Prior to 01/06/2015, paying late filing penalties under Section 234E for a tax deduction was unjustified
Fact and issue of the case
Anjani PRS Blends Private Limited (“the assessee”) filed these appeals because it was upset by the decision(s) made by the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) for the assessment years 2013–14 and 2014–15. We decide these appeals using this typical order for convenience’s sake.
These appeals are filed with a delay of 64 days each and the reason for such delay is attributed to the oversight of the chartered accountant in identifying a suitable counsel to file the appeal in Tribunal, due to the heavy pre-occupation of audit and filing of returns which were extended till 07/11/2022. The delay is 64 days and there is no grievance of Revenue of any prejudice being caused due to this delay. Prima facie we do not find any malafide on the part of the assessee in preferring these appeals with delay. Having regard to the facts and circumstances, we are inclined to condone the delay and proceed to hear the appeal.
Only issue which needs to be adjudicated in these appeals is the charging of late filing fee u/s 234E of the Income Tax Act, 1961 (‘the Act’) while issuing the intimation u/s 200A of the Act. Assessee is a private limited company, engaged in the business of manufacturing of raw material used for plastic products. Assessee is under legal obligation to deduct tax at source and deposit the same with Government within the prescribed time. Assessee, however, received noticed under section 200A of the Act levying late filing fee for the assessment year 2012-13.
Assessee appealed against such levy before the learned CIT(A), but the learned CIT(A) declined to delete the levy of fee and charging of interest stating that when the assessee files the TDS statements beyond the due date, such a levy of late fee and the interest is consequential and mandatory.
Observation of the court
Its canvassed before us by the learned AR that where the legislature has inserted clause (c) to section 200A(1) of the Act w.e.f 01/06/2015, then in respect of the TDS statements which were filed under the respective sections of the Act, for the period prior to 01/06/2015, no late filing fee could be charged u/s 234E of the Act, in the intimation issued u/s 200A of the Act. He further submitted that the CIT(A) has overlooked the fact that notices under section 200A of the Act were issued for computing and charging late filing fees under section 234E of the Act for the period of tax deducted prior to 1st day of June, 2015 and the same cannot be charged by issue of notices after 1st day of June, 2015 even where the returns were filed belatedly by the deductor after 1st June, 2015, where it clearly related to the period prior to 01/06/2015.
Per contra, learned DR submits that the assessee furnished the returns late and, therefore, as rightly pointed by the learned CIT(A) levy of late fee and penalty under section 200A of the Act is consequential and mandatory.
It is, therefore, clear that the only issue that falls for our consideration is whether late fee and consequential interest could be levied in respect of the TDS statements relating to the period prior to 01/06/2015. We find that the said issue has been adjudicated by the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & Ors vs. Union of India (2016) 289 CTR 0602.
Hon’ble High Court of Karnataka thus explained the position of charging of late filing fees under section 234E of the Act and the mechanism for computation of fees and failure for payment of fees under section 200A of the Act in the light of amendment w.e.f. 01/06/2015, and held such amendment to be prospective in nature and, therefore, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 01/06/2015 were not maintainable. The same were accordingly quashed.
Same is the view of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. UOI reported in (2017) 83 com 137. Further, a Co-ordinate Bench of this Tribunal in the case of Nirmala Infra Projects India (P) Ltd., Vs. Dy.CIT in ITA Nos. 666 to 669/Hyd/2022, dated 12/12/2022 while noticing the above decisions, reached a conclusion that the levy of late fee and the interest in respect of the TDS statements prior to 01/06/2015 cannot be sustained. We accordingly direct the learned Assessing Officer to delete the same.
In the result, both the appeals are allowed. Order pronounced in the open court on this the 28th day of February, 2023.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
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