TDS Late Fees u/s 234E Leviable only Prospectively, Not Before 01/06//2015: ITAT deletes Penalty [Read Order]

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty holding that the late fee under Section 234E of the Income Tax Act 1961 regarding Tax Deducted at Source (TDS) could only be levied prospectively and not before 1/06/2015.

The Assistant Commissioner of Income Tax, (ACIT), Ghaziabad issued an intimation under Section 200A read with Section 154 of the Income Tax Act, 1961 to assessee Envision Landmarks LLP for the assessment year 2014-15 levying a late fee under the provisions of section 234E of the Income Tax Act stating that the appellant had failed to file the quarterly statement of TDS of first, second, third and fourth quarters for financial year 2013-14.

Accordingly, the ACIT had levied penalty of late fee under Section 234E of the Income Tax Act by intimation dated 30.07.2014 passed under Section 200A  read with Section 154 of the Income Tax Act.

The two-member Bench of Inturi Rama Rao, (Accountant Member) and S. S. Viswanethra Ravi, (Judicial Member) observed that amendment which was made under Section 200A of the Income Tax Act providing that fee under Section 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the deductor as fee under Section 234E of the Income Tax Act was only enforceable from 01.06.2015.

The Bench further referred to the relevant observation of the Karnataka High Court in the case of Fatheraj Singhvi which held that the provisions of section 234E of the Income Tax Act were substantive in nature and the mechanism for computing the late fee was provided by the Parliament only with effect from 01.06.2015.

The Bench allowed the appeal filed by the assessee and deleted the penalty under Section 234E of the Act holding that late fees under Section 234E of the Income Tax Act could be levied only prospectively with effect from 01.06.2015.

To Read the full text of the Order CLICK HERE

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