Section 234E TDS Late Fee Invalid for Pre-2015 Period Due to Lack of Legal Provision

Sancheti Onions Pvt. Ltd. Vs ITO (ITAT Pune)

The case involves a batch of three appeals filed by two assessees against separate orders passed by the National Faceless Appeal Centre (NFAC), Delhi under Section 250 of the Income Tax Act, 1961. The primary issue in all appeals concerns the levy of late filing fees under Section 234E of the Act for delayed submission of TDS (Tax Deducted at Source) returns for Assessment Years 2013–14, 2014–15, and 2015–16.

At the outset, the Tribunal addressed a delay of 17 days in filing appeals in one of the cases. The assessee submitted an affidavit explaining the delay. Upon consideration, the Tribunal found that there was reasonable cause preventing timely filing and, adopting a justice-oriented approach while relying on judicial precedents, condoned the delay and admitted the appeals for adjudication.

The facts indicate that the assessees had filed TDS returns belatedly for the relevant assessment years. These returns were processed by the Central Processing Cell (CPC) under Section 200A of the Act, which levied late filing fees under Section 234E. The assessees filed rectification applications under Section 154 seeking removal of such fees, but these applications were unsuccessful. Subsequent appeals before the Commissioner of Income Tax (Appeals)/NFAC also did not yield relief, leading to the present appeals before the Tribunal.

The Tribunal noted that the sole issue was whether late filing fees under Section 234E could be levied for TDS statements processed under Section 200A for periods prior to 1 June 2015. It observed that this issue was no longer res integra and had been consistently addressed in earlier judicial decisions.

The Tribunal examined the statutory framework and noted that Clause (c) to Section 200A(1), introduced by the Finance Act, 2015 with effect from 1 June 2015, empowered authorities to levy fees under Section 234E while processing TDS statements. Prior to this amendment, there was no explicit provision under Section 200A permitting such levy at the time of processing TDS returns.

Based on this, the Tribunal observed that although Section 234E existed in the statute before 1 June 2015, there was no enabling provision under Section 200A to impose such fees through processing of TDS statements. Consequently, multiple benches of the Tribunal had consistently held that fees under Section 234E could not be levied for defaults relating to periods prior to 1 June 2015.

The Tribunal also referred to judicial precedents supporting this position. It noted that the Karnataka High Court in Fatheraj Sanghvi & Others had taken a similar view. Further, decisions such as Emsons Exim Pvt. Ltd. (by majority view), as well as rulings of the Kerala High Court in Olari Little Flower Kuries Pvt. Ltd. and Jyi Varghese, affirmed that such fees cannot be imposed for periods prior to 1 June 2015. Additionally, a coordinate bench of the Tribunal in Dadasaheb Vitthalrao Urhe had reiterated this position.

Applying these settled principles to the facts of the case, the Tribunal observed that the TDS returns in question had been processed under Section 200A before 1 June 2015. Therefore, the levy of late filing fees under Section 234E for those periods was not legally sustainable.

In view of the consistent judicial position and the factual matrix, the Tribunal set aside the orders of the lower authorities and directed deletion of the late filing fees imposed under Section 234E. Accordingly, the appeals filed by the assessees were allowed.

The order was pronounced on 17 April 2026.

SEO-Friendly Titles with Descriptions

Late Fee Deleted as Section 200A Lacked Power to Levy 234E Before 2015
SEO Description: The tribunal held that no late fee under Section 234E can be imposed for periods prior to 1 June 2015 due to absence of enabling provisions in Section 200A. The levy was deleted following consistent judicial precedents.

TDS Late Fee Invalid for Pre-2015 Period Due to Lack of Legal Provision
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Late Filing Fee Struck Down as CPC Had No Authority Before 2015 Amendment
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FULL TEXT OF THE ORDER OF ITAT PUNE

This batch of three appeals at the instance of two different assesses are directed against the separate orders passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’).

2. Registry has pointed out that there is delay of 17 days in filing of the appeals before this Tribunal in the case of Sancheti Onions Pvt. Ltd. Assessee has submitted an Affidavit explaining the delay. On due consideration of the Affidavit, we find that ‘reasonable cause’ prevented the assessee to file the appeals within the stipulated time. We therefore adopting justice oriented approach and placing reliance on the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 17 days before this Tribunal and admit the appeals for adjudication.

