Mulchand Ramkisan Laddha Vs ITO (ITAT Pune)
Old TDS Default, Later Correction: Section 234E Fee Still Fails
A correction statement processed in 2021 did not save a late fee demand relating to a TDS statement for FY 2012-13. In M/s. Mulchand Ramkisan Laddha v. ITO (TDS-2), the Pune ITAT held that the levy under Section 234E for a period prior to 1 June 2015 was invalid. Faced with conflicting High Court decisions and no direct jurisdictional High Court ruling brought to its notice, the Tribunal followed the view favourable to the assessee and directed deletion of the fee.
The Background: A ₹39,200 Fee and ₹37,632 Interest Demand
The assessee, a business firm, was required to deduct tax, deposit it with the Government and file quarterly TDS statements within the prescribed time.
Its Form 26Q for the fourth quarter of FY 2012-13 was filed on 27 November 2013. CPC (TDS) processed the statement under Section 200A on 23 December 2013.
Several years later, the assessee filed a correction statement on 10 December 2021. This was processed through an order under Section 154 dated 11 December 2021, involving a late fee of ₹39,200 under Section 234E, together with interest of ₹37,632 under Section 220(2).
The first appellate authority upheld the demand, relying on the Madras High Court’s decision in Conceria International (P.) Ltd. v. ITO. The assessee challenged that decision before the Pune Tribunal.
The Real Issue: Power to Levy Fee During Processing
The dispute concerned the authority to levy a Section 234E fee while processing a TDS statement relating to a period before 1 June 2015.
The distinction between Section 234E, which provides for the late filing fee, and Section 200A, which governs processing of TDS statements, was central to the controversy. The favourable judicial view treats the amendment enabling computation of the fee under Section 200A as prospective from 1 June 2015.
The assessee relied on several favourable decisions, including Gajanan Construction v. DCIT, Maharashtra Cricket Association v. DCIT and Medical Superintendent Rural Hospital v. DCIT of the Pune Tribunal.
The Revenue relied on the contrary decisions in Conceria International (P.) Ltd. v. ITO [2024] 464 ITR 92 (Madras) and Rajesh Kourani v. Union of India [2017] 83 taxmann.com 137 (Gujarat).
Karnataka High Court’s Favourable View Followed
The Tribunal expressly acknowledged that contrary judicial decisions exist.
It nevertheless relied on the Karnataka High Court’s Division Bench judgment in Fatheraj Singhvi v. Union of India, 289 CTR 602, which held that the amendment to Section 200A effective from 1 June 2015 operated prospectively.
Under that reasoning, computation and demand of a Section 234E fee through Section 200A for the earlier period lacked statutory authority. The Karnataka High Court had accordingly set aside the impugned intimations to that extent.
The Pune Tribunal also noted that the Karnataka ruling had been followed by the Kerala High Court in Olari Little Flower Kuries (P.) Ltd. v. Union of India [2022] 134 taxmann.com 111.
Thus, the assessee’s claim had support from High Court authority as well as earlier decisions of the Pune Bench.
The Later Madras Decision Also Considered
The first appellate authority had preferred Conceria International, observing that the Madras High Court had explained its disagreement with the Karnataka High Court’s approach.
However, the Tribunal pointed to a subsequent Madras High Court decision in Lingeswara Creations v. Principal Chief Commissioner of Income-tax [2024] 168 taxmann.com 383, dated 12 September 2024.
In that case, the Madras High Court set aside late fee demands concerning the earlier assessment years on the ground that the relevant processing authority was unavailable for those periods.
The Pune Tribunal therefore considered the later favourable decision alongside the Karnataka and Kerala rulings. It did not accept the first appellate authority’s reliance on Conceria International as sufficient to reject the assessee’s claim.
Conflicting Decisions: The Favourable View Prevails
No direct ruling of the jurisdictional High Court on the disputed issue was brought to the Tribunal’s notice.
In these circumstances, the Bench applied the principle associated with CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) and followed the interpretation favourable to the assessee.
The Tribunal additionally noted that Fatheraj Singhvi was a Division Bench decision, whereas Conceria International was delivered by a Single Judge. It also relied on its own earlier decisions following the Karnataka High Court.
Since the fee concerned FY 2012-13, the Tribunal held the levy to be bad in law and directed the Assessing Officer to delete it. The appeal was allowed.
Author’s Comments
The practical significance is that later processing of a correction statement did not alter the period to which the disputed fee related. Although the correction was processed in December 2021, the Tribunal granted relief because the underlying TDS statement concerned a period before 1 June 2015.
