Levy of Late Filing Fee under Section 234E for TDS Statements:

A Consolidated Judicial Analysis of Pre-1 June 2015 Period**

1. Introduction :-The levy of late filing fee under Section 234E of the Income-tax Act, 1961 for delayed furnishing of TDS statements has generated extensive litigation, particularly in respect of financial years prior to 1 June 2015. Although Section 234E was introduced as early as 1 July 2012, serious doubts arose regarding the jurisdiction and authority of the Department to levy such fee while processing TDS statements under Section 200A, in the absence of an express enabling provision.

Over the last several years, Income-tax Appellate Tribunal benches across the country have consistently examined this controversy. A near-uniform judicial consensus has emerged holding that late filing fee under Section 234E cannot be levied for TDS statements pertaining to periods prior to 01.06.2015, when processed under Section 200A.

This article consolidates the statutory framework, legislative intent, and the pan-India tribunal jurisprudence, and presents the settled legal position.

 2. Statutory Scheme and Legislative Background

2.1 Section 234E – Nature of Levy:- Section 234E was inserted by the Finance Act, 2012 with effect from 01.07.2012. It provides that where a person fails to deliver a statement of tax deducted at source within the prescribed time under Section 200(3), such person shall be liable to pay, by way of fee, a sum of ₹200 per day of default, subject to a maximum of the tax deductible.

While Section 234E creates a liability in principle, it does not prescribe the mode, mechanism, or authority for computation and recovery of such fee.

2.2 Section 200A – Processing of TDS Statements (Prior to Amendment):- Section 200A, introduced by the Finance Act, 2009 with effect from 01.04.2010, provides for computerised processing of TDS statements. Prior to its amendment by the Finance Act, 2015, Section 200A permitted adjustments only in respect of:

(i)       arithmetical errors,

(ii)     incorrect claims apparent from the statement,

(iii)    computation of interest,

(iv)    determination of refund or demand.

Significantly, there was no provision enabling computation or levy of fee under Section 234E during processing of TDS statements.

 2.3 Finance Act, 2015 – The Turning Point:-The Finance Act, 2015 amended Section 200A with effect from 01.06.2015, inserting clause (c) to explicitly provide that:

“the fee, if any, shall be computed in accordance with the provisions of section 234E.”

This amendment for the first time conferred statutory jurisdiction upon the processing authority to compute and levy late filing fee under Section 234E while issuing intimation under Section 200A.

3. Core Legal Issue:- The precise issue that arose repeatedly before appellate authorities was:

Whether late filing fee under Section 234E could be levied through intimation under Section 200A for TDS statements relating to periods prior to 01.06.2015, when Section 200A did not contain any enabling machinery provision.

Judicial Interpretation

4.1 Karnataka High Court – Leading Authority

The controversy was authoritatively addressed by the Karnataka High Court in Fatheraj Singhvi v. Union of India (26.08.2016). The Court held that:

(i)       Prior to 01.06.2015, Section 200A did not authorise computation of fee under Section 234E.

(ii)     Levy of late fee through intimation under Section 200A for periods prior to that date was without authority of law.

(iii)    The amendment to Section 200A was prospective, not retrospective.

The Court accordingly quashed intimations levying fee under Section 234E for TDS statements pertaining to periods prior to 01.06.2015.

4.2 Consistent Tribunal View Across the Country:- Following the Karnataka High Court, multiple benches of the Income-tax Appellate Tribunal—Delhi, Mumbai, Pune, Bangalore, Indore, Kolkata, Amritsar, Visakhapatnam, Lucknow, and others—have consistently held that:

(i)       Section 234E is substantive, but

(ii)     its enforceability through Section 200A arose only from 01.06.2015,

(iii)    therefore, no fee can be levied via intimation for earlier periods, even if the return was filed belatedly.

Tribunals have further held that consequential interest under Section 220(2) cannot survive once the principal demand under Section 234E is deleted.

 4.3 Conflicting Gujarat High Court View and Rule of Beneficial Interpretation

The Gujarat High Court in Rajesh Kourani v. Union of India took a contrary view, holding that Section 234E being a charging provision, fee could be levied even prior to 01.06.2015.

