Part – I – case in brief
Entering the subject
Section 234E came on rule book w.e.f. 1-Jul-2012 which levies a fee at the rate of Rs. 200/- per day for delay in filing TDS return. The mechanism provisions were brought into operation w.e.f. 1-Jun-2015. IT dept. has issued numerous notices for earlier year(s) or period(s) i.e. before 1-Jun-2015 for recovery of the fees.
The question was whether it is correct / valid. If so, in which manner can it be done.
Questions answered by ITAT
| Q | 1. What is the nature of amendment to section 200A(1) w.e.f. 01-Jun-2015?
2. What is the driving force of above amendment and its impact on recovery of fee u/s 234E? 3. What are the powers of AO to charge and recover fees u/s 234E for period prior to 1-Jun-2015 ? |
| A | 1. the amendment to section 200A(1) of the Act is procedural in nature
2. the amendments will have a prospective effect. 3. An AO Assessing Officer was not empowered to charge fees under section 234E of the Act for the period(s) prior to 01-Jun-2015. |
| Q | whether any appeal is maintainable against following orders before CIT(A)
|
| A | Yes |
Chennai ITAT in the case of Smt. G. Indhirani v DCIT has taken a slightly different view in this regard which is covered in this article.
Author’s Personal opinion
The author is of a personal view that, the charge of levy should not/can-not fail. In this regard, the observations of Chennai ITAT are more relevant.
For a moment consider that, the amendment by the finance bill, 2015 is not there.
Whether the courts still would have come to this conclusion that the levy fails because the explicit mechanism of recovering the levy is inadequate?
Can the amendments by Finance Act, 2015 and more importantly the observations in the memorandum to the said bill, 2015 influence the interpretation of legislative amendments made vide the Finance Act, 2012?
The courts have upheld the elimination of penalty on failure to timely file TDS return but have held that mechanism u/s 234E can not be brought into force.
Observations of Chennai ITAT in the case of Smt. G. Indhirani v DCIT regarding other modes of recovery-:
Para 8 contains following observation
When Section 234E clearly says that the assessee is liable to pay fee for the delay in delivery of the statement with regard to tax deducted at source, the assessee shall pay the fee as provided under Section 234E(1) of the Act before delivery of the statement under Section 200(3) of the Act. If the assessee fails to pay the fee for the periods of delay, then the assessing authority has all the powers to levy fee while processing the statement under Section 200A of the Act by making adjustment after 01.06.2015. However, prior to 01.06.2015, the Assessing Officer had every authority to pass an order separately levying fee under Section 234E of the Act. What is not permissible is that levy of fee under Section 234E of the Act while processing the statement of tax deducted at source and making adjustment before 01.06.2015. It does not mean that the Assessing Officer cannot pass a separate order under Section 234E of the Act levying fee for the delay in filing the statement as required under Section 200(3) of the Act.
Part – II – case explained elaborately
Facts of the case
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