Late Filing Fee under Section 234E: Chronicle Publication Pvt Ltd, New Delhi vs. ACIT (CPC)-TDS, New Delhi – ITA 6319/DEL/2019

Late Filing Fee under Section 234E: Chronicle Publication Pvt Ltd vs. ACIT (CPC)-TDS

Case Number: ITA 6319/DEL/2019

Appellant: Chronicle Publication Pvt Ltd, New Delhi

Respondent: ACIT (CPC)-TDS, New Delhi

Assessment Year: 2015-16 Qtr 24(Q-3)

Date of Filing: 2019-07-26

Date of Order: 2020-08-31

Pronounced on: 2020-08-31

This case concerns the challenge raised by Chronicle Publication Pvt Ltd, New Delhi, against the imposition of a late filing fee under Section 234E of the Income Tax Act, 1961. The issue in question revolves around the imposition of fees for the late submission of TDS statements for the assessment year 2015-16 Qtr 24(Q-3), and whether such fees could be levied for periods prior to the amendment of Section 200A of the Income Tax Act, which came into effect on June 1, 2015.

Background

Chronicle Publication Pvt Ltd, a notable entity based in New Delhi, filed their TDS statements belatedly for the assessment year 2015-16 Qtr 24(Q-3). Following the late filing, the Central Processing Center (CPC) of the Income Tax Department imposed a fee under Section 234E, citing the late submission as the basis for the charge. The company contested this imposition, arguing that the fee under Section 234E could not be applied to TDS statements filed for periods before the amendment to Section 200A, which empowered the Assessing Officer to charge such fees while processing TDS returns.

Legal Issue

The central legal issue in this case was whether the late filing fee under Section 234E could be imposed for periods before the amendment to Section 200A, which came into effect on June 1, 2015. The amendment specifically added clause (c) to Section 200A(1), enabling the computation of fees payable under Section 234E during the processing of TDS returns. Prior to this amendment, there was no explicit provision allowing for such fees to be charged during the processing of TDS returns.

Arguments Presented

Appellant’s Argument: The appellant, Chronicle Publication Pvt Ltd, argued that since the TDS returns were filed for the period before the amendment took effect, the imposition of the fee under Section 234E was not valid. They contended that the amendment to Section 200A, being prospective in nature, should not apply to any TDS statements filed before June 1, 2015. The appellant cited various tribunal decisions and the ruling by the Karnataka High Court in the case of Fatehraj Singhvi & Ors. vs Union of India, which supported the view that the amendment was not retrospective.

Respondent’s Argument: The respondent, ACIT (CPC)-TDS, argued that the fee under Section 234E was compensatory in nature and automatically applicable to any delay in filing TDS statements. They contended that even in the absence of clause (c) in Section 200A before the amendment, the fee under Section 234E could be levied, as it was a statutory obligation of the deductor to file TDS returns on time. The respondent cited the decision of the Bombay High Court in Rashmikant Kundalia vs Union of India, which upheld the constitutional validity of Section 234E, and argued that the fee was justifiable.

Court’s Analysis and Conclusion

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT), considering the arguments from both sides, examined the legislative intent behind the amendment to Section 200A and the nature of the fee under Section 234E. The Tribunal noted that the amendment to Section 200A, which allowed for the computation of fees under Section 234E during the processing of TDS returns, was indeed prospective and applicable only from June 1, 2015, onwards.

The Tribunal referenced several prior decisions, including the rulings in Udit Jain vs ACIT and M/s Wits Interior Pvt. Ltd. vs ACIT, which had similarly held that fees under Section 234E could not be levied for TDS statements filed for periods before the amendment. Additionally, the Tribunal acknowledged the Karnataka High Court’s ruling in Fatehraj Singhvi & Ors. vs Union of India, which had set aside demands raised for periods before the amendment.

Based on these precedents, the Tribunal concluded that the late filing fee under Section 234E could not be imposed on Chronicle Publication Pvt Ltd for the TDS returns related to the assessment year 2015-16 Qtr 24(Q-3), as the relevant period was before the amendment to Section 200A. The demand raised by the ACIT (CPC)-TDS was, therefore, not valid, and the Tribunal ordered the deletion of the fee imposed.

Final Judgment

The Income Tax Appellate Tribunal (ITAT) ruled in favor of Chronicle Publication Pvt Ltd, New Delhi, and quashed the imposition of the late filing fee under Section 234E for the assessment year 2015-16 Qtr 24(Q-3). The Tribunal held that the amendment to Section 200A, which empowered the computation of such fees, was not applicable retrospectively, thereby rendering the demand invalid for periods before June 1, 2015.

This decision reaffirms the principle that legislative amendments with financial implications cannot be applied retrospectively unless explicitly stated. The ruling provides significant relief to entities facing similar demands for periods before the legislative change.

Late Filing Fee under Section 234E: Chronicle Publication Pvt Ltd, New Delhi vs. ACIT (CPC)-TDS, New Delhi – ITA 6319/DEL/2019