However, in the presence of conflicting High Court decisions, tribunals have applied the settled principle laid down by the Supreme Court in CIT v. Vegetable Products Ltd., namely:

Where two reasonable interpretations are possible, the interpretation favourable to the taxpayer must be adopted.

Accordingly, tribunals across jurisdictions have preferred the Karnataka High Court view, particularly where no jurisdictional High Court decision exists.

4.2 Adoption of Beneficial Interpretation:- Tribunals have also taken note of the conflicting High Court decisions, particularly between:

(I)       the Karnataka High Court view favouring the assessee, and

(II)     the Gujarat High Court view favouring the Revenue.

In the absence of a binding jurisdictional High Court decision, tribunals have uniformly applied the principle laid down by the Supreme Court in CIT v. Vegetable Products Ltd., holding that where two reasonable interpretations exist, the one favourable to the taxpayer must prevail.

5. Machinery Provision vs Charging Provision:- A recurring and decisive reasoning across tribunal orders is the distinction between a charging provision and a machinery provision.

While Section 234E creates a charge, its enforceability depends upon a statutory mechanism. Courts and tribunals have consistently held that:

a levy cannot be enforced merely because a charge exists,

unless the statute provides a clear computational and recovery mechanism,

any demand raised is ultra vires.

Since such machinery was introduced only from 01.06.2015, the levy for earlier periods fails.

6. Rectification under Section 154:- Tribunals have further held that:

(i)       levy of Section 234E fee for pre-01.06.2015 periods constitutes a mistake apparent on record,

(ii)     such levy is amenable to rectification under Section 154,

(iii)    rejection of rectification applications on the ground of “debatable issue” is unsustainable where the legal position is settled.

7. Consequential Interest under Section 220(2) Interest under Section 220(2) is purely consequential in nature. Once the principal demand under Section 234E is held to be invalid:

  • the foundation for charging interest collapses,
  • interest under Section 220(2) cannot independently survive.

Tribunals have uniformly directed deletion of both fee and consequential interest.

8. Consolidated Ratio Emerging from Tribunal Jurisprudence From the consistent and overwhelming body of ITAT decisions, the following settled propositions emerge:

  1. Section 234E is a charging provision but requires a statutory machinery for enforcement.
  2. Prior to 01.06.2015, Section 200A did not authorise levy or computation of fee under Section 234E.
  3. The amendment to Section 200A by the Finance Act, 2015 is prospective in nature.
  4. Fee under Section 234E cannot be levied for TDS statements pertaining to periods prior to 01.06.2015, even if filed belatedly.
  5. Consequential interest under Section 220(2) automatically falls.
  6. In the presence of conflicting High Court views, the interpretation favourable to the assessee must be adopted.

 9. Conclusion:- The controversy relating to levy of late filing fee under Section 234E for pre-1 June 2015 periods is now judicially settled at the tribunal level across the country. The consistent view recognises that tax administration must operate strictly within statutory boundaries, and that jurisdiction cannot be assumed by implication.

The Finance Act, 2015 represents a clear legislative watershed, and any attempt to retrospectively enforce Section 234E through Section 200A for earlier periods would offend fundamental principles of statutory interpretation and fiscal certainty.

This consolidated tribunal jurisprudence provides much-needed clarity and predictability, reinforcing the principle that no tax or fee can be levied without express authority of law.

 Note :

Consistent Tribunal View Across the Country – Consolidated List of Case Law

Pune Bench

  1. Maharashtra Cricket Association v. DCIT (CPC-TDS), Ghaziabad-ITA Nos. 560 & 561/PN/2016 and batch, order dated 21.09.2016
  2. Swami Vivekanand Vidyalaya v. DCIT (CPC-TDS), Ghaziabad-ITA Nos. 2377 to 2386/PUN/2017
  3. Water Treatment Equipment v. DCIT (CPC-TDS), Ghaziabad-ITA Nos. 568 to 579/PUN/2021
  4. Allacode Technology Solutions (P.) Ltd. v. ITO (TDS), Pune-ITA Nos. 565 to 582/PUN/2022
  5. New English School & Jr. College v. DCIT (CPC-TDS), Ghaziabad-ITA Nos. 122 to 129/PUN/2022

