ITA 6754/DEL/2019: Innovative Technology Solutions, Gurgaon vs. ITO, Ward (TDS), Ghaziabad

Income Tax Appellate Tribunal – Delhi Bench ‘A’

Innovative Technology Solutions vs. ITO, Ward (TDS), Ghaziabad

Case Number: ITA 6754/DEL/2019

Assessment Year: 2014-15, 26Q, Qtr-2

Presiding Officers

Ms. Sushma Chowla, VP & Dr. B.R.R. Kumar, AM

Date of Hearing: August 26, 2020

Date of Order: August 31, 2020

Representatives

Appellant by: Sh. M.R. Sahu, CA

Respondent by: Sh. M.Barnwal, Sr.DR

Background

Innovative Technology Solutions, a firm based in Gurgaon, faced assessments for discrepancies in TDS (Tax Deducted at Source) filings for the second quarter of the 2014-15 assessment year. The case addressed whether late fees under section 234E for delayed TDS filing could be levied in an intimation issued under section 200A before the legislative amendment of June 1, 2015.

Issues Raised

The primary issue was the applicability of section 234E of the Income Tax Act, which involves fees for late filing of TDS statements. The appellant contended that the charges levied for delays in TDS statement submissions prior to the amendment of section 200A, effective from June 1, 2015, were unjust. This led to a significant legal debate on whether the retrospective application of the law was permissible.

Court’s Analysis

The tribunal extensively reviewed precedents and statutory interpretations, emphasizing the distinction between procedural and substantive law. It was noted that the amendment to section 200A(1), which allowed for the computation of fees under section 234E during TDS processing, was introduced after the relevant tax periods. Thus, any fee levied for periods before the amendment was deemed beyond the statutory authority of the processing officer under section 200A.

Conclusion and Final Order

The tribunal concluded that the fees under section 234E could not be retroactively applied to periods before June 1, 2015. It was held that the demand raised for late fees on TDS filings before this date was invalid. The decision relieved Innovative Technology Solutions of the additional fees initially charged by the Income Tax Department.

This case is a landmark decision illustrating the tribunal’s stance on retrospective application of tax laws, providing significant relief to taxpayers facing similar charges for periods prior to legislative amendments.

Implications

This ruling not only impacts the parties involved but also sets a precedent for other cases where penalties and fees are imposed based on retrospective law changes. Taxpayers and practitioners should note the importance of the timing of law amendments and their effective application.

ITA 6754/DEL/2019: Innovative Technology Solutions, Gurgaon vs. ITO, Ward (TDS), Ghaziabad