In the case of Kerala Gramin Bank, the Cochin bench of the Income Tax Appellate Tribunal (ITAT) has held that late fee interest under section 234E(1) is not leviable for processing on the period before the amendment.
The petitioner filed an application challenging the applicability or otherwise of the levy of interest under section 234E of the Income Tax Act (‘the Act’) in respect of different Quarters of the financial year 2013-14, in view of the amendment to section 200A(1) of the Act by insertion of clause (c) thereto by Finance Act, 2015 w.e.f. 01.06.2015, enabling processing of levy of fees under section 234E(1) of the Income Tax Act, 1962.
The levy u/s. 234E(1) seeks to subject the delayed filing of a tax deduction at source (TDS) return, to be filed by every deductor quarterly, i.e., within the prescribed time of the end of each quarter, as required by sec. 200(3), to a late filing fee, reckoned on a per-day basis, albeit subject to a cap at the TDS under reference. The processing u/s. 200A(1) in all appeals in the instant case is after 01/6/2015, with the TDS returns themselves being furnished much thereafter.
In Sarala Memorial Hospital v. UOI, it was held that the said amendment to section 200A(1) of the Act is prospective in nature so the said power was not available to the assessing authority before 01.6.2015. Accordingly, processing u/s. 200A(1) could thus validly be made qua fee u/s. 234E w.e.f. 01/6/2015.
In Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] it was clarified that a decision by the jurisdictional High Court shall be binding and lead to rectification where an order inconsistent therewith has been passed; rather, even where the same is before the binding decision by the Hon’ble High Court since it would relate to the period to which it pertains to.
It was evident that no late filing fee could be levied per a processing u/s. 200A(1) for any period prior to 01.6.2015. The TDS returns in the case are themselves filed after 01/6/2015; rather, being so only in view of the law, w.e.f 01/10/2014, enabling so by providing for the filing of a correction statement. Therefore, could be processed only after 31/5/2015, after which date the power of determining the levy u/s. 234E while processing the return is available. The appeals arose u/s. 154 of the Act, denying the assessee’s claim for cancelling such levy.
A Coram comprising of Shri Sanjay Arora, AM & Shri Sandeep Gosain, JM found that the orders by the Revenue authorities as not sustainable in law. The Court allowed the assessee’s appeals since the processing is for a period before 01/6/2015.
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