The ruling strengthens the favourable line of authority but also expressly recognises the judicial conflict. Its reasoning should therefore be presented with the contrary decisions, rather than described as an undisputed nationwide position.
The order specifically directs deletion of the Section 234E fee. It records the accompanying Section 220(2) interest demand but contains no separate discussion of that interest; its consequential treatment should be examined when the order is implemented.
Cases Discussed
- Sark Cable (P.) Ltd. Vs. ITO, (2023) 451 ITR 167 (Kerala) — Relied upon by the assessee in support of its contention that late fee under section 234E could not be levied for the relevant pre-1 June 2015 period.
- Lingeswara Creations Vs. Pr. CIT, (2024) 168 taxmann.com 383 (Madras) — Subsequent Madras High Court decision specifically considered by the Tribunal; it held that Section 234E late fee could not be imposed through Section 200A for the earlier assessment years concerned.
- Sri Rujula International Vs. Pr. CIT, (2024) 167 taxmann.com 367 (Madras) — Relied upon by the assessee as a favourable Madras High Court authority; no exact standalone TaxGuru case page verified.
- Maharashtra Cricket Association, Pune Vs. DCIT, (2016) 74 taxmann.com 6 (Pune-Trib.) — Relied upon by the assessee concerning lack of authority to compute Section 234E fee under Section 200A for the pre-amendment period.
- Gajanan Construction Vs. DCIT, (2016) 73 taxmann.com 380 (Pune-Trib.) — Earlier Pune Tribunal decision followed in the line of cases holding that Section 234E fee could not be levied through Section 200A for the period before 1 June 2015.
- Medical Superintendent Rural Hospital Vs. DCIT, (2018) 100 taxmann.com 78 (Pune-Trib.) — Pune Tribunal precedent following the favourable view on levy of Section 234E fee for the pre-1 June 2015 period.
- Conceria International (P.) Ltd. Vs. ITO, (2024) 464 ITR 92 (Madras) — Contrary Madras High Court decision relied upon by the Revenue and by the first appellate authority; no exact TaxGuru case page verified.
- Rajesh Kourani Vs. Union of India, (2017) 83 taxmann.com 137 (Gujarat) — Contrary authority relied upon by the Revenue.
- Fatheraj Singhvi Vs. Union of India, 289 CTR 602 (Karnataka) — Division Bench decision expressly followed by the Tribunal. It held that the amendment to Section 200A effective from 1 June 2015 was prospective and that Section 234E fee could not be computed through Section 200A for the earlier period.
- Olari Little Flower Kuries (P.) Ltd. Vs. Union of India, [2022] 134 taxmann.com 111 (Kerala) — Kerala High Court decision noted by the Tribunal as following the Karnataka High Court’s favourable view.
- CIT Vs. Vegetable Products Limited [1973] 88 ITR 192 (SC) — Applied for the principle that, where contrary High Court decisions exist and there is no jurisdictional High Court decision on the issue, the view favourable to the assessee should be followed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order of the Learned Additional/Joint Commissioner of Income Tax (Appeals)-5, Kolkata [Ld. Addl./JCIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2013-14 on 30.12.2025.
Submission of Ld. AR :
2. The Ld. AR submitted that no late fee u/s 234E can be levied for AY 2013-14. The Ld. AR relied on the following decisions :
i. Sark Cable (P.) Ltd. Vs. ITO, (2023) 451 ITR 167 (Kerala);
ii. Linteswara Creations Vs. Pr. CIT, (2024) 168 taxmann.com 383 (Madras);
iii. Sri Rujula International Vs. Pr. CIT, (2024) 167 taxmann.com 367 (Madras);
iv. Maharashtra Cricket Association, Pune Vs. DCIT, (2016) 74 taxmann.com 6 (Pune-Trib.);
v. Gajanan Construction Vs. DCIT, (2016) 73 taxmann.com 380 (Pune-Trib.);
vi. Medical Superintendent Rural Hospital Vs. DCIT, (2018) 100 taxmann.com 78 (Pune-Trib.).
Submission of Ld. AR :
3. The Ld. DR supported the order of the Assessing Officer and Ld. CIT(A) and relied on the following decisions :
i. Conceria International (P.) Ltd. Vs. ITO, (2024) 464 ITR 92 (Madras);
ii. Rajesh Kourani Vs. Union of India, (2017) 83 taxmann.com 137 (Gujarat).
