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2016 (10) TMI 429 - ITAT MUMBAI

2016 (10) TMI 429 - ITAT MUMBAI - TM - Levy of fees u/s 234E - intimation issued under section 200A in respect of processing of TDS returns - powers with AO - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adju .....

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/2015, I.T.A. No. 4477/Mum/2015, I.T.A. No. 4605/Mum/2015, I.T.A. No. 4606/Mum/2015, I.T.A. No. 4607/Mum/2015 - Dated:- 24-8-2016 - Shri B.R. Baskaran (AM) & Shri Pawan Singh (JM) For The Assessee : Shri None For The Department : Shri B.S. Bist ORDER Per Bench:- In all these appeals, the solitary issue challenged by the assessee relates to the demand raised by the AO u/s 234E of the Act in the intimation processed u/s 200A of the Act prior to 01-06-2015. None appeared on behalf of the assess .....

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e period prior to 01.06.15, fees under section 234E of the Income Tax act, 1961 (hereinafter referred to as the Act) in respect of defaults in furnishing TDS statements, could be levied in intimation under section 200A of the Act. 2. In some of the appeals there is a representation by the Ld. Counsel/authorized representative on behalf of the assessee. However, in some of appeals, none has come present and adjournment has been sought. However, considering the short and common issue involved in a .....

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endment/substitution of clause (c) to section 200A vide which it has been provided that fees payable under section 234E can be adjusted while processing intimation under section 200A w.e.f. 1.6.2015. 4. Now coming to the facts of these cases, in the course of the processing of the TDS returns, the Assessing Officer (TDS) [hereinafter referred to as the AO(TDS)] raised demand in each of the above cases by way of an intimation issued under section 200A of the Act for levy of fees under section 234 .....

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Counsels for the assessees has been that this issue has already been considered by the Amritsar Bench of the Tribunal in the case of Sibia Healthcare Pvt. Ltd. vs. DCIT (2015) 171 TTJ (ASR) 0145 wherein the Amritsar Bench of the Tribunal has held that since the intimation under section 200A is an appealable order before the Ld. CIT(A) (w.e.f. 1.7.2012) under section 246A(a) and therefore the Ld. CIT(A) could have examined the validity of the adjustments made under the intimation under section 20 .....

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ce Act, 2015 w.e.f. 01.06.15 only. The Tribunal therefore held that the action of the AO in making adjustments with regard to the fees leviable under section 234E while processing the TDS statements under section 200A for the period prior to 1.6.2015, was not legally valid. It has therefore been contended on behalf of the assessees that the TDS statements filed by the assessee has to be processed in the manner as laid down in the provisions of section 200A as in force during the relevant period. .....

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gh Court has upheld the constitutional validity of section 234E. The Ld. D.R. has further submitted that, even otherwise, the section 234E of the Act is an independent section and the AO (TDS) has otherwise jurisdiction to levy penalty for delay in filing TDS statements as provided under section 200(3) of the Act. It has therefore been contended that the AO(TDS) has rightly exercised his jurisdiction while making adjustment of the fees leviable under section 234E for non compliance/delay in fili .....

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the issue whether the fees leviable under section 234E can be adjusted while processing the TDS statements under section 200A of the Act in relation to the period prior to 01.06.15, has neither been raised before the Hon ble Bombay High Court nor has been adjudicated. Hence, the reliance of the Revenue on the decision of the Hon ble Bombay High Court in the case of Rashmikant Kundalia vs. Union of India (supra) so far as the issue is concerned, is of no help to the Revenue. One of the contentio .....

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such aggrieved person can always approach the Hon ble High Court in extraordinary equitable jurisdiction under article 226/227 of the Constitution of India, as the case may be. 8. However, in the cases before us, the grievance of the assessees is not against the levy of fees under section 234E of the Act independently rather, the issue is that while processing the TDS statements under section 200A of the Act, whether or not, the fees leviable under section 234E can be adjusted therein? No doubt, .....

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r to 01.06.15, such adjustment can be made while processing the statements under section 200A of the Act is concerned, we find that the Amritsar Bench of the Tribunal in the case of Sibia Healthcare Pvt. Ltd. vs. DCIT (supra) has held that in the absence of enabling provision under section 200A prior to 01.06.15 such a power was not vested with the AO (TDS). The said decision has been further followed by the Ahmedabad Bench of the Tribunal in a recent decision dated 05.02.16 in the case of Varun .....

