Late fee u/s 234E is imposed towards extra effort and resources for processing delayed TDS returns. ITAT dismisses assessee’s appeal
ABCAUS Case Law Citation:
ABCAUS 3194 (2019) (12) ITAT
Important case law relied upon by the parties:
Shree Narayana Guru Smaraka Sangam Upper Primary School vs. UOI & Ors.
Rashmikant Kundalia vs. Union of India 2015 (54) Taxman.com 200 (Bombay)
Lakshminirman Bangalore (P) Ltd. vs. DCIT, Ghaziabad [(2015) 60 taxmann.com 144]
M/s Dundlod Shikshan Sansthan vs. Union of India
In The instant case, the appeal was filed by the assessee against the order passed by CIT(A) in upholding the levy for the late filing fees u/s 234E of the Income Tax Act, 1961 (the Act).
The revenue vide order u/s 200A of the Act had determined late fee in respect of the TDS statement filed by the assessee beyond the due date.
According to the appellant assessee it had duly deposited the total TDS with the Bank and the late filing of return was only a procedural in nature and did not result into any loss of revenue.
The Tribunal observed that the fee u/s 234E is required to be mandatorily paid by the deductor at the time of submission of the TDS statement, calculated at the rate of Rupees two hundred per day. It was noted that there is no provision in the Act which allows for waiver from the payment of such fees on grounds like the ones raised by the appellant.
The Tribunal opined that any condonation of delay or leniency would mean punishing the law abiding deductors who had duly calculated the fees u/s 234E and paid the same. Non levy of the fee would mean punishing the honest and rewarding the guilty, which can never be the intention of the legislature.
The Tribunal noted that in a judgment passed by the Hon’ble Kerala High Court had upheld the levy of fee u/s 234E and has held that “on account of the additional work burden which has fallen upon the department due to the fault of the deductor that a fee has been levied.”
In view of the above, the Tribunal held that the claim of the appellant that late filing was only procedural and did not result in any loss to Revenue has no bearing on the levy of fee u/s 234E. The Tribunal further found that this reasoning was also followed by the various Hon’ble High Courts.
Late fee u/s 234E is imposed towards extra effort & resources for processing delayed TDS returns
The Tribunal pointed out that Section 234E of the Act clearly sets out that the fee imposed under Section 234E is levied towards regularization of the delay in filing of a TDS return or statement; since the Revenue department has to expend extra effort and resources for processing delayed TDS returns or statements and possibly also incurs the additional burden of interest to be paid to the assessee on whose account tax deduction has been made.
The Tribunal stated that the fee imposed u/s 234E is for all intents and purposes a late fee payable for accepting the TDS/Statement/Return at a belated point in time.
In view of the above the Tribunal dismissed the appeal of the assessee.
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