The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that the demand for late fees under section 234 E of the Income Tax Act,1961 on TDS default before 01/06/2015 is not sustainable.
The assessee,M/s Shimas Network Pvt. Ltd filed the TDS returns belatedly which was accepted by TIN. The ITO Centralized Processing Call-TDS levied a late fee of Rs. 64,480/- for the delay as per intimation under section 200 A of the Act, issued on 31/10/2018.
Onan appeal before the CIT(A), the assessee contended that prior to 1st June 2015, there was no enabling provision for payment and levy of fee u/s 234E of the Income Tax Act,1961. The CIT(A) confirmed the order of the ITO by relying on the judgment of the Gujarat High Court in the case of Rajesh Kourani Vs. Union of India (2017) 85 taxmann.com 13,7 wherein it was held that sec. 234E is a charging provision creating a charge for levying fees for certain defaults in filing statements and the fee would be levied even without a regulatory provision being found in sec. 200A for computation of fees.
A Coram ofSmt. Beena Pillai, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member viewed that the intimation given in purported exercise of power under Section 200A is in respect of fees under Section 234E for the period prior to 1.6.2015.
Further viewed that the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having a 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.
In light of the case of Shri Fatheraj Singhvi, the Tribunal allowed the appeals of the assessee and held that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A prior to 01/06/2015.
Shri Raghavendra Maiya, C. A appeared for the assessee and Shri Sankar Ganesh K, JCIT appeared for the revenue.
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