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g provision for the period before 01.06.15, the levy of fee under section 234E while processing the TDS statements was not permissible to the AO (TDS). However, the coordinate Chennai Bench of the Tribunal has also examined the other contention of the Revenue that section 234E is an independent section and the fees can be levied by the AO (TDS), independent of the provisions of section 200A, for the default/delay in filing the TDS statements as prescribed under section 200(3) of the Act. The Tri .....

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ver, after 01.06.15 the Assessing Authority is well within his limit to levy fee under section 234E of the Act even while processing the statement under section 200A and making adjustment. The relevant part of the decision of the Chennai Bench of the Tribunal for the sake of completeness is reproduced as under: 4. The Ld. counsel invited our attention to Section 234A of the Act and submitted that when an assessee fails to deliver the statement within the prescribed time, the assessee is liable t .....

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efore filing the statement under Section 200(3) of the Act and the assessing authority has no power to levy the fee. 5. On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that Section 234E of the Act provides for payment of fee, if the assessee fails to deliver the statement as prescribed in Section 200(3) of the Act. Therefore, the Assessing Officer has every authority to levy fee either by a separate order or while processing the statement under Section 200A .....

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ed to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely :- (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely :- (i) any arithmetical error in the statement ; or (ii) an incorrect claim, apparent from an information in the statement (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement ; (c) the sum payable by, or the amou .....

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shall be granted to the deductor: Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation -For the purposes of this sub-section, "art incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement (ii) .....

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Section 200A of the Act. By Finance Act, 2015, with effect from 01.06.2015, the Parliament amended Section 200A by substituting sub-section (1) of clauses (c) to (e). For the purpose of convenience, we are reproducing the amendment made in Section 200A by the Finance Act, 2015 as under:- "In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:- "(c) the fee, if any .....

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mount of refund due to, him 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." Therefore, it is obvious that prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act. The Parliament for the first time enabled the As .....

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0A of the Act. Therefore, this Tribunal is of the considered opinion that the fee levied by the Assessing Officer under Section 234E of the Act while processing the statement of tax deducted at source is beyond the scope of adjustment provided under Section 200A of the Act. Therefore, such adjustment cannot stand in the eye of law. 8. The next contention of the assessee is that Section 234E of the Act says that the assessee "shall be liable to pay" by way of fee, therefore, the assesse .....

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200(3) of the Act. If the assessee fails to pay the fee for the periods of delay, then the assessing authority has all the powers to levy fee while processing the statement under Section 200A of the Act by making adjustment after 01 .06.2015. However, prior to 01 .06.2015, the Assessing Officer had every authority to pass an order separately levying fee under Section 234E of the Act. What is not permissible is that levy of fee under Section 234E of the Act while processing the statement of tax .....

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imprisonment for a term which may be extended to ten years and also liable to fine. For the purpose of convenience, we are reproducing Section 396 of Indian Penal Code, hereunder:- "396. Dacoity with murder - If any one of five or more persons, who are conjointly committing dacoity, commits murder in so committing dacoity, every one of those persons shall be punished with death, or imprisonment for life, or rigorous imprisonment for a term which may extend to ten years, and shall also be l .....

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eans that the Magistrate or Sessions Judge, who tries the accused for an offence punishable under the provisions of Indian Penal Code, in addition to punishment of imprisonment, shall also levy fine. If the contention of the Ld.counsel for the assessees is accepted, then the Magistrate or Sessions Judge, as the case may be, who is trying the accused for the offence punishable under Indian Pencal Code, may not have authority to levy fine. 10. It is well known principle that the fine prescribed un .....

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ulsion under the statutory provision. The Parliament welcomes the citizens to come forward and comply with the provisions of the Act by paying the prescribed fee before filing the statement under Section 200(3) of the Act. However, if the assessee fails to pay the fee before filing the statement under Section 200(3) of the Act, the assessing authority is well within his limit in passing a separate order levying such a fee in addition to processing the statement under Section 200A of the Act. In .....

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is jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A .....

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