of the Act, the adjustment made by the A.O. on account of late fee U/s 234E of the Act cannot be deleted,” the Tribunal said.