RAASHI POWERS,CHENNAI vs. ITO, TDS WARD, CHENNAI

Brief facts of the case are that the assessee is a firm and belatedly filed its quarterly returns of TDS for A.Y.2013-14. During the financial year 2012-13, the assessee stated that the quarterly returns have been filed belatedly and hence levied the penalty to the tune of Rs.72,170/- as late fee u/s.234E of the Act by passing an order u/s.200A(1) of the Act dated 25.09.2016. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A).

At the outset, we observed that the Ld.CIT(A) has dismissed the appeal filed by the assessee observing that the Form 26Q for all the 4 quarters of the F.Y.2012-13 have been filed belatedly and the assessee has filed the appeal belatedly after around 9 years without showing sufficient cause by passing an order dated 17.11.2025. 4. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

The ld.AR submitted that the assessee the demand of TDS was created on the consolidated basis for all the 4 quarters for the F.Y. 2012-13 was Rs.72,170/- on account of late filing fees u/s.234E of the Act. However, the TDS liabilities have been remitted in full by the assessee. Further, the ld.AR submitted that the late fees has been levied u/s.234E of the Act for belated filing of quarterly returns pertains to the F.Y. 2012-13, which is leviable only from 01.06.2015 as per the provisions of section 200A r.w.s 234E of the Act. Therefore, the ld.AR submitted that the levy of late fees for belated filing of quarterly returns relating to the period prior 01.06.2015 is not sustainable under the law and prayed for deleting the same. Further, the ld.AR submitted that the demand has been raised by the ITO, TDS, Ward-2(3), Chennai for the F.Y.2012-13, 2013-14, 2014-15, 2017-18 and 2022-23 only on 20.01.2025. Hence, the assessee was aware of the levy of late filing fee u/s.234E of the Act on that date. The assessee

The Ld.DR supported the order of the ld.CIT(A) and prayed for confirming the same.

We have heard the case, perused the materials on record, and gone through orders of the authorities below. The issues arising in the present appeal are twofold, viz., (i) whether the delay in filing the appeals before the ld. CIT(A) deserves to be condoned, and (ii) whether the levy of late fees under section 234E of the Act in the facts of the present case is sustainable in law.

At the outset, it is noticed that the ld. CIT(A) has dismissed the appeal in limine on account of inordinate delay of more than 9 years, without adjudicating the issue on merits. The assessee has placed on record the reasons for such delay is that the intimation of demand for the F.Y 2012-13 was given to the assessee by the ITO, TDS, Chennai only in January 2025 along with the late fee related to other four years upto F.Y 2022-23. Further, the assessee was in Bonafide belief that the levy of late fee u/s.234E of the Act is applicable only from 01.06.2015 and hence the demand raised for late fee for the F.Y 2012-13 in the Traces website was not came to the knowledge of the assessee. As soon as the notice of demand served by the ITO, TDS, Chennai, the management became aware of the impugned demand immediately thereafter, the assessee took steps to file the appeals.

Considering the explanation furnished, we find that the delay has occurred due to bonafide reasons and circumstances beyond the control of the assessee. It is a settled proposition of law that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the ld. CIT(A) has not examined the explanation for delay in a judicious and liberal manner. Therefore, in the interest of justice, we are inclined to condone the delay in filing all the appeals before the ld. CIT(A).

Having condoned the delay, we now proceed to examine the issue on merits. The undisputed facts are that the late fees under section 234E of the Act have been levied while processing the TDS statements under section 200A of the Act for the relevant assessment years. It is also not in dispute that the TDS returns pertaining to F.Y. 2012-13 relate to the period prior to 01.06.2015, i.e., before the amendment enabling levy of fee under section 234E through processing under section 200A came into effect.

