Chronicle Publication Pvt Ltd, New Delhi vs ACIT (CPC)-TDS, New Delhi: Dispute Over Levy of Fees Under Section 234E for AY 2014-15

Case Overview: Chronicle Publication Pvt Ltd, New Delhi vs ACIT (CPC)-TDS, New Delhi

Case Number: ITA 6323/DEL/2019

Assessment Year: 2014-15, 26(Q-4)

Date of Filing: July 26, 2019

Order Type: Final Tribunal Order

Date of Order: August 31, 2020

Pronounced On: August 31, 2020

Introduction

The case involves the appellant, Chronicle Publication Pvt Ltd, New Delhi, challenging the decision of the respondent, ACIT (CPC)-TDS, New Delhi, regarding the imposition of late filing fees under Section 234E of the Income Tax Act. The central issue revolves around whether the fees under Section 234E could be levied for TDS returns pertaining to the period before June 1, 2015, when the amendment to Section 200A became effective.

Background

The appellant, Chronicle Publication Pvt Ltd, had filed its TDS returns for the fourth quarter of the assessment year 2014-15 under Form 26Q. The TDS returns were filed after the due date, leading to the levying of late filing fees by the ACIT under Section 234E of the Income Tax Act. The appellant contested this levy, arguing that the power to levy such fees was not available under the Act before the amendment to Section 200A, which came into effect on June 1, 2015.

Legal Arguments

The appellant’s primary contention was that the levy of late filing fees under Section 234E was invalid for periods prior to June 1, 2015. They argued that the machinery provision of Section 200A, which allowed for such a levy, was introduced only with the Finance Act, 2015, and was applicable prospectively.

On the other hand, the respondent argued that the fees under Section 234E were applicable irrespective of the amendment to Section 200A, as the charge under Section 234E was independent and automatic for delayed filing of TDS returns.

Tribunal’s Decision

The Income Tax Appellate Tribunal (ITAT) considered the arguments from both sides. The Tribunal referred to various decisions, including the judgment of the Karnataka High Court in the case of Fateh Raj Singhvi & Ors vs UOI, which had held that the amendment to Section 200A was prospective and not applicable to periods before June 1, 2015.

The Tribunal noted that the amendment introduced by the Finance Act, 2015, empowered the Assessing Officer to levy fees under Section 234E at the time of processing the TDS returns under Section 200A. However, for periods before June 1, 2015, such a power did not exist, and hence, the levy of fees under Section 234E for TDS returns filed for periods before this date was invalid.

Conclusion

Based on the findings, the Tribunal ruled in favor of the appellant, Chronicle Publication Pvt Ltd, New Delhi. The Tribunal held that the late filing fees levied under Section 234E for the TDS returns related to the fourth quarter of the assessment year 2014-15 were not valid, as the power to levy such fees was only conferred by the amendment to Section 200A, effective from June 1, 2015. As a result, the demand raised by the ACIT (CPC)-TDS, New Delhi, was deleted.

The final judgment emphasized the prospective nature of the amendment to Section 200A and the invalidity of fees levied under Section 234E for periods before the amendment came into effect. This ruling provides clarity on the applicability of late filing fees under Section 234E, reinforcing that such fees cannot be retrospectively applied to periods before June 1, 2015.

Chronicle Publication Pvt Ltd, New Delhi vs ACIT (CPC)-TDS, New Delhi: Dispute Over Levy of Fees Under Section 234E for AY 2014-15