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Facts
The assessee company filed quarterly TDS statements for FY 2012-13 belatedly. Consequently, a late fee of Rs. 1,58,800/- was levied under Section 234E of the Income Tax Act, 1961, read with Section 200A(1)(c). The CIT(A)/NFAC upheld this levy.
Held
The Tribunal held that while Section 234E was introduced in 2012, it became operational only from 01.06.2015 after the amendment to Section 200A(1)(c). Following the jurisdictional High Court's decision, the levy of late fee prior to 01.06.2015 was deemed to be without authority of law.
Key Issues
Whether the late fee under Section 234E of the Income Tax Act can be levied for periods prior to 01.06.2015, when the operational mechanism became effective.
Sections Cited
234E, 200A, 250
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 21.3.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1074814958(1) for the assessment year 2012-13 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”.)
The brief facts of the case are that the assessee being a company registered under the Companies Act filed the quarterly statement of deduction of tax at source u/s 200(3) of the Act in Form No.26Q for the quarters 2, 3 & 4 of the financial year 2012-13 belatedly and accordingly an intimation u/s 200A of the Act levying a late fee u/s 234E of the Act amounting to Rs.1,58,800/- was raised for the delay in filing the said TDS statements.
Tanisujan Infra Private Limited, Mysuru Page 2 of 4 3. Aggrieved by the intimation passed u/s 200A of the Act dated 14.2.2019, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
The ld. CIT(A)/NFAC dismissed the appeal of the assessee by following the decision of Hon’ble Madras High Court which held that section 234E of the Act by itself creates a liability and the liability to pay the late fee is not dependent on section 200A(1)(c) of the Act which only prescribes the recovery mechanism reflects the true intent & purpose of Section 234E. Section 234E of the Act is the substantive provision and section 200A(1)(c) of the Act prescribes the recovery mechanism. Therefore, the court held that the provision of section 234E has to be effective from 01/07/2012 and not from 01.06.2015.
Aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee vehemently submitted that the judgement of jurisdictional high court in the case of Fatheraj Singhvi Vs. UOI (2016) 289 CTR 602 (Karn HC) is squarely covered in the present case which prohibits such levy prior to 1.6.2015 and accordingly prayed to allow the appeal of the assessee.
Ld. D.R. on the other hand relied on the orders of the authorities below.
We have heard the rival submissions and perused the materials available on record. The solitary issue in the present appeal is whether the ld. CIT(A)/NFAC was justified in confirming the action of the AO/TDSCPC in levying late fee u/s 234E of the Tanisujan Infra Private Limited, Mysuru Page 3 of 4 Act? Admittedly, the quarterly statement of TDS for Q2, Q3 & Q4 of financial year 2012-13 were filed belatedly. In our opinion, the late fee was levied for the period prior to the amendment to section 200A of the Act, which come into effect on 1.6.2015 enabling the levy of late fee by the AO/TDSCPC. It is also undisputed fact that the Hon’ble Karnataka High Court in the case of Shri Fatheraj Singhvi (supra) took a view that in the absence of charging provision, late fee u/s 234E of the Act cannot be levied for the period prior to 1.6.2015.
8.1 The Hon’ble jurisdictional high court held that the levy of late fee u/s 234E of the Act was introduced vide Finance Act, 2012 w.e.f. 1.7.2012 but it became operational/effective only w.e.f. 1.6.2015 when the section 200A(1)(c) of the Act was amended/substituted by Finance Act, 2015 with prospective effect from 1.6.2015 whereby the fees to be computed in accordance with the provision of section 234E of the Act stood included while processing the statement of tax deducted at source. The jurisdictional High Court further held that such amendment or mechanism introduced w.e.f. 1.6.2015 is not merely a regulatory mechanism but is substantive in nature. Thus, the amendment to section 200A(1)(c) of the Act cannot be given retrospective effect. Thereafter, by relying on the decision of Apex court in the case of B.C. Srinivasa Shetty reported in 21 CTR (SC) 138, the court held that “when the machinery provision is not provided the levy itself would fail” and accordingly, the Hon’ble Karnataka High court finally decided that levy of fees u/s 234E of the Act prior to 1.6.2015 is held to be without authority of law.
8.2 Considering the decision of Hon’ble jurisdictional High court which is binding on us, respectfully following the decision of Hon’ble jurisdictional high court in the case of Shri Fatheraj Tanisujan Infra Private Limited, Mysuru Page 4 of 4 Singhvi & Ors. Vs. UOI (supra), we delete the levy of late fee u/s 234E of the Act amounting to Rs.1,58,800/- for Q2, Q3 & Q4 of the financial year 2012-13 as it is without Authority of Law.
In the result, appeal filed by the assessee is allowed.