In the case of Sutheepan Sowmini vs. ITO, the Kerala High Court addressed the imposition of late fees under Section 234E of the Income Tax Act, 1961, related to the filing of delayed TDS returns for the assessment year 2013-2014. This article provides a detailed analysis of the case, focusing on the jurisdictional grounds and the court’s decision to quash the late fee notices.
The Challenge: The petitioner contested Ext.P1 to Ext.P6, which pertained to the imposition of fees under Section 234E of the Income Tax Act. These fees were levied for filing TDS returns late, specifically for the assessment year 2013-2014. The primary contention in this writ petition was that the demand notices exceeded the jurisdictional boundaries.
Jurisdictional Limits: The central argument put forth by the petitioner was that late fees could not be imposed for failing to file previous returns for the period before June 1, 2015. This restriction was crucial in determining the legality of the demand notices. The petitioner’s counsel referenced a relevant judgment by the Kerala High Court for support.
Precedent and Legal Grounds: The petitioner’s legal counsel referred to a judgment issued by the Kerala High Court in the case of M/S. OLARI LITTLE FLOWER KURIES PVT. LTD. vs. UNION OF INDIA, W.P.(C) No. 11175 of 2014, dated October 22, 2021. Paragraph 9.1 of this judgment was particularly relevant, as it addressed the issue of late fee demands for filing belated statements before June 1, 2015.
Court’s Verdict: The Kerala High Court found that the petitioner’s grievance was covered by the judgment of the Division Bench mentioned in Paragraph 9.1 of the OLARI LITTLE FLOWER KURIES case. In light of this precedent, the court allowed the writ petition, setting aside the impugned orders in Ext.P1 to Ext.P6.
Conclusion: The case of Sutheepan Sowmini vs. ITO highlights the importance of jurisdictional limits in imposing late fees under Section 234E of the Income Tax Act. The court’s decision to quash the late fee notices for the assessment year 2013-2014, issued before June 1, 2015, aligns with the precedent set by the Kerala High Court in a similar case. This judgment reaffirms the significance of adhering to legal boundaries when levying penalties for late tax filings.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. Heard Sri. K.N.Sreekumaran, Learned Counsel for the petitioner and Sri. Christopher Abraham, Standing Counsel for Income Tax.
2. The petitioner is challenging Ext.P1 to Ext.P6 pertaining to levied fees under Section 234E of the Income Tax Act, 1961 for imposing of late fee for filing delayed previous TDS return for the assessment year 2013-2014. The limited ground on which this writ petition has been filed is that, the demand notices are beyond jurisdictional envisagement. No late fee could be levied for not filing the previous return for the period prior to 01.06.2015.
3. The Learned Counsel for the petitioner also submits that, in the present case, the period for which the impugned demand notices have been issued is prior to 01.06.2015 in respect of the assessment year 2013-2014. The Learned Counsel for the petitioner has also placed reliance on the grounds of the Judgment of this Court in the case of M/S. OLARI LITTLE FLOWER KURIES PVT. LTD. Vs. UNION OF INDIA in W.P.(C) No. 11175 of 2014 passed on 22nd October 2021. Paragraph 9.1 of the Judgment reads as follows.
“9.1 Stated briefly, the writ petitioner challenges the intimation received under Section 200 A from the respondent/Revenue calling upon the writ petitioner to pay late fee for delayed filing of quarterly statements of TDS. The periods for which the notices are issued are stated as prior to 01.06.2015. By following the judgment in W.P.(C) No. 37775/2018, as confirmed in W.A.No.722/2019, the writ petition stands allowed and the intimations dealing with filing of belated statements prior to 01.06.2015 are set aside. A return filed subsequent to 01.06.2015 is present, the respondents are given liberty to issue notice, hear the writ petitioner, and pass orders in accordance with law.”
4. I find that the grievance of the petitioner thus covered by the said Judgment of the Division Bench and therefore, the Writ Petition is allowed. Impugned orders in Ext. P1 to Ext.P6 are hereby set aside.