The Kerala High Court observed that no penalty or interest is leviable on filing income tax return on time.
The present writ petition under Article 226 of the Constitution of India has been filed impugning the order for the Assessment Year 2018-19 on remand by the Tribunal wherein the demand of late fee under Section 234E of the Income Tax Act has been assessed at Rs.71,067/-.
The petitioner, M/s ATNK & K Area Armed Forces Veterans Canteen, an Armed Forces Veterans Canteen, was served with a notice under Section 201 for not filing the quarterly statement for the second quarter of Financial Year 2017-18 in Form 26Q. In fact, the petitioner had deducted and paid the tax but filed Form 24Q instead of Form 26Q. The said Form 24Q was rejected.
However, the petitioner filed the correct Form only on 23.06.2018. Therefore, the late fee of Rs.47,000/- and interest on the payment of the late fee of Rs.567/- was levied on the petitioner. The petitioner challenged the said order before the Commissioner of Income Tax (Appeals), which affirmed the order passed by the Assessing Authority.
Thereafter, the petitioner approached the Income Tax Appellate Tribunal (‘the Tribunal’). The Tribunal noted that computer generated Form 24Q was filed on 20.10.2017. This Form was revised and corrected in Form 26Q. Considering the fact that the quarterly TDS returns were filed on time, and only the Form was incorrectly filed, the Tribunal remanded the matter back to the Assessing Authority to pass fresh orders in the light of the observation made in the Order dated 01.07.2022 passed by the Tribunal.
The Counsel for the petitioner submitted that on remand, the Assessing Authority, in fact, gave effect to the order of the Tribunal and assessed ‘Nil’ demand. However, subsequently, vide order the Assessing Authority has again levied a late fee of Rs.47,000/-, interest of Rs.23,500/- and interest of late payment of Rs.567/-.
The Counsel for the petitioner further submitted that the earlier stand of the Assessing Officer was rejected by the Tribunal. The Tribunal found that the return for the second quarter of the Financial Year 2017- 18 was filed on time, however, it was in the incorrect Form, and the said Form was revised. Therefore, it cannot be said that the petitioner did not file the return on time and that there was no question of levying any late fee. She also submits that when the petitioner had deposited the tax deducted as TDS on time, there was no question of levy of any interest.
A Single Bench of Justice Dinesh Kumar Singh observed that “I find substance in the submission of the Counsel for the petitioner. It is not in dispute that the petitioner had filed the return on time. However, it was not in the correct Form, and it was revised. Therefore, when the petitioner had filed the return on time, there is no question of levying penalty and interest.”
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