Facts of the Case

The assessee company filed quarterly TDS statements with delay. While processing the TDS returns under Section 200A, the CPC (TDS) levied late filing fee under Section 234E.

The fee was imposed even though the TDS statements related to a period prior to the amendment made by the Finance Act, 2015, which enabled computation of fee under Section 234E while processing statements under Section 200A.

The assessee challenged the levy, contending that such fee could not be imposed through processing of returns for periods prior to the statutory amendment.

Issues Involved

  1. Whether late filing fee under Section 234E can be levied while processing TDS statements under Section 200A for periods prior to the amendment effective from 01.06.2015.
  2. Whether the demand raised by CPC (TDS) was legally valid.
  3. Whether rectification or adjustment through automated processing was permissible in such circumstances.

Petitioner’s (Assessee’s) Arguments

  • The assessee argued that at the time of filing the TDS statements, Section 200A did not authorize computation and levy of fee under Section 234E.
  • The enabling provision to levy such fee during processing was introduced only later through legislative amendment.
  • Therefore, applying the amendment retrospectively would be unlawful.
  • The demand raised by CPC (TDS) was thus contended to be without authority of law.

Respondent’s (Revenue’s) Arguments

  • The Revenue maintained that Section 234E imposes a statutory fee for delay in filing TDS statements, and such fee becomes payable automatically upon default.
  • CPC (TDS) was justified in computing the fee while processing the statements.
  • The Department argued that the levy was valid and enforceable.

Court Order / Findings (ITAT)

  • Prior to 01.06.2015, Section 200A did not provide for computation of fee under Section 234E while processing TDS statements.
  • The amendment introduced by the Finance Act, 2015 was prospective in nature.
  • Therefore, levy of late filing fee under Section 234E through processing under Section 200A for earlier periods was not legally sustainable.

Important Clarification

  • Companies facing automated demands from CPC (TDS)
  • Historical TDS defaults before Finance Act 2015
  • Interpretation of prospective vs retrospective amendments
  • Automated tax processing disputes

Link to download the order –

https://itat.gov.in/public/files/upload/1606910965-Elechico%20Hotels%20&%20Restaurants%20Private%20Limited.pdf

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