Levy of Fees u/s 234E by virtue of Section 200A

Levy of Fees u/s 234E by virtue of Section 200A




Loading

Levy of Fees u/s 234E by virtue of Section 200A

Section 234E of the Income Tax Act, 1961 talks about levying of late fees if TDS Return is not submitted within time.

Section 234E reads as under:

234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Sub-section 3 of Section 200 of the Act requires the submission of TDS Return. Sub-Section 3 of Section 200 of the Income Tax Act, 1961 reads as under:

(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority2 or the person authorised by such authority such statement in such form3 and verified in such manner and setting forth such particulars and within such time as may be prescribed:

Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.

Section 200A gives the power to the income tax authorities to send intimations regarding the TDS statements furnished by the assessee. Section 200A reds as under:

200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:—

 (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—

  (i) any arithmetical error in the statement; or

 (ii) an incorrect claim, apparent from any information in the statement;

 (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;

 (c) the fee, if any, shall be computed in accordance with the provisions of section 234E;

 (d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee;

 (e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and

  (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor:

Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.

Explanation.—For the purposes of this sub-section, “an incorrect claim apparent from any information in the statement” shall mean a claim, on the basis of an entry, in the statement—

  (i) of an item, which is inconsistent with another entry of the same or some other item in such statement;

 (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act.

(2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.

It means that the Assessing officer can levy the Late Filing Fees by way of intimation. This is not so since beginning. The clause was amended with effect from the 1st day of June, 2015. The amendment that was made is as under:

Amendment in section 200A.

In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:—

“(c)   the fee, if any, shall be computed in accordance with the provisions of section 234E;
(d)   the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b)and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee;
(e)   an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and
(f)   the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor.”.

Since, the permission to the income tax authorities to charge fees by way of intimation was given by this amendment they cannot charge it before 1st of June 2015. The similar judgment was made by ITAT Cuttak in case of TB and ID Hospital Vs ITO (ITAT Cuttack)

The case is reproduced for reference:

TB and ID Hospital Vs ITO (ITAT Cuttack)

These are the appeals filed by the assessee against the order of CIT(A)-1, Bhubaneswar, all dated 25.06.2018 passed in I.T.Appeal No.0134, 0135, 0136 & 0137/17-18 for the assessment year 2013-2014, 2014-2015, 2015-2016 & 2016-2017.

  1. The common grievance of the assessee in all the appeals is that the CIT(A) has erred in dismissing the assessee’s appeal in respect of levy of late fee u/s.234E of the Act.
  2. Brief facts of the case are that in all the above appeals under consideration, admittedly there was a delay in filing of TDS statement and during the processing of TDS return, the AO(TDS) raised demand by way of intimations issued u/s.200A of the Act for levy of fees u/s. 234E for delayed filing of TDS statement for Quarter 4 in the A.Y.2013-2014, for Quarters 1 to 4 in the assessment year 2014-2015, for Quarters 1 to 4 in the assessment year 2015-2016 and for Quarter 1 in the assessment year 2016-2017, respectively and passed order dated 04.09.2015.
  3. Aggrieved by the order of AO, the assessee filed appeals before the CIT(A). The CIT(A) after considering the grounds of appeal of the assessee has dismissed the appeals.
  4. Now, the assessee is in further appeals before the Tribunal.
  5. Ld AR filed an order of this Bench of the Tribunal in the case of Community Health Centre, ITA No.31/CTK/2017, order dated 14.02.2018 and further submitted that this issue is covered in favour of the assessee in respect of levy of late fee u/s.234E of the Act, which fact has not been controverted by the DR
  6. We have heard rival submissions and perused the material on We find that on similar issue the coordinate Bench of the Tribunal has decided the levy of late fee u/s.234E of the Act in Community Health Centre, ITA No.31/CTK/2017, order dated 14.02.2018, at page 2, observing as under:-

“7. We find that the Tribunal in the case of Glee Pharma Pvt. Ltd., ITA Nos.161 to 163/CTK/2016, order dated 28.08.2017, has held as under :-

“5. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. We find that on similar issue, this Bench of the Tribunal has deleted the levy of fee u/s. 234 E of the Act in the above stated case, observing as under:

“We have heard both parties and perused the records. We find that the only issue permeating from all the 5 appeals is regarding imposition of levy of fee for late filing TDS return u/s 234E of the Act, while processing the statements furnished by the assessee u/s 200A of the Act. At the outset itself, it was pointed out by the Ld. Counsel for the assessee that this issue is no longer res integra since the Hon’ble Karnataka High Court in Fatehraj Sin ghvi v. Union of India (289 CTR 0602) has held that w.e.f. 01.06.2015, the Parliament by way of an amendment to Section 200A of the Act, has empowered the AO to levy fee u/s 234E of the Act while processing u/s 200A of the Act. Therefore, prior to that date i.e.01.06 .2015, the AO had no authority to levy fee u/s 234E of the Act. Therefore, according to the contention of the Ld. Counsel for the assessee, that the AO erred in levying the fee u/s 234E of the Act which been wrongly confirmed by the Ld. CIT(A) and, therefore, the impugned orders of the Ld. CIT(A) need to deleted.

