Shivsu Pielkenrood Watek Ltd. Vs ITO (ITAT Chennai)
Summary: The Chennai Bench of the Income Tax Appellate Tribunal considered the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, dated 16.02.2026 for Assessment Year 2014-15. The appeal before the CIT(A) had been filed on 30.06.2025 against a late filing fee of Rs. 35,160/- imposed under Section 234E of the Income Tax Act, 1961 by order dated 28.02.2014. The appeal was delayed by more than 11 years and the CIT(A) dismissed it in limine.
Before the Tribunal, the assessee reiterated its submissions concerning condonation of delay and contended that the issue on merits was already covered by judicial precedents. The Tribunal considered the Supreme Court’s decision in Collector, Land Acquisition Vs. Mst. Katiji & Ors., (167 ITR 471), including the principle that where substantial justice and technical considerations conflict, substantial justice deserves preference. The Tribunal held that refusing to condone the delay would result in a meritorious matter being shut out on a technical ground when the Tribunal was capable of removing the alleged injustice.
The Tribunal observed that the merits of the assessee’s case were covered by judicial precedents, including decisions of the jurisdictional High Court and coordinate Benches of the Tribunal, holding that prior to 01.06.2015 there was no enabling provision under Section 200A of the Act for levy of fees under Section 234E while processing TDS statements. Accordingly, the Tribunal condoned the delay in filing the appeal before the CIT(A).
On merits, the Tribunal relied upon the coordinate Bench decision in Paul System Technologies Private Limited vs ITO, ITA Nos. 59 to 67/CHNY/2026 dated 10.04.2026. That decision had considered both condonation of delay and the sustainability of Section 234E late fees for TDS statements pertaining to periods before 01.06.2015. It held that prior to 01.06.2015 there was no enabling provision under Section 200A to levy Section 234E fees while processing TDS statements.
The Tribunal also referred to the Madras High Court decision in M/s. Sri Rujula International vs. PCIT, WP Nos. 4307 of 2024, WMP Nos. 4619 & 4621 of 2024, dated 12.09.2024, which followed the earlier decision in M/s. True Blue Voice India Private Limited vs. Chief CIT, TDS. The quoted decision held that where Section 200A did not contain the relevant enabling provision during the concerned assessment years, late fee under Section 234E could not be imposed while processing TDS statements under Section 200A.
The Tribunal further considered the coordinate Bench decision in Gopuram Enterprises Private Limited vs. ACIT, ITA No. 1002-1007/Chny/2024 dated 26.06.2024. That decision had followed the Madras High Court’s decision in M/s. True Blue Voice India Private Limited vs. CCIT & Ors., WP Nos. 2700 & 2703 of 2022 dated 09.10.2023. The Tribunal reproduced the High Court’s reasoning that Section 234E was introduced with effect from 01.07.2012, while Section 200A(1)(c), enabling computation of the fee under Section 234E during processing of TDS statements, was introduced with effect from 01.06.2015. On that reasoning, the High Court held that the authorities were not empowered to impose the late fee under Section 234E while processing TDS statements under Section 200A before the enabling provision came into force.
The Tribunal also referred to the coordinate Bench decision in M/s. M.F. Textiles Pvt. Ltd. Vs. ACIT, ITA Nos. 578 & 579/Chny/2021 dated 24.02.2022, which had considered Section 234E and the amendment to Section 200A by the Finance Act, 2015 with effect from 01.06.2015, and held that in the absence of an enabling provision under Section 200A, the Assessing Officer could not levy Section 234E late fee for belated quarterly TDS returns for the period prior to 01.06.2015.
Following these judicial precedents, the Tribunal held that the levy of late fees under Section 234E in respect of TDS statements pertaining to the period prior to 01.06.2015 was invalid and liable to be deleted. It accordingly deleted the corresponding demand and allowed the assessee’s appeal.
Cases Discussed
- Collector, Land Acquisition Vs. Mst. Katiji and Ors., 167 ITR 471 — considered on the principles governing condonation of delay and the preference for substantial justice over technical considerations.
- Paul System Technologies Private Limited vs ITO, ITA Nos. 59 to 67/CHNY/2026 dated 10.04.2026 — followed on condonation of delay and the invalidity of Section 234E late fee for TDS statements pertaining to the period prior to 01.06.2015.
- M/s. Sri Rujula International vs. PCIT, WP Nos. 4307 of 2024, WMP Nos. 4619 & 4621 of 2024 dated 12.09.2024 — referred to for the Madras High Court’s holding that Section 234E late fee could not be imposed while processing TDS statements under Section 200A in the absence of the enabling provision applicable before 01.06.2015.
