ORDER
George George K, Vice President. – These appeals filed by the assessee are directed against four orders of the Commissioner of Income Tax (Appeals), Chennai-18, all dated 23.01.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2014-15 & 2015-16.
2. Common issue is raised in these appeals and hence, they were heard together and are being disposed of by this consolidated order. Identical grounds are raised in these appeals. The grounds raised read as follows:-
“1. The order of the Learned CIT(A) is contrary to law, facts, and circumstances of the case and is liable to be set aside.
2. The order of the Learned CIT(A) suffers from legal infirmity as the Learned CIT(A) failed to appreciate that the rectification order passed u/s 154 of the Act is without jurisdiction, since a rectification u/s 154 of the Act cannot exist independently of an original assessment order.
3. The Learned CIT(A) erred in upholding the action u/s 154 of the Act without appreciating that the said provision empowers only correction of a mistake apparent from record in an existing order and cannot be invoked independently to create or modify an assessment de novo.
4. The Learned CIT(A) failed to note that for the period prior to 01.06.2015, there was no enabling provision under section 200A(1) (c) to compute or levy such fee while processing TDS statements.
5. The Learned CIT(A) failed to appreciate that the amendment to section 200A(1)(c) introduced by the Finance Act, 2015, is prospective in operation and therefore cannot be applied to TDS statements pertaining to any period before 01.06.2015,
6. The Learned CIT(A) failed to appreciate that section 234E by itself creates a charge and liability to pay fee, overlooking that prior to 01.06.2015 there was no statutory machinery to compute or recover such fee, rendering the levy invalid and without jurisdiction.
7. The Learned CIT(A) has erred in confirming the order of the AO despite the existence of divergent judicial views on the issue without considering the principle laid down by the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd. (
88 ITR 192), when two views are possible, the one favourable to the assessee must be followed.
8. The Learned CIT(A) further failed to appreciate that where conflicting judicial views exist, the later view in point of time is to be preferred, which supports the Assessee’s contention that levy of fee under section 234E prior to 01.06.2015 is not legally tenable.
9. The Learned CIT(A) erred in not appreciating that levy of fee under section 234E for a period prior to 01.06.2015 amounts to retrospective application of law, which is impermissible in the interpretation of fiscal matters unless expressly stated by the legislature.
10. The Learned CIT(A) erred in sustaining the levy of interest under section 220(2), which being consequential to an invalid demand under section 234E, is equally unsustainable.
11. The Learned CIT(A) erred both on facts and in law in holding that the time limit for filing the rectification / correction statement had expired. The finding of the Learned CIT(A) is contrary to the statutory provisions applicable for the relevant period.
12. Prior to 01/04/2025, the provisions governing correction statements did not prescribe any specific time limit for filing such corrections. The Appellant had therefore acted within the framework of the law during the relevant assessment period.
13. The Learned CIT(A) failed to appreciate that the amendment brought by the Finance (No. 2) Act, 2024 with respect to time limit to file correction statements cannot be imposed retrospectively. Therefore, the conclusion that the Appellant’s rectification / correction statement is time-barred is legally unsustainable.
14. The CIT(A) erred in dismissing the appeal of the appellant on the ground that the appeal before his good authority was time barred. He has erred in not appreciating the fact that an appeal lies against the rectification order also and not confined to original orders alone.
The Appellant craves leave to alter, amend, modify or raise additional grounds at the time of hearing before this Hon’ble Tribunal”
3. Brief facts of the case are as follows: The assessee is an individual engaged in retail business of electronic products. For the assessment years 2014-15 & 2015-16, assessee had filed his TDS statement for various quarters belatedly. The TDS statements were processed by the CPC u/s.200A of the Act on 30.05.2014 and 31.03.2015. In the said orders passed u/s.200A of the Act, the CPC had levied late fees u/s.234E of the Act. Subsequently, assessee filed rectified TDS statements. The CPC passed rectification order u/s.154 r.w.s.200A of the Act raising the same late fee u/s.234E of the Act levied in the original order passed u/s.200A of the Act. The details of the quarterly statement filed, the orders passed u/s.200A of the Act, orders u/s.154 of the Act, late fee levied u/s.234E of the Act are as follows:-
| AY |
Quarter Ending |
Date of filing of TDS statement |
Order u/s 200A dated |
Order u/s. 154 rws 200A dated |
234E levied |
| 2014-15 |
Qi |
15.05.2014 |
30.05.2014 |
28.03.2025 |
80800 |
|
Q2 |
15.05.2014 |
30.05.2014 |
28.03.2025 |
40000 |
|
Q3 |
15.04.2014 |
30.05.2014 |
28.03.2025 |
00000 |
| 2015-16 |
Q2 |
27.03.2015 |
31.03.2015 |
28.03.2015 |
32600 |
4. Aggrieved by the orders passed u/s.154 r.w.s.200A of the Act, assessee filed appeals before the CIT(A). The CIT(A) dismissed the appeals filed by the assessee. The CIT(A) observed that the TDS statements filed by the assessee for various quarters for assessment year 2014-15 & 2015-16 were processed u/s.200A of the Act on 30.05.2014 & 31.03.2015 charging late fee u/s.234E of the Act. It was held by the CIT(A) that assessee ought to have filed appeals against the original intimation u/s.200A of the Act and not from the correct statement processed by the CPC, TDS on 28.03.2025. It was held by the CIT(A) that subsequent rectified order by the CPC, TDS on 28.03.2025 does not give rise to a fresh or independent cause of action. It was stated that the appeal against the rectified order passed u/s.154 r.w.s. 200A of the Act is barred by limitation and is not maintainable in law. The CIT(A) dismissed the appeal on the ground of limitation and did not consider the merits of the levy u/s.234E of the Act.