  1. On the other hand, the Ld. CIT(DR) contended that the Punjab and Haryana High Court in Dr. Amrit Lai Man gal vs. Union of India 62 com310 (Punjab & Haryana) has taken a view which is in favour of the Revenue. On a query from the bench as to whether the jurisdictional High Court i.e. Hon’ble Orissa High Court has passed any orders in respect to the LIS before us. The Ld. DR fairly conceded that there is no order of the Hon’ble Orissa High Court on the issue in hand before us. It is well settled that when there is no order of the Jurisdictional High Court on the issue before us, the Tribunal will follow the order of the High Court which is in favour of the assessee (CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC)). In such a scenario, we are inclined to follow the order of the Karnataka High Court which has been brought to our knowledge by the Ld. Counsel for the assessee.
  2. The facts in Fatehraj Singh vs.. Union of India (supra), which was decided by the Hon’ble Karnataka High Court was that for financial year 2012-13 and 20 13-14, TDS was deducted by the respective assessees and deposited in the Government account. However, as per the Department, there was delay in filing the return/statement with the details of the persons from whom the TDS was deducted including the details and the persons concerned and the transactions etc. The Department issued intimation u/s 200A of the Act, calling upon the respective assessees to pay late filing fee u/s 234E of the Act in purported exercise of the power u/s 200A of the Act. The assessee challenged the levy of the fee and also the vires of the statute (Section 234E). The Hon’ble High Court did not make any finding in respect of the vires of the statute and the said issue was left open. However, the Hon’ble High Court held that prior to 01.06.2015, the AO while issuing intimation u/s 200A does not have the authority under law, to make any order u/s 243E of the Act and was pleased to delete the order of levy of late fee u/s 234E of the Act. The Hon’ble High Court held as follows In para 22 to 24 which is reproduced as under:
  3. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest.
  4. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid.
  5. If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.”
  6. We take note that the facts of the aforesaid case and the facts before us are similar. Only after 01.06.2015, the AO can levy fee under section 234E of the Act while processing the statement under section 200A of the Act and not before. Therefore, respectfully relying the order of the Hon’ble Karnataka High Court, the impugned intimation of the lower authorities levying fee under section 234E of the Act cannot be sustained in law. 

Accordingly the intimation under section 200A as confirmed by the Ld. CIT(A) in so far as levy of fee under section 234E is set aside and fee levied u/s 243E in all the appeals are ordered to be deleted. However, the other adjustments made by the AO in the impugned intimation shall stand as such. “

  1. In the appeals before us, the financial year involved is 2013-14. Therefore, respectfully following the precedent, we set aside the orders of lower authorities and delete the levy of fee u/s.234 E of the Act in all the quarters and allow the appeals filed by the assessee.
  2. We on perusal of all the appeals under consideration find that the issue involved in the appeals i.e ITA Nos.323 to 331CTK/2018 are covered by the above orders of the Tribunal as the amendment to Section 200(3) of the I.T. Act was made only with effect from June 1, 2015. Except for the Quarter-1 in the assessment year 2016-2017(i.e.ITA No.332/CTK/2018), all the quarters i.e. Quarter 4 in the A.Y.2013-2014, for Quarters 1 to 4 in the assessment year 2014-2015 and for Quarters 1 to 4 in the assessment year 2015-2016 are coming under the purview of amendment to Section 200(3) of the Act. Therefore, the fee levied u/s.234E of the Act while processing the statement of tax deducted at source was beyond the scope provided under Section 200A of the Act. Accordingly, we respectfully follow the judicial precedent and set aside the orders of lower authorities and delete the levy of fee u/s.234E of the Act in Quarter 4 in the A.Y.2013-2014, for Quarters 1 to 4 in the assessment year 2014-2015 and for Quarters 1 to 4 in the assessment year 2015- 2016 and allow the appeals i.e ITA Nos.323 to 331/CTK/2018 filed by the assessee.
  3. With regard to the appeal filed by the assessee for Quarter-1 in assessment year 2016-2017 (i.e. ITA No.332/CTK/201 8), we considering the amendment to Section 200(3) of the Act and applicability to the present case of the assessee does not fall under the purview of amendment as the first quarter for the assessment year 2016-2017 ends on 30.06.2015 and the amendment is effective from 01.06.2015. Therefore, we are of the opinion that the assessee is liable to pay the late fee as levied for the assessment year 2016-2017. Accordingly, we uphold the orders of lower authorities and dismiss the ground of appeal of the assessee.
  4. In the result, appeals of the assessee i.e. ITA Nos. 323 to 331/CTK/2018 are allowed and ITA No.332/CTK/2018 is dismissed.

Order pronounced in the open court on this 27/08/ 2018.

[button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/”]Home[/button]  [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/submit-article-publish-your-articles-here/”]Submit Article [/button]  [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/discussion-on-tax-problem/”]Discussion[/button]




Menu