M.F. Textiles Pvt. Ltd. Vs ACIT (ITAT Chennai)
Summary: The Income Tax Appellate Tribunal, Chennai Bench, ‘A’ Bench, comprising Shri V. Durga Rao, Judicial Member and Shri G. Manjunatha, Accountant Member, disposed of ITA Nos. 578 & 579/Chny/2021 concerning Assessment Years 2013-14 and 2015-16. The appeals were directed against separate but identical orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 29.09.2021. Since the facts and issues were common, the appeals were heard together and disposed of by a consolidated order. The order was pronounced on 24.02.2022.
At the outset, the Tribunal noted that the appeals were barred by limitation by 11 days. The assessee sought condonation of the delay on the ground that the delay was meagre and deserved to be condoned in the interest of justice. After considering the condonation petition and hearing both sides, the Tribunal found that the reasons furnished for not filing the appeals within the prescribed period constituted reasonable cause. It accordingly condoned the delay and admitted the appeals for adjudication.
On merits, the relevant facts were that, for Assessment Years 2013-14 and 2015-16, the assessee had filed quarterly TDS returns in Forms 24Q and 26Q beyond the prescribed due dates. The Assessing Officer processed the quarterly TDS returns under Section 200A and levied late filing fee under Section 234E of the Income-tax Act, 1961.
The assessee challenged the levy before the CIT(A). The Tribunal recorded that several opportunities of hearing had been provided by the CIT(A), but the assessee had not filed submissions or details in support of its claim. The CIT(A), after considering the material on record, dismissed the appeals both on limitation and on merits and affirmed the late fee levied under Section 234E.
The principal issue before the Tribunal was whether the Assessing Officer could levy late fee under Section 234E while processing quarterly TDS returns under Section 200A for periods prior to 01.06.2015, when the enabling provision in Section 200A had not yet been introduced. The Tribunal noted that Section 234E had been inserted by the Finance Act with effect from 01.07.2012 and provided for levy of late fee for belated filing of quarterly TDS statements. However, the enabling provision in Section 200A for computation of such fee while processing TDS statements was introduced with effect from 01.06.2015.
The Tribunal considered the judicial developments on the issue and referred to the Karnataka High Court decision in Fatheraj Singhvi v. Union of India, [2016] 289 CTR 602 (Karnataka). The Karnataka High Court had held that, in the absence of an enabling provision in Section 200A, the Assessing Officer could not levy late fee under Section 234E while processing quarterly TDS returns for the relevant periods prior to 01.06.2015.
The Tribunal also referred to the Kerala High Court decision in Olari Little Flower Kuries (P.) Ltd. v. Union of India, [2022] 134 taxmann.com 111 (Kerala), which considered the Karnataka High Court decision and held that the amendment to Section 200A was necessary to enable computation of late fee under Section 234E at the time of processing quarterly TDS returns. Consequently, an intimation issued under Section 200A imposing late fee for a belated return relating to a period prior to 01.06.2015 was held invalid.
The Tribunal noted that, subsequent to these High Court decisions, various Benches of the Tribunal had also held that late fee under Section 234E could not be levied for the period prior to 01.06.2015 because there was no enabling provision to levy such fee through processing under Section 200A.
Applying those principles to the present appeals, the Tribunal found that the assessment years involved were prior to 01.06.2015. It therefore held that the late fee charged by the Assessing Officer under Section 234E while processing the quarterly TDS returns under Section 200A was “without any authority and invalid”. Respectfully following Fatheraj Singhvi v. Union of India, the Tribunal held that the Assessing Officer could not levy late fee while processing TDS returns under Section 200A up to the financial year 2014-15.
Since the late fee in the present case pertained to financial year 2013-14, the Tribunal directed the Assessing Officer to delete the late fee charged under Section 234E in the intimation issued under Section 200A for processing the assessee’s quarterly TDS return.
The Tribunal ultimately allowed both appeals filed by the assessee. The order was pronounced in the open court on 24.02.2022.
Cases Discussed
- Fatheraj Singhvi v. Union of India, [2016] 289 CTR 602 (Karnataka) — followed on the proposition that, in the absence of an enabling provision under Section 200A, late fee under Section 234E could not be levied while processing quarterly TDS returns for the period prior to 01.06.2015.
- Olari Little Flower Kuries (P.) Ltd. v. Union of India, [2022] 134 taxmann.com 111 (Kerala) — considered for its view that the amendment to Section 200A enabled computation of late fee under Section 234E while processing quarterly TDS returns and that an intimation imposing such fee for a period prior to 01.06.2015 was invalid.
