Whether when there were no enabling provisions u/s 200A, no fee u/s 234E could have been levied for delay in filing TDS returns - YES: ITAT

THE issue before the Bench is - Whether when there were no enabling provisions u/s 200A, no fee u/s 234E could have been levied for delay in filing TDS returns. YES is the answer.

Facts of the case

Pursuant to the delay in filing of TDS returns by the assessee, the AO during processing of the return, raised a demand by way of intimation issued u/s 200A, for levy of fees u/s 234 E for delayed filing of TDS statement. On appeal, the CIT confirmed the order of AO.

Having heard the parties, the Tribunal held that,

++ it is seen that in effect, post 1st June 2015, in the course of processing of a TDS statement and issuance of intimation u/s 200A in respect thereof, an adjustment could be made in respect of "fee, if any, shall be computed in accordance with the provisions of section 234E". There is no dispute that what is impugned in appeal before Tribunal is the intimation u/s 200A. As stated in so many words in the impugned intimation itself, and, as the law stood, prior to 1st June 2015, there was no enabling provision thereinfore raising a demand in respect of levy of fees under section 234E. While examining the correctness of the intimation u/s 200A, the Tribunal have to be guided by the limited mandate of Section 200A, which, at the relevant point of time, permitted computation of amount recoverable from, or payable to, the tax deductor after making the adjustments, It is clear that no other adjustments in the amount refundable to, or recoverable from, the tax deductor, were permissible in accordance with the law as it existed at that point of time;

++ it was viewed that the adjustment in respect of levy of fees u/s 234E was indeed beyond the scope of permissible adjustments contemplated u/s 200A. This intimation was an appealable order u/s 246A(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. However, the CIT(A) has not done so. He had justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation u/s 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. Thus, the impugned levy of fees u/s 234 E is unsustainable in law.