An in-depth review of ITA No. 1365/Del/2021, a case where ICMC Projects Pvt. Ltd. contests late fees applied by the ITD, CPC, Bengaluru for the 2013-14 fiscal year’s third quarter on non-salary returns.
The focus of the dispute is on the application of late fees under Section 234E, which were retrospectively applied prior to their formal enactment by the Finance Act 2015 starting June 1, 2015.
ICMC Projects argued that the retrospective application of late fees contradicts the prevailing legal standards at the time of filing. The tribunal evaluated the legitimacy of these fees based on the laws then in place.
The tribunal noted varying High Court rulings on the retroactive application of such amendments. However, adhering to the principle of interpreting ambiguities in tax law in favor of the taxpayer, as enshrined by the Supreme Court, the tribunal sided with ICMC Projects.
This case underscores the judiciary’s role in safeguarding taxpayer rights against retroactive fiscal measures and clarifies the application of tax law amendments. The ruling highlights the necessity for clear legislative instructions when imposing financial obligations. The verdict was delivered on February 25, 2022, granting relief to the appellant and other similarly situated entities.
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