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Facts
The assessee filed TDS quarterly returns belatedly for the 3rd Quarter of FY 2012-13, resulting in a delay of 576 days. Consequently, a late filing fee under Section 234E of the Act and interest were levied. The CIT(A) upheld the Assessing Officer's order.
Held
The Tribunal held that the levy of late fee under Section 234E of the Act while processing TDS statements under Section 200A of the Act is invalid for assessment years prior to the introduction of Section 200A(1)(c) with effect from 01.06.2015.
Key Issues
Whether late fee under Section 234E can be imposed while processing TDS returns under Section 200A for assessment years prior to 01.06.2015?
Sections Cited
200A, 234E, 220(2)
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
1. The captioned five appeals filed by the assessee are directed against order of the Ld. Commissioner of Income Tax (Appeal)/NFAC, Delhi [‘CIT(A)’ in short] dated 17.04.2025 for Assessment Years 2013-14 & 2014-15.
Brief facts of the case are that the assessee had filed its TDS quarterly for 3rd Quarter of FY 2012-13 on 14th August which was due to be filed on 15th May 2013. Therefore, it was delayed by ‘576’ days. The to 1836/Chny/2025 (AYs 2013-14 & 2014-15) Sibichakravarthi Tenzingh :: 2 ::
assessee was liable to deduct TDS for payments made by it. Vide order u/s.154 of the Act dated 30.11.2021, Traces(TDS-CPC) levied late filing fee of Rs.29,706/- u/s.200A of the Act r.w.s.234E of the Act and corresponding interest of Rs.1,454/- and interest u/s 220(2) of Rs.18,349/-, aggregating to Rs.49,510/- for the aforesaid delay in filing of Quarterly TDS statement. The ld.CIT(A) affirm the order of AO and dismissed the appeal of the assessee. In all appeals, facts are similar to that of FY 2012-13.
Aggrieved by the learned CIT(A) order, the assessee is in appeal before us.
4. We have heard ld. AR 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 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:- to 1836/Chny/2025 (AYs 2013-14 & 2014-15) Sibichakravarthi Tenzingh :: 3 ::
4. 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 of the matter, this Court is of the opinion that the impugned Demand Intimation Letters are liable to be set aside.
5. 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, 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:-
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 to 1836/Chny/2025 (AYs 2013-14 & 2014-15) Sibichakravarthi Tenzingh
:: 4 ::
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 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 the Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015.
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 have processed the returns under Section 200A of the Act. When the respondent had started to process the returns of the petitioner under Section 200A of the Act, obviously they have to follow the requirements under Section 200A of the Act. Section 200A(1)(c) of the Act was introduced with effect from 01.06.2015. A reading of the objects and reasons of the same makes it clear that since no mechanism was available, Section 200A(1)(c) of the Act was introduced for imposing late fee for the delay in filing statement of TDS. Therefore, from the introduction of the said Sub-Section it is clear that prior to the same, though Section 234E of the Act was introduced with effect from 01.07.2012, the Authorities were not empowered to impose the late fee while processing the statement of TDS under Section 200A of the Act.
to 1836/Chny/2025 (AYs 2013-14 & 2014-15) Sibichakravarthi Tenzingh :: 5 ::
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’’
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 u/s.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.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 Assessing Officer cannot levy late fee while processing of TDS return u/s.200A of the Act upto the financial year 2014-15. Since, late fee charged in the present case pertaining to the financial years 2013-14 and 2014-15, we direct the Assessing Officer to delete the late fee charged u/s.234E of the Act in the to 1836/Chny/2025 (AYs 2013-14 & 2014-15) Sibichakravarthi Tenzingh intimation issued u/s.200A of the Act for the processing of quarterly TDS return filed by the assessee. Consequently, interest u/s 220(2) of the Act of Rs.18,349/- levied by the AO is also deleted. The above decision is also applicable mutatis mutandis to other years also.
In the result, all the appeals filed by the assessee are allowed.
Order pronounced in the open court on the 26th day of August, 2025 at Chennai.