Late fee u/s 234E for processing for period prior to 1st June 2015 unsustainable

Kerala Gramin Bank Vs ITO (ITAT Cochin)

ITAT Cochin held that levy of late fee under section 234E for processing for period prior to 1st June 2015 is unsustainable and bad-in-law.

Facts- The issue in these appeals is the applicability or otherwise of the levy of interest under section 234E of the Income Tax Act (‘the Act’ hereinafter) in respect of different Quarters of the financial year 2013-14 (and Qtr.1 of fy 2014-15), in view of the amendment to section 200A(1) of the Act by insertion of clause (c) thereto by Finance Act, 2015 w.e.f. 01.06.2015, enabling processing of levy of fees under section 234E(1) of the Act (brought on statute w.e.f. 01.07.2012).200

The levy u/s. 234E(1) seeks to subject the delayed filing of a tax deduction at source (TDS) return, to be filed by every deductor quarterly, i.e., within the prescribed time of the end of each quarter, as required by sec. 200(3), to a late filing fee, reckoned on a per-day basis, albeit subject to a cap at the TDS under reference. The processing u/s. 200A(1) in all appeals in the instant case is after 01/6/2015, with the TDS returns themselves being furnished much thereafter.

Conclusion- The levy of fee u/s. 234E vide Intimation u/s. 200A(1) would be valid where the said processing is after 31/5/2015. This would be irrespective of the financial year to which it relates, which of course cannot extend to any period prior to 01/7/2012, i.e., the date with effect from which s. 234E stands inserted on the statute.

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