5. Aggrieved, assessee has filed the present appeals before the Tribunal. The Ld.AR relied on the grounds raised. The Ld.AR submitted that the Chennai Bench of the Tribunal in the case of Derby Clothing (P.) Ltd. v. ITO [IT Appeal Nos. 309 to 316 (CHNY) of 2026, dated 19.03.2026], after considering the judicial pronouncement has decided the issue in favour of the assessee on merits.
6. The Ld.DR relied on the orders of the CIT(A).
7. We have heard rival submissions and perused the material on record. The provision governing the correction of TDS statement did not prescribe any specific time limit for filing such corrections prior to the period 01.04.2025. The assessee had given corrected TDS statement on 26.03.2025. Therefore, the assessee had acted within the framework of law during the relevant assessment year. The amendment brought about by the Finance (No.2) Act, 2024 with respect to time limit to file correction statements cannot be given retrospective effect. Therefore, the conclusion of CIT(A) that assessee’s rectification / correction statements are timely barred is legally untenable. The CIT(A) has erred in dismissed the appeals on the ground of limitation since appeals lie against the rectification order and also not confined to the original orders passed u/s.200A of the Act alone. The CIT(A) has erred in sustaining the levy of late fee for a period prior to 01.06.2015 when there was no machinery provision for calculation of such fee. Therefore, we are of the view that dismissal of the appeals as time barred is not legally correct and we set aside the orders of the CIT(A).
8. As regards the issues on merits, we find the Chennai Bench of the Tribunal in the case of Derby Clothing Pvt. Ltd., (supra) by following the judgment of Hon’ble Jurisdictional High Court in the case of True Blue Voice India (P.) Ltd. v. Chief CIT (Madras)/[2025] 472 ITR 480 (Madras) and the order of the Chennai Bench of the Tribunal in the case of Avinash Kishore Hemdev v. ITO [IT Appeal Nos. 2421 to 2432 (Chny) of 2025, dated 21.11.2025] had held that levy of late fee u/s.234E of the Act prior to 01.06.2015 is bad in law. The relevant finding of the Chennai Bench of the Tribunal in the case of Derby Clothing Pvt. Ltd., (supra) reads as follows:-
“8. We have heard the rival submissions and perused the material available on record. The solitary issue for consideration is whether the First Appellate Authority (FAA) was justified in confirming the levy of late fee under section 234E of the Act in respect of belated filing of quarterly TDS statements for the period prior to 01.06.2015. Though section 234E of the Act provides for levy of fee for delay in filing TDS statements, the mechanism for computation of such fee while processing the statements under section 200A of the Act was not available prior to 01.06.2015. The enabling provision in section 200A(1)(c) permitting such computation was inserted only with effect from 01.06.2015. Therefore, in respect of TDS statements relating to the period prior to 01.06.2015, levy of late fee under section 234E of the Act through an intimation under section 200A of the Act is not sustainable. This view is fortified by the judgment of the Hon’ble Madras High Court in the case of True Blue Voice India Pvt. Ltd. (supra), wherein it has been held that late fee u/s.234E of the Act cannot be levied while processing the TDS statement u/s.200A of the Act for the period prior to 01.06.2015 because machinery provision enabling such computation was inserted only w.ef.01.06.2015. Following the said judgment of Hon’ble Madras High Court, the Chennai Bench of the Tribunal has also taken a consistent view in the case of Avinash Kishore Hemdev, (supra).
9. The assessee in the statement of case attached along with Form 35 filed before the FAA had referred to the various case laws in support of its contention. However, the FAA has not adverted to the same and has summarily dismissed the appeals by merely extracting the provisions of section 234E of the Act. In light of the judgment of the Hon’ble Jurisdictional High Court in the case of True Blue Voice India Pvt. Ltd., (supra), we hold that the AO, while processing the quarterly TDS statements for the period prior to 01.06.2015 was not empowered to levy late fee u/s.234E of the Act. Accordingly, the levy of such fee for said periods are directed to be deleted. It is ordered accordingly.”
9. In light of the aforesaid judicial pronouncement, we direct deletion of fee levied u/s.234E of the Act. It is ordered accordingly.
10. In the result, the appeals filed by the assessee are allowed.