3. The only issue raised in these appeals is against the levy of fees u/s.234E for the quarters relating to Assessment Years 2013-14, 2014-15 and 2015-16.

4. Identical issue have been raised by assessee in all these appeals. We therefore proceed to dispose of these appeals by this consolidated order for the sake of convenience.

5. Brief facts common to these appeals are that TDS returns for the assessment years 2013-14 and 2014-15 corresponding to respective quarters captioned above were filed belatedly. The same were processed by Central Processing Cell (in short “CPC”) u/s.200A levying fee u/s.234E of the Act. Assessee preferred Rectification application u/s.154 of the Act levying fee u/s.234E of the Act. The assessee filed rectification applications u/s.154 of the Act for removal of late fee u/s.234E but failed to succeed. Aggrieved assessee preferred appeal(s) before Ld. CIT(A)/NFAC but failed to get any relief. Now the assessee is in appeal(s) before the Tribunal.

6. We have heard both the parties and perused the records placed before us. The solitary issue in this batch of appeals is against the levy of fee u/s.234E of the Act by CPC for delay in filing the TDS quarterly returns and Ld. CIT(A)/NFAC confirming such levy of fee u/s.234E for filing the Quarterly returns after the due date.

7. We observe that the issue of levy of fee u/s.234E is no more res Integra by virtue of several decisions rendered by this Tribunal on this very issue. It shows that the late fee u/s.234E has been imposed for the delay in furnishing the statements for quarters, in the returns processed u/s.200A of the Act prior to 01.06.2015. By Finance Act 2015 Clause-(c) to section 200A(1) was introduced w.e.f. 01.06.2015 empowering the authority concerned to levy fee under section 234E of the Act while processing the TDS statement under section 200A of the Act. Therefore, prior to 01.06.2015 there was no specific provision under section 200A of the Act for levy of late filing fee under section 234E of the Act. Thus, taking note of the aforesaid factual position, different benches of the Tribunal consistently held that prior to 01.06.2015 provisions of section 200A of the Act did not contemplate levy of fee under section 234E of the Act. Therefore, it was held, even-though section 234E of the Act was in the statute prior to 01.06.2015, however, in absence of any enabling provision, no fee under section 234E of the Act can be levied for late filing of TDS statement for any period prior to 01.06.2015. The same view was expressed by the Hon’ble Karnataka High Court in case of Fatheraj Sanghvi & Ors vs. Union of India & Ors [2016] 289 CTR 602 (Kar.). In the case of Emsons Exim Pvt. Ltd. v/s ITO, ITA No.4406/Mum./2017 & Ors. dated 28th August 2019, by majority view it was held that levy of fee under section 234E of the Act cannot be made in respect of a period prior to 01.06.2015 while processing the TDS statement under section 200A of the Act.

8. We find that the Coordinate Benches of this Tribunal after considering the judicial pronouncements have been taking a consistent view that the amendment brought in Finance Act, 2015 w.e.f. 01.06.2015 under Section 200A (clause (c)] of the Act is prospective in nature thereby empowering the Revenue authorities to charge fee u/s.234E of the Act only after 01.06.2015. In that view of the matter, Revenue authorities are empowered to impose such late fee u/s.234E only for the default committed after 01.06.2015 and not prior to that. The Hon’ble Kerala High Court in Olari Little Flower Kuries Pvt. Ltd. Vs. Union of India and others (2022) 440 ITR 26 (Kerala) has affirmed the non-imposition of fee for the period prior to 01.06.2015. Similar view has been taken in Jyi Varghese VS. ITO(TDS) & Ors. (2022) 443 ITR 267 (Ker) holding that no fee u/s.234E can be imposed for the periods of the respective A.Ys. prior to 1st June, 2015. Similar view was also taken by this Tribunal in the case of Dadasaheb Vitthalrao Urhe Vs. ITO (TDS), Pune in ITA Nos.1286 to 1309/ PUN/ 2023, dated 29.02.2024. Thus, it is seen that the issue raised in the these appeals is covered in favour of the assessee as the returns u/s.200A(c) were processed before 01.06.2015, details of which are given below :

9. Following the settled judicial precedents, we overturn the impugned orders and delete the late fee levied u/s.234E of the Act on this sole issue and allow the effective grounds of appeal raised by the assessee in these three appeals.

10. In the result, the appeals of the respective assessee(s) are ALLOWED.

Order pronounced on this 17th day of April, 2026