Late Filing Fee Levy Under Section 234E: Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS – Assessment Year 2015-16 Qtr – 24(Q-2)

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

The case titled Chronicle Publication Pvt Ltd, New Delhi vs ACIT (CPC)-TDS, New Delhi (Case No. ITA 6318/DEL/2019) pertains to the assessment year 2015-16, specifically for Quarter 2 (24Q). The case was filed on July 26, 2019, with the final tribunal order pronounced on August 31, 2020.

Background and Case Filing

This case was filed by Chronicle Publication Pvt Ltd against the levy of late filing fees under Section 234E of the Income Tax Act, 1961. The core issue revolves around the levy of late fees for the delay in filing TDS returns for the mentioned quarter. The appellant challenged the imposition of these fees, particularly focusing on the period before the amendment to Section 200A(1)(c) of the Act, which took effect from June 1, 2015.

Legal Framework

Section 234E of the Income Tax Act imposes a fee for late filing of TDS returns. The Finance Act, 2012, introduced this section, making it mandatory for tax deductors to pay fees for delayed submission of TDS statements. However, before the amendment in 2015, there was no provision in Section 200A of the Act empowering the Assessing Officer to levy such fees while processing TDS returns.

The critical point of contention in this case was whether the Assessing Officer could levy late filing fees under Section 234E for returns filed before the amendment, but processed after June 1, 2015.

Arguments Presented

The appellant, Chronicle Publication Pvt Ltd, argued that since the amendment to Section 200A(1)(c) was prospective, the levy of late filing fees under Section 234E could not be applied retrospectively for TDS statements filed before June 1, 2015. They cited several tribunal decisions supporting this view, including the Karnataka High Court’s ruling in the case of Fateh Raj Singhvi & Ors. vs Union of India, which held that such fees could not be levied for periods prior to the amendment.

On the other hand, the respondent, ACIT (CPC)-TDS, argued that the late fees under Section 234E were compensatory and not penal in nature. Therefore, they contended that the fees could be imposed even for periods prior to the amendment, as the requirement to pay these fees existed independently of the machinery provision under Section 200A.

Tribunal’s Findings

The tribunal carefully examined the arguments and precedents cited by both parties. It acknowledged the validity of Section 234E but emphasized that the amendment to Section 200A(1)(c) explicitly provided the mechanism for imposing these fees during the processing of TDS returns. Before this amendment, the Assessing Officer lacked the authority to levy such fees while processing returns.

The tribunal referred to various judgments, including the Pune Bench’s decision in the Maharashtra Cricket Association case and the Delhi Bench’s decision in Udit Jain vs ACIT. Both these cases supported the appellant’s argument that the levy of late filing fees under Section 234E for periods prior to June 1, 2015, was not permissible.

Final Judgment

After considering the facts and legal precedents, the tribunal concluded that the late filing fees under Section 234E could not be levied for the assessment year 2015-16 Qtr – 24(Q-2) in this case, as the TDS returns were filed before the amendment came into effect. The tribunal thus ruled in favor of Chronicle Publication Pvt Ltd and deleted the fees imposed under Section 234E for the mentioned period.

This decision reinforces the principle that amendments to tax laws, particularly those that impose penalties or fees, should not be applied retrospectively unless expressly stated by the Legislature.

Implications of the Judgment

This ruling has significant implications for other cases where late filing fees under Section 234E were levied for periods before the 2015 amendment. Tax deductors who faced similar penalties for delays in filing TDS returns before June 1, 2015, may have grounds to appeal against such fees if they were processed after the amendment date.

Furthermore, the tribunal’s reliance on established precedents underscores the importance of consistent judicial interpretation in tax matters, ensuring that taxpayers are treated fairly and in accordance with the law as it stood during the relevant period.

Conclusion

The case of Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS serves as a crucial reference point for understanding the application of late filing fees under Section 234E of the Income Tax Act. The tribunal’s decision to delete the fees for the period prior to the amendment highlights the necessity for clear legislative intent when introducing provisions with financial implications for taxpayers.

As tax law continues to evolve, it remains imperative for both taxpayers and tax authorities to stay informed about such critical judgments, ensuring compliance with the law while safeguarding their rights.

Late Filing Fee Levy Under Section 234E: Chronicle Publication Pvt Ltd vs ACIT (CPC)-TDS – Assessment Year 2015-16 Qtr – 24(Q-2)