- M/s. True Blue Voice India Private Limited vs. Chief CIT, TDS, [2024] 158 taxmann.com 67 (Madras) — referred to as the earlier Madras High Court decision followed in Sri Rujula International and considered on the levy of Section 234E fee while processing TDS statements.
- Gopuram Enterprises Private Limited vs. ACIT, ITA No. 1002-1007/Chny/2024 dated 26.06.2024 — referred to as a coordinate Bench decision covering the levy of Section 234E late fee for belated quarterly TDS returns.
- M/s. M.F. Textiles Pvt. Ltd. Vs. ACIT, ITA Nos. 578 & 579/Chny/2021 dated 24.02.2022 — followed on the proposition that Section 234E late fee could not be levied through Section 200A processing for the period prior to 01.06.2015.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short “CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) dated 16.02.2026 for Assessment Year (AY) 2014-15.
2. The assessee is a private limited company. The assessee was imposed with late filing fee u/s. 234E of the Act vide order dated 28.02.2014 amounting to Rs. 35,160/-. Aggrieved, the assessee filed further appeal before the CIT(A) on 30.06.2025 with a delay more than 11 years. The CIT(A) dismissed the appeal in limine. The assessee is in appeal before the Tribunal against the order of the CIT(A).
3. We have heard the parties, and perused the material available on record. The ld AR reiterated the submissions of the assessee made by the assessee before the CIT(A) with respect to condonation. The Ld. AR further submitted that the impugned issue on merits is already covered by various judicial precedence and dismissing the appeal on the ground of technicality is not correct. Before proceeding further, it is imperative to consider the decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) where the Apex Court laid down the following six principles which are reproduced hereunder –
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(3) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, common sense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay.
(5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
4. From the above it is clear that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. We notice that the merits in assessee’s case, is covered by judicial precedents, including the decisions of the Hon’ble jurisdictional High Courts and coordinate benches of the Tribunal, that prior to 01.06.2015, there was no enabling provision under section 200A of the Act to levy fees under section 234E while processing TDS statements. Accordingly, as observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, in our opinion, by preferring the substantial justice, the delay in filing the appeal before the CIT(A) has to be condoned.
5. On merits we notice that the coordinate bench in an identical situation in the case of Paul System Technologies Private Limited vs ITO (ITA Nos.59 to 67/CHNY/2026 dated 10.04.2026) has held that –
10. We have heard the case, perused the materials on record,and gone through orders of the authorities below.The issues arising in the present bunch of appeals 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 all the nine appeals in limine on account of inordinate delay ranging from 8 to 10 years, without adjudicating the issue on merits. The assessee has placed on record the reasons for such delay in Form No. 35, stating that the intimations issued under section 200A of the Act were not brought to its notice, as the TDS compliances were handled by an external consultant, and the management became aware of the impugned demands only upon receipt of recovery notices from the jurisdictional TDS Assessing Officer. Immediately thereafter, the assessee took steps to file the appeals.
11. 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).
12. 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. 2014-15 and part of F.Y. 2015-16 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.
13. It is by now well settled by various judicial precedents, including the decisions of the Hon’ble jurisdictional High Courts and coordinate benches of the Tribunal, that prior to 01.06.2015, there was no enabling provision under section 200A of the Act to levy fees under section 234E while processing TDS statements. Therefore, any such levy for the period prior to 01.06.2015 is not sustainable in law. Our view is supported by the Hon’ble jurisdictional Madras High Court decision 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:-
“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.”
14. 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:-
“4. 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?
11. 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;”
12. 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 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.”
13. 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 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.
15. 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.
16. 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.
17. 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 (supra), we are of the considered view that the Assessing Officer cannot levy late fee while processing of TDS return under section 200A of the Act upto the financial year 2014-15. Since, late fee charged in the present case pertaining to the financial years 2012-2013 and 2013-14, we direct the Assessing Officer to delete the late fee charged under section 234E of the Act in the intimation issued under section 200A of the Act for the processing of quarterly TDS return filed by the assessee.
7. In the result, all six these appeals filed by the assessee are allowed.
15. Respectfully following the binding judicial precedents relied upon by the ld.AR, we hold that the levy of late fees u/s.234E of the Act in respect of TDS statements pertaining to the period prior to 01.06.2015 is invalid and liable to be deleted. Accordingly, the eight (8) appeals for A.Ys. 2014-15 and 2015-16 and corresponding demands raised u/s.234E of the Act as detailed beloware hereby deleted.
6. It can be seen that the quarterly returns under dispute in the present appeals pertain to period prior to 01.06.2015 and therefore respectfully following the judicial precedence, we hold that the levy of late fees u/s.234E of the Act in respect of TDS statements pertaining to the period prior to 01.06.2015 is invalid and liable to be deleted.
7. In the result, the appeal of the assessee is allowed.
Order pronounced on 18th day of May, 2026 at Chennai.