We note that the We find that the issue involved in the present appeal filed by the assessee is on levy of late fee u/s.234E of the Act, for belated filing of quarterly TDS returns beyond prescribed date and this issue is squarely covered by the decision of Hon’ble Jurisdictional Madras High Court in the case of M/s.Sri Rujula International vs. PCIT (WP Nos. 4307 of 2024, WMP Nos.4619 & 4621 of 2024) dated 12.09.2024 by following the earlier decisions of the Hon’ble High Court in the case of 2023(10) TMI 1141 [M/s.True Blue Voice India Private Limited vs. Chief CIT, TDS [2024] 158 taxmann.com 67 (Madras) held as under:-

In the present case, the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014. However, Section 200A of the Act was not introduced during the said assessment years and it was introduced only with effect from 01.06.2015. Therefore, in the absence of any provisions under Section 200A of the Act, the respondents ought not to have imposed late fee under Section 234E while processing the applications for TDS under Section 200A. Hence, in such view

Accordingly, the impugned demand Intimation Letters dated 28.03.2019 are set aside and the Writ Petition stands disposed of. No costs.

Further, we note that the issue is already covered by the decision of the coordinate bench of the tribunal in the case of Gopuram Enterprises Private Limited vs. ACIT, ITA No.1002-1007/Chny/2024 dated 26.06.2024 by holding as under:-

We have heard ld. Counsel for the assessee and ld.DR. We have perused orders of the authorities below. We find that the issue involved in the present appeals filed by the assessee is on levy of late fee under section 234E of the Act, for belated filing of quarterly TDS returns beyond prescribed date and this issue is squarely covered by the decision of Hon’ble Jurisdictional Madras High Court in the case of M/s.True Blue Voice India Private Limited vs. CCIT & Ors (WP Nos. 2700 & 2703 of 2022) dated 09.10.2023 and held as under:- “10. There is no dispute on the aspect of validity of the Section 234E of the Act. The only issue that has to be decided in the present case is as to whether the late fee can be imposed under Section 234E of the Act, while processing the statement of TDS under Section 200A of the Act for the subject assessment years?

On considering the submissions of both the learned counsel and while reading Section 234E of the Act, it appears that the Department/respondents can impose the late fee for the circumstances mentioned under Section 234E of the Act with effect from 01.07.2012, but not when they process the TDS under Section 200A of the Act. In the Finance Bill, 2015, Section 200A(1)(c) of the Act was introduced, which reads as follows: “200A. Processing of statements of tax deducted at source.— (1) ...................... (a)...................... (b)........................ (c) the fee, if any, shall be computed in accordance with the provisions of section 234E;”

Further, the objects and reasons for introduction of Section 200A(1)(c) of the Act are as follows: “Rationalisation of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) Under Chapter XVII-B of the Act, a person is required to deduct tax on certain specified payment at the specified rate if the payment exceeds the specified threshold. The person deducting tax (‘the deductor’) is required to file a quarterly Tax Deduction at Source (TDS) statement containing the details of :-6-: deduction of tax made during the quarter by the prescribed due date. Similarly, under Chapter XVII-BB of the Act, a person is required to collect tax on certain specified receipts at the specified rates. The person collecting tax (‘the collector’) also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Act to provide for levy of fee for late furnishing of TDS/TCS statement. The levy of fee under section 234E of the Act has proved to be an effective tool in improving the compliance in respect of timely submission of TDS/TCS statement by the deductor or collector. Finance (No.2) Act, 2009 inserted section 200A in the Act which provides for processing of TDS statements for determining the amount payable or refundable to the deductor. However, as section 243E was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fee payable under section 234E of the Act at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act. Currently, the provisions of sub-section (3) of section 200 of the Act enable the deductor to furnish TDS correction statement and consequently, section 200A of the Act allows processing of the TDS correction statement. However, currently, there does not exist any provision for allowing a collector to file correction statement in respect of TCS statement which has been furnished. It is, therefore, proposed to amend the provisions of section 206C of the Act so as to allow the collector to furnish TCS correction statement. Currently, there does not exist any provision in the Act to enable processing of the TCS statement filed by the collector as available for processing of TDS statement. As the mechanism of TCS statement is similar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act.”