FULL TEXT OF THE JUDGMENT/ORDER OF INCOME TAX APPELLATE TRIBUNAL, CHENNAI
These two appeals filed by the assessee filed by the assessee are directed against separate, but identical orders passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 29.09.2021 and pertain to assessment years 2013-14 & 2015-16. Since, facts are identical and issues are common, for the sake of convenience these appeals were heard together and are being disposed off, by this consolidated order.
2. We find that appeals filed by the assessee are barred by limitation of 11 days for which the learned AR for the assessee submitted that that meager delay may be condoned in the interest of justice.
3. Having heard both sides and considered the petition filed for condonation of delay, we are of the considered view that reasons given by assessee for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of above appeal is condoned and appeals filed by the assessee are admitted for adjudication.
4. Brief facts of the case are that for the relevant assessment years 2013-14 & 2015-16, the assessee has filed TDS Quarterly returns in Form 24Q and 26Q beyond due date specified under the Act. The Assessing Officer has assessed TDS quarterly returns filed by the assessee under section 200A and levied late filing fee under section 234E of the Income Tax Act, 1961 [“Act” in short] for the delay in filing the said statements for all the assessment year. The assessee has challenged the levy of late filing fee under section 234E of the Act before the learned CIT(A). Even though, several opportunity of hearing was provided to the assessee by the learned CIT(A) on 03.02.2001, 09.04.2021, 09.04.2021, 20.08.2021 & 16.09.2021, which is evident from records, the assessee has filed any submissions/details in support of its claim. Therefore, the CIT(A), after considering the relevant materials on record dismissed both these appeals on the ground of limitation as well as on merits by affirming order of the Assessing Officer towards imposing late fee levied u/s.234E of the Act.
5. We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. The solitary issue that needs to be resolved in the given facts and circumstances of the case is whether the Assessing Officer can levy late fee prescribed under section 234E of the Act, when the quarterly return filed by the tax deductor for the period prior to 01.06.2015, when the law has been amended by Finance Act enabling the Assessing Officer to compute late fee while processing TDS returns under section 200A of the Act. The provisions of section 234E of the Act has been inserted to the statute by Finance Act with effect from 01.07.2012 and provides levy of late fee for belated filing of quarterly return filed by the tax deductor. The Assessing Officer started levying of late fee under section 234E of the Income Tax Act, 1961 while processing quarterly TDS return and started issuing intimation to the assessees. The issue has been challenged before various Courts by the assessees by writ and challenged the validity of provision of section 234E of the Act. In some cases, some Courts have granted stay of operation of intimation issued by the Department under section 200A of the Act. Therefore, on the basis of judgement of the Hon’ble High Court, the assessees have started challenging the intimation issued by the Assessing Officer before the ld. CIT(A). The ld. CIT(A) did not entertain the appeal filed by the assessee on both counts, including on limitation in filing the appeal as well as on merits of the issue and rejected the arguments taken by the assessee and confirmed late fee levied under section 234E of the Income Tax Act, as per mandate of the statute. In the meantime, the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi v. Union of India [2016] 289 CTR 602 (Karnataka) had considered the issue and after analyzing the provisions of section 234E of the Act and section 200A of the Act and held that in the absence of enabling provision in section 200A of the Act, the Assessing Officer cannot levy late fee under section 234E of the Act, while processing the quarterly TDS return filed for the period of the respective assessment years prior to 01.06.2015. A similar view has been expressed by the Hon’ble Kerala High Court in the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India [2022] 134 taxmann.com 111 (Kerala) after considering the decision of Hon’ble Karnataka High Court in the case of Fatheraj Singhvi v. Union of India [2016] 289 CTR 602 (Karnataka) and held that the provisions of section 200A of the Act were mandated to enable computation of late fee payable under section 234E of the Act, at the time of processing of quarterly TDS return and the said amendment came into effect from 01.06.2015. Thus, the intimation issued by the Assessing Officer under section 200A of the Act to levy late fee for belated return for the period prior to 01.06.2015 is invalid. Subsequent to the decisions of the Hon’ble Karnataka High Court and the Hon’ble Kerala High Court, series of decisions have been rendered by various Benches of the Tribunal and held that late fee under section 234E of the Act cannot be levied for the period prior to 01.06.2015, because, there was no enabling provision to levy such late fee.
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 decision of the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi v. Union of India [2016] 289 CTR 602 (Karnataka), 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 year 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, both these appeals filed by the assessee are allowed.
Order pronounced in the open court on 24th February, 2022
