Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi: Late Fee Levy Challenge for AY 2013-14 under Section 234E – ITA 6325/DEL/2019

Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi: ITA 6325/DEL/2019 – Tribunal Ruling on Late Fee Levy under Section 234E

Case Number: ITA 6325/DEL/2019

Appellant: Chronicle Publication Pvt Ltd, New Delhi

Respondent: ACIT (CPC)-TDS, New Delhi

Assessment Year: 2013-14, Quarter 3, Form 26(Q)

Case Filed On: 2019-07-26

Order Type: Final Tribunal Order

Date of Order: 2020-08-31

Pronounced On: 2020-08-31

Background of the Case

In this appeal, the appellant, Chronicle Publication Pvt Ltd, New Delhi, challenged the levy of late fees under Section 234E of the Income Tax Act for the assessment year 2013-14, specifically for the third quarter, under Form 26(Q). The appeal was filed following the Central Processing Cell (CPC) – TDS in New Delhi issuing an intimation demanding the late fee.

Section 234E, introduced by the Finance Act, 2012, imposes a fee for delayed filing of TDS statements. The appellant contended that the late fee could not be levied for periods prior to the amendment of Section 200A(1)(c) of the Income Tax Act, which provided the procedural mechanism for such levy. The amendment to Section 200A(1)(c) was made effective from 01.06.2015, and therefore, the appellant argued that the levy for the period before this date was invalid.

Key Issues Raised

The primary issue before the Tribunal was whether the ACIT (CPC)-TDS was empowered to levy the late fee under Section 234E for a period prior to 01.06.2015, given that the amendment to Section 200A(1)(c) enabling such levy was prospective in nature.

The appellant relied on various judgments, including those from the Karnataka High Court in Fatehraj Singhvi & Ors. vs Union of India, where it was held that the amendment to Section 200A of the Act, allowing for the levy of late fees under Section 234E, was prospective and not retrospective. The appellant argued that the intimation issued by the CPC was therefore beyond the scope of the law as it stood at the time.

Arguments by the Revenue

The Revenue, represented by the Senior Departmental Representative, contended that the fee under Section 234E was a charging provision, and the amendment to Section 200A(1)(c) was merely a procedural change. They argued that the fee was compensatory in nature, aimed at ensuring timely filing of TDS statements, which was critical for the processing of income tax returns and the functioning of the tax administration system.

The Revenue also referenced various High Court rulings that upheld the validity of Section 234E and emphasized that the amendment to Section 200A(1)(c) should not be seen as limiting the levy of the fee to periods post-01.06.2015.

Tribunal’s Decision

The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘A’, presided over by Ms. Sushma Chowla, Vice President, and Dr. B.R.R. Kumar, Accountant Member, delivered the final judgment on 31.08.2020. The Tribunal held that the amendment to Section 200A(1)(c) of the Act was prospective and could not be applied retrospectively to periods before its enactment. Therefore, the levy of late fees under Section 234E for the period prior to 01.06.2015 was deemed invalid.

The Tribunal relied on the Karnataka High Court’s judgment in Fatehraj Singhvi & Ors. vs Union of India, which had previously set aside similar demands, stating that the intimation issued under Section 200A for levying fees under Section 234E was not valid for periods before the amendment took effect.

In conclusion, the Tribunal ruled in favor of Chronicle Publication Pvt Ltd, and the demand for late fees levied by the ACIT (CPC)-TDS was quashed.

Conclusion

This case highlights the importance of understanding the temporal application of tax laws and amendments. The Tribunal’s decision underscores that procedural amendments, such as the one introduced in Section 200A(1)(c), are prospective unless explicitly stated otherwise by the Legislature. Taxpayers and professionals must be vigilant in recognizing the applicability of such provisions, particularly when facing demands or intimations from the tax authorities.

The ruling provides significant relief to taxpayers who had been charged late fees under Section 234E for periods before the amendment to Section 200A(1)(c) came into effect, setting a precedent for similar cases.

“आयकर अपीलीय अिधकरण, दिल्ली यायपीठ ‘ए’, नई दिल्ली के उपा य एवं डॉ. बी. आर. आर. कुमार के लेखा सद य क सम य के समक्ष इस मामले का निपटारा किया गया।”

Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS, New Delhi: Late Fee Levy Challenge for AY 2013-14 under Section 234E – ITA 6325/DEL/2019