By TIOL News Service

PUNE, DEC 19, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether levy of late fees u/s 234E can be effected in the course of intimation issued u/s 200A, prior to the period when the enabling provision itself was not in force. NO IS THE ANSWER.

Facts of the case:

The assessee is an individual and the proprietor of Jalgaon Gas Agency. He filed the TDS quarterly statement for F.Y 2012-13 on July 07, 2013 at a delay of 271, 179 and 59 days respectively. Accordingly, the AO sent an intimation u/s 200A, wherein he had determined the late fee for delay in filing of quarterly TDS statements @ Rs.200/- per day. The assessee in response, filed rectification application u/s 154 which was rejected by the DCIT, CPC, Ghaziabad. On appeal, the CIT(A) upheld the action of AO in levying late filing fee u/s 234E, observing that section 234E had been brought into statute w.e.f. July 07, 2012 and the assessee's case pertains to the period during which section 234E was effective. He held that any demand raised u/s 234E was not appealable before CIT(A). Even on merit also, he observed that the AO was empowered to charge late filing fee u/s 234E.

ITAT held that,

++ it is found that the issue relating to levy of late fees u/s 234E, while issuing intimation u/s.200A, is decided in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in the case of Maharashtra Cricket Association Vs. DCIT (CPC)-TDS, Ghaziabad. The Tribunal therein after thoroughly discussing the issue, has observed that:

["....the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the AO which processing the intimation u/s 200A could charge late fee under the provisions of section 234E. Undoubtedly, the responsibility of the deductor was to deposit the tax deducted at source in time and if not so, then with interest and consequently, where the tax was not paid in time and interest was not paid in time and then, where the statement of tax deducted at source could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees u/s 234E. However, in case any default occurs due to the nonpayment of fees by the assessee in this regard, then the provisions which has to be considered is section 200A(1)(c). The power to charge / collect fees as per provisions of section 234E was vested with the prescribed authority under the Act only on substitution of earlier clause (c) to section 200A of the Act by the Finance Act, 2015. Once any provision of the Act has been made applicable from a respective date, then the requirement of the statute is to apply the said provisions from the said date....."]

["....Admittedly, the onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015. Prior to said substation, the AO had no authority to charge the fees u/s 234E while issuing intimation u/s 200A. Before exercising the authority of charging any sum from any deductor or the assessee, the prescribed authority should have necessary power vested in it and before vesting of such power, no order can be passed by the prescribed authority in charging of such fees u/s 234E, while exercising jurisdiction u/s 200A. Thus, in the absence of enabling provisions, under which the prescribed authority is empowered to charge the fees, the AO while processing the returns filed by the deductor in respect of tax deducted at source, can raise the demand on account of taxes, if any, not deposited and charge interest. However, prior to June 2015, the AO does not have the power to charge fees u/s 234E while processing TDS returns. In the absence of enabling provisions, levy of fees could not be effected in the course of intimation issued u/s 200A prior to June 2015...."]

++ the issue arising in the present appeal is identical to the issue before the Tribunal in bunch of appeals where it has been held that since the amendment to section 200A(1) is procedural in nature, therefore, the AO while processing the TDS statements / returns in the present set of appeals for the period prior to June 01, 2015, was not empowered to charge fees u/s 234E. Accordingly, intimation issued by AO u/s 200A in all the appeals does not stand and the demand raised by charging the fees u/s 234E is not valid and the same is deleted.

(See 2017-TIOL-1759-ITAT-PUNE)