Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi – Case Filed Against Late Fees Under Section 234E – ITA 6327/DEL/2019

Case Summary: Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi – ITA 6327/DEL/2019

Case Number: ITA 6327/DEL/2019

Appellant: Chronicle Publication Pvt Ltd, New Delhi

Respondent: ACIT (CPC)-TDS, New Delhi

Assessment Year: 2015-16 Qtr 26 (Q-2)

Order Type: Final Tribunal Order

Date of Order: 31st August 2020

Pronounced on: 31st August 2020

Case Filed On: 26th July 2019

Result: Final tribunal order pronounced on 31st August 2020

Background

The appellant, Chronicle Publication Pvt Ltd, New Delhi, filed a case against the ACIT (CPC)-TDS, New Delhi, challenging the levying of late fees under Section 234E of the Income-tax Act, 1961. The late fees were imposed for the delay in filing the TDS statement for the assessment year 2015-16, Quarter 26 (Q-2).

According to the Income-tax Act, Section 234E was introduced to levy fees for late submission of TDS returns. However, the appellant contested the imposition of this fee, arguing that the legislative framework to levy such fees while processing TDS returns was only enacted prospectively from 1st June 2015, through an amendment in Section 200A.

Legal Arguments

The key issue in the case was whether the fee under Section 234E could be charged for the period prior to the amendment of Section 200A, which empowered the authorities to levy such fees while processing TDS statements.

The appellant’s counsel argued that since the amendment to Section 200A came into effect only from 1st June 2015, any levy of fees under Section 234E for the periods before this date was not legally permissible. The contention was that Section 234E was not a self-contained provision for the levy of fees, and its enforcement depended on the procedural mechanism provided by Section 200A.

On the other hand, the respondent, represented by Sh. M. Baranwal, Sr. DR, argued that the late fees under Section 234E were compensatory in nature and could be levied irrespective of the procedural amendments to Section 200A. The respondent also relied on several precedents where courts had upheld the validity of Section 234E and its application.

Tribunal’s Analysis

The tribunal carefully considered the arguments presented by both parties. It referred to several landmark judgments, including those from the Karnataka High Court and Delhi Tribunal, which had previously dealt with similar issues.

The tribunal acknowledged the appellant’s position that the amendment to Section 200A, which enabled the automatic levy of fees under Section 234E, was prospective and not retrospective. This meant that any TDS statements filed for periods before 1st June 2015 could not be subjected to fees under Section 234E based on an intimation under Section 200A.

Moreover, the tribunal noted that the legislative intent behind the amendment was to provide a procedural mechanism for levying fees under Section 234E and that this mechanism could not apply to periods before the amendment was in force.

Final Judgment

The tribunal ruled in favor of the appellant, Chronicle Publication Pvt Ltd. It held that the fees under Section 234E could not be levied for TDS returns filed before the amendment to Section 200A came into effect on 1st June 2015. Consequently, the demand for late fees made by the ACIT (CPC)-TDS was quashed.

The judgment emphasized that the imposition of such fees before the amendment was beyond the scope of the law and could not stand legal scrutiny. The tribunal ordered that the intimation issued under Section 200A for the levy of late fees be declared invalid for the periods prior to the amendment.

Conclusion

This case serves as a significant precedent for numerous taxpayers who were facing similar demands for late fees under Section 234E for periods before 1st June 2015. The tribunal’s decision reaffirmed the principle that procedural amendments to tax laws cannot be applied retrospectively to the detriment of taxpayers.

The detailed examination of the legal framework and the tribunal’s adherence to established principles of statutory interpretation in this case underscore the importance of fair and just application of tax laws. The appellant, Chronicle Publication Pvt Ltd, successfully defended its case, leading to the quashing of the demands made by the revenue authorities.

The final tribunal order was pronounced on 31st August 2020 by the Delhi Bench ‘A’, consisting of Ms. Sushma Chowla, VP, and Dr. B.R.R. Kumar, AM. The order was delivered through video conferencing, reflecting the tribunal’s commitment to ensuring justice even amidst challenging times.

Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi – Case Filed Against Late Fees Under Section 234E – ITA 6327/DEL/2019