Delhi Bench

  1. Prakash Industries Ltd. v. DCIT-ITA Nos. 5865 to 5869/Del/2016
  2. Ajvin Infotech Pvt. Ltd. v. DCIT- ITA Nos. 2305 & 2306/Del/2017
  3. D.D. Motors, Haryana v. DCIT- ITA No. 956/Del/2017
  4. District Health & Welfare Society v. ITO- ITA No. 7473/Del/2018
  5. Bathline India Pvt. Ltd. v. ACIT (CPC-TDS), Ghaziabad-ITA Nos. 9336 to 9341/Del/2019
  6. W Serve Technologies Pvt. Ltd. v. ACIT (CPC-TDS), Ghaziabad- ITA Nos. 1027 to 1040/Del/2020
  7. ICMC Projects Pvt. Ltd. & Others v. ITO / ACIT (CPC-TDS)-ITA Nos. 1361 to 1374/Del/2021
  8. Raj Veer Singh v. ACIT (CPC-TDS), Ghaziabad- ITA No. 3681/Del/2017
  9. Sub-Divisional Office v. ITO (TDS), Karnal-ITA No. 5921/Del/2021

Mumbai Bench

  1. K.D. Realities Pvt. Ltd. v. ITO (CPC-TDS)-ITA No. 2451/Mum/2017
  2. National Laminate Corporation v. ITO (CPC-TDS)-ITA No. 4902/Mum/2018
  3. Lawmen Concepts Pvt. Ltd. v. DCIT (CPC-TDS)- ITA Nos. 5140 to 5143/Mum/2018
  4. Vivek J. Thar (Legal Heir) v. ITO (TDS), Kalyan- ITA Nos. 1476 to 1479/Mum/2022
  5. Krishna Pandurang Kobnak v. NFAC- ITA Nos. 337 to 339/Mum/2022
  6. Govershan Venture Pvt. Ltd. v. ACIT (CPC-TDS)- ITA Nos. 181 & 182/Mum/2020

Bangalore Bench

  1. Thomas Abraham v. ITO (TDS), Bangalore- ITA Nos. 387 to 390/Bang/2022
  2. Mindlogicx Infratec Ltd. v. ACIT- ITA Nos. 462 to 483/Bang/2022
  3. Shri Thomas Abraham v. ITO (TDS)- ITA Nos. 387 to 390/Bang/2022

Indore Bench

  1. Keshav Industries Pvt. Ltd. v. ACIT-ITA Nos. 76 & 77/Ind/2020
  2. Patwa Abhikarana Pvt. Ltd. v. ACIT (CPC-TDS)-ITA Nos. 58 to 60/Ind/2021
  3. Madhya Pradesh Gramin Bank v. ACIT (CPC-TDS), Ghaziabad-ITA Nos. 222 to 328/Ind/2022

Kolkata Bench

  1. Passport Jeans Pvt. Ltd. v. DCIT (CPC)-ITA No. 575/Kol/2021
  2. Bhaskar Roy v. ACIT-ITA No. 1753/Kol/2019

Agra / Amritsar Benches

  1. Sudershan Goyal v. DCIT- ITA No. 442/Agra/2017
  2. Ram Prasad Verma Purva Madhyamik Vidyalaya v. ACIT (CPC-TDS)-ITA Nos. 03 to 06/Agra/2022
  3. United Service Station v. ITO (TDS), Jalandhar-ITA No. 22/Asr/2022

Visakhapatnam Bench

  1. WS Industries India Ltd. v. DCIT (TDS)-ITA Nos. 164 to 178/Viz/2021

Lucknow Bench

  1. Shivansh Infrateestate Pvt. Ltd. v. ACIT (CPC-TDS)-ITA Nos. 121 to 125/Lkw/2022

Nagpur Bench

  1. Hasanate Burhaniah Fidayyiah Trust v. ITO (TDS)=-ITA Nos. 9 & 10/Nag/2022

Rajkot Bench

  1. Mavani Developers v. ITO (TDS), Gandhidham-ITA Nos. 323 to 331/Rjt/2018