Friday, January 20, 2017

No Penalty Under Section 234E before 01.06.2015

Section 200A was amended by Finance Bill 2015 with effect from 01.06.2015. Through this amendment in section 200A of the Income-tax Act 1961 in sub-section (1), for clauses (c) to (e), the following clauses has been be added  with effect from the 1st day of June, 2015

(c ) the fee, if any, shall be computed in accordance with the provisions of section 234E

Income tax department has been empowered to levy late fee U/s 234E @ Rs. 200/- per day on delayed filing of TDS Quarterly Statement.  So late fee levied before 01.06.2015 can be waived by the officer and the assessee for waiver can file a rectification under Section  154 or appeal can be filed for getting the demand of 234E cancelled.

As clause (c) newly inserted was effective from 01.06.2015 and prior to 1st June 2015, there was no enabling provision in the Income Tax Act for raising a demand in respect of levy of fees under section 234E consequently  no late fee under Section 234E is not payable if it pertains to the period 01.06.2015

(d) First the adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200/201/234E and any amount paid otherwise by way of tax or interest or fee will be made and then the sum payable by, or the amount of refund due to, the deductor shall be determined. 

(e) An intimation shall be prepared and sent to the deductor determining the tax to be payable or the amount of refund due under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor.

Now ITAT ,Amritsar in the case of Sibia Healthcare Private Limited  Vs. Dy. Commissioner of Income-tax (TDS) dated 09.06.2015, has passed an order on section 234E of Income Tax Act on Levy U/S 234E  i.e on late filing of E TDS return for delay @ Rs.200/- per day  admitting that in the absence of the enabling provision under Section 200A such levy is not valid so cannot be recovered.

The main points cleared by such Judgment are as under :

ü  the adjustment in respect of levy of fees under section 234E  is  beyond the scope of permissible adjustments under section 200A.
ü  The intimation for processing of TDS Statement  is an appealable order under section 246A(a).
ü  No such levy could be effected or recovered in  the absence of the enabling provision under section 200A,.
ü  An  intimation under section 200A can be passed within 1 year from the end of the Financial Year within which the related TDS Quarterly Statement is filed,  for raising of a demand or issuing a  refund to the tax deductor.

So in Light of above decision it  has been cleared  that Late fee penalty/Fee cannot be imposed before 01.06.2015

Now caution for intimation under Section 200A if received for earlier period :

ü  The assessee should check the intimation immediately as received through mail
ü  The assessee should give the Valid E mail ID on Traces site which is Poped up if intimation is received or is checked by the assessee regularly.
ü  For such levy under Section 234E before 01.06.2015 file a rectification if no intimation received .
ü  If such intimation is received then check that appeal is filed in time so that it is not time barred.
ü  Intimation for all TDS statements filed during Financial Year 14-15 and for Quarter ended 31.03.2015 filed in Financial Year 15-16 should have been passed before 31.03.16 and 31.03.17 respectively.
TDS CPC is sending intimations through mail for the current period immediately and as well for earlier period also.