Findings and Analysis :
4. We have heard both the parties and perused the records.
4.1 The facts mentioned in the Ld. CIT(A)’s order are as under:
“1. BRIEF FACTS OF THE CASE:- The appellant is a firm and derives income from business. The appellant is liable to deduct and deposit with government account, TDS on various payments made by it as per different provisions of the I.T. Act. After doing so, the appellant is also required to file quarterly returns of TDS deducted and deposited within the specified dates as per the provisions of sec. 200 of the I.T. Act, 1961. The appellant filed the quarterly TDS statement for Quarter-4 of FY 2012-13 in Form 26Q on 27.11.2013. AO, CPC, TDS processed the statement u/s 200A on 23.12.2013. Subsequently, the appellant filed a correction statement on 10.12.2021 which was processed by CPC, TDS by the impugned order u/s 154 dated 11.12.2021. Late fee u/s 234E for Rs.39,200/- along with interest u/s 220(2) for Rs.37,632/- was levied.”
4.2 The Ld. CIT(A) following the decision of Hon’ble Madras High Court upheld the levy of late fee u/s 234E of the Act, the relevant paragraphs of the Ld. CIT(A)’s order are as under :
“Significant point to be noted is that Hon’ble Madras High Court discussed the reason as to why it was not in agreement with Hon’ble Karnataka High Court’s judgement in this matter. The appellant has quoted the judgements delivered by a number of ITAT’s, which have decided in favour of respective assesses and the basis of such judgements are in line with that in the judgement of Karnataka High Court in the case of Fatheraj Singhi. I have therefore no other option but to rely on the recent judgement of Madras High Court in the case of Conceria International and rule against the appellant. The demand raised by CPC, TDS by the order u/s 154 r.w.s. 200A dated 11.12.2021 is therefore confirmed and the appeal dismissed.”
4.3 In this case, admittedly, the CPC (TDS) has levied late fee u/s 234E for Q4 of FY 2012-13 of Rs.39,200/-.
4.4 The issue involved in this case is, whether late fee u/s 234E can be levied for FY 2012-13. This issue is covered in favour of the assessee.
5. We are aware of the fact that there are contrary decisions on this issue. The Division Bench of Hon’ble Karnataka High Court in Fatheraj Singhvi Vs. Union of India 289 CTR 0602 (Kar) held in favour of assessee as under :
Quote, “23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid.
24. ………………..In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having 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. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.” Unquote.
6. The decision of the Hon’ble Karnataka High Court was followed by the Hon’ble Kerala High Court in the case of Olari Little Flower Kuries (P.) Ltd. Vs. Union of India, [2022] 134 taxmann.com 111 (Kerala).
7. The Ld. CIT(A) has relied on the decision of Hon’ble Madras High Court in the case of Conceria International (P.) Ltd. Vs. ITO order dated 10.11.2023 (supra). However, subsequently, the Hon’ble Madras High Court in the case of Lingeswara Creations v. Principal Chief Commissioner of Income-tax, [2024] 168 taxmann.com 383 (Madras) vide order dated 12.09.2024 has held as under :
Quote, “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, 20132014. 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.” Unquote.
8. No direct decision on the impugned issue of the Hon’ble Jurisdictional High Court has been brought to our notice. In these facts and circumstances of the case, when there are contrary decisions of different Hon’ble High Courts, in the absence of decision of Hon’ble Jurisdictional High Court, the decision which is favourable to the assessee needs to be followed; as observed by the Hon’ble Supreme Court in the case of CIT Vs. Vegetable Products Limited [1973] 88 ITR 192 (SC). The decision of Hon’ble Karnatraka High Court was delivered by the Division Bench whereas the decision of Hon’ble Madras High Court in the case of Conceria International (P.) Ltd. (supra) is by Hon’ble Single Member. The decision of Hon’ble Karnataka High Court (supra) was followed by ITAT Pune Bench in the case of Medical Superintendent Rural Hospital, vs. DCIT, CPC (TDS) [2018] 100 taxmann.com 78, and the decision of ITAT, Pune in the case of Gajanan Constructions Vs. DCIT, CPC (TDS), (2016) 73 taxmann.com 380 (Pune-Trib.).
9. In this case, Late Fee u/s 234E has been levied for FY 2012-13. Therefore, respectfully following the Hon’ble Karnataka High Court, Hon’ble Kerala High Court and ITAT Pune Bench (supra) it is held that Late Fee levied u/s 234E in the case of the assessee for the period prior to 01.06.2015 is bad-in-law. Accordingly, the AO is directed to delete the Late Fee levied u/s 234E of the Act. Accordingly, appeal of the assessee is allowed.
10. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 30th September, 2026