A reading of the above makes it clear that since no mechanism was available for determination of late fee payable under Section 234E of the Act at the time of processing TDS statements. Thus it was proposed to amend the provisions of Section 200A of the Act, so as to enable the computation of fee payable under Section 234E of the Act at the time of processing of TDS statement under Section 200A of he Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015. 14. Now the dispute is with regard to the assessment years 2012- 13, 2013- 14, 2014-15 and the applicability of Section 200A(1)(c) of the Act for relevant assessment years. There is no dispute on the aspect that the TDS statement was filed under Section 200A of the Act and the respondent had also issued the intimation under Section 200A of the Act, which means the respondents

The learned counsel for the respondent advanced his arguments on the aspect of the imposition of late fee by applying Section 200A(1)(c) of the Act retrospectively. This Court is not in agreement with the said submissions of the respondent. Since, there was no provision for imposing the late fee under Section 234E of the Act while filing and processing the TDS returns under Section 200A of the Act, clause (c) to Sub-Section (1) to Section 200A was introduced with effect from 01.07.2012. Therefore, the aforesaid submission made by the learned counsel for the respondent is rejected by this Court.

Further it was stated by the respondent that they have no power to waive the late fee and only the Commissioner of Income Tax is empowered to pass the revised order by proper application of provision of Section 264C of the Act.

In view of the above, it is made clear that the respondent had had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015-2015. However, Section 200A(1)(c) of the Act was not introduced during the said assessment years. In the absence of any provisions under Section 200A of the Act, when they have processed the application for TDS under Section 200A, no late fee can be imposed under Section 234E. Hence, in such view of the matter, this Court feels that the impugned orders are liable to be set aside’’ The Co-ordinate Bench of the Tribunal also in the case of M/s.M.F.Textiles Pvt.Ltd. Vs. ACIT in ITA Nos. 578 & 579/Chny/2021 dated 24.02.2022 had considered an identical issue in light of provisions of section 234E of the Act and also amendment to section 200A by Finance Act, 2015 w.e.f. 01.06.2015 and held that in absence of enabling provision under section 200A of the Act, the Assessing Officer cannot levy late fee under section 234E of the Act for belated filing of quarterly TDS return for period prior to 01.06.2015. 6. In the present appeals, on perusal of the facts, we find that the assessment years involved are prior to 01.06.2015. Therefore, we are of the considered view that the late fee charged by the Assessing Officer under section 234E of the Act, while processing quarterly TDS return under section 200A of the Act, is without any authority and invalid. Hence, by respectfully following the decisions of the Hon'ble Jurisdictional Madras High Court in the case of M/s. True Blue Voice India Private Limited (supra) and Co-ordinate Bench in the case of M/s.M.F.Textiles Pvt.Ltd

In the result, all six these appeals filed by the assessee are allowed.

In the present appeal, on perusal of the facts, we find that the assessment year (2013-14) involved is prior to 01.06.2015. Therefore, we are of the considered view that the late fee charged by the Assessing Officer u/s.234E of the Act, while processing quarterly TDS return u/s.200A of the Act, is without any authority and invalid. Hence, by respectfully following the decisions of the Hon'ble Jurisdictional Madras High Court in the case of M/s.Sri Rujula International (supra) and Co-ordinate Bench in the case of M/s.Gopuram Enterprises Private Limited (supra), we are of the considered view that the AO cannot levy late fee while processing of TDS return u/s.200A of the Act up to the financial year 2014-15. Since, late fee charged in the present case pertaining to the financial year 2014-15, we direct the AO to delete the late fee charged u/s.234E of the Act in the intimation issued u/s.200A of the Act for the processing of quarterly TDS return filed by the assessee.

In the result, the appeal filed by the assessee is allowed.