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Vidya Vardhani Education and Research Foundation and Others Versus DCIT (CPC) -TDS, Ghaziabad

2017 (1) TMI 1044 - ITAT PUNE

Charging of fees under section 234E - intimation issued by the Assessing Officer under section 200A - Held that:- Amendment to section 200A(1) of the Act is procedural in nature, then the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Accordingly, intimation issued by the Assessing Officer under section 200A of the Act in all the appeals does not stan .....

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; 1945/PUN/2016, 1946/PUN/2016 to 1949/PUN/2016, 1954/PUN/2016, 2000/PUN/2016 & 2001/PUN /2016, 2002/PUN/2016, 2003/PUN/2016, 2004/PUN/2016, 2005/PUN/2016, 2006/PUN/2016, 2007/PUN/2016, 2008/PUN/2016 to 2010/PUN/2016, 2012/PUN/2016, 2013/PUN/2016 to 2016/PUN /2016, 2021/PUN/2016, 2022/PUN/2016, 2104/PUN/2016, 2106/PUN/2016, 2108/PUN/2016 to 2110/PUN/2016, 2112/PUN/2016, 2114/PUN/2016, 2116/PUN/2016, 2118/PUN/2016, 2120/PUN/2016, 2124/PUN/2016 to 2127/PUN/2016, 2128/PUN/2016 & 2129/PUN/20 .....

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ders of CIT(A) relating to different assessment years against respective intimation issued under section 200A(3) of the Income-tax Act, 1961 (in short the Act ). 2. Bunch of present appeals relating to different assessee were heard together on different dates and are being disposed of by this consolidated order as the issue raised in all these appeals was similar. 3. The learned Authorized Representative/s for the assessee at the outset pointed out that the issue raised in the present set of app .....

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d on record and we proceed to decide the present bunch of appeals after hearing both the learned Authorized Representatives. 4. Before adjudicating the issue raised in the present bunch of appeals, it may be pointed out that some of appeals have been filed belatedly by the assessee. The respective assessee have moved applications for condonation of delay pointing out that the delay was because of failure on the part of Accountant Clerk. The appeal in ITA No.2029/PUN/2016 was filed after delay of .....

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4E of the Act have been charged by the Assessing Officer. The Legislature had inserted clause (c) to section 200A(1) of the Act specifically w.e.f. 01.06.2015 and the case of assessee before us was that in such circumstances where the said amendment was introduced w.e.f. 01.06.2015 and there was nothing to suggest that the said amendment was clarificatory or retrospective in nature, then no such late fees could be charged under section 234E of the Act in respect of TDS statements which were file .....

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ated period as provided under the section. Admittedly, in the present appeals, the TDS returns were filed belatedly. The Assessing Officer while processing the TDS returns issued intimation to the respective assessee under section 200A of the Act and levied late filing fees under section 234E of the Act. 7. In appeal, the CIT(A) held that the Assessing Officer was empowered to raise the said demand under section 234E of the Act while issuing intimation under section 200A of the Act. 8. The asses .....

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S, Ghaziabad, relating to assessment years 2013-14 and 2014-15 for the respective quarters deliberated upon the issue and held as under:- 16. We have heard the rival contentions and perused the record. The issue arising in this bunch of appeals is against levy of fees under section 234E of the Act. In order to adjudicate the issue, first reference is being made to the relevant provisions of the Act. Under Chapter XVII headed collection and recovery of taxes and under clause B , deduction at sour .....

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tax on behalf of the person from whose income the deduction was made. The sum referred to in sub-section (1A) of section 192 of the Act and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 17. Section 200 of the Act lays down the duty of the person deducting tax, which reads as under:- 200. (1) Any person deducting any sum in accordance with the foregoing provisions of this Chapter shall pay with .....

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the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, who is responsible for crediting such sum or tax to the credit of the Central Government, shall deliver or cause to be delivered to the prescribed income-tax authority, or to the person authorised by such authority, a statement in such form, verified in such manner, setting forth s .....

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prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified .....

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ard directs. Under sub-section (2A) of the Act, it is provided that where the sum has been deducted in accordance with foregoing provisions of the Chapter, by the office of the Government, then duty is upon the Treasury Officer or the Drawing & Disbursing Officer or any other person, to deliver or cause to be delivered to the prescribed income tax authorities, or to the person authorized by such authority, statement in such form, verified in such manner, setting forth such particulars within .....

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to be delivered to the prescribed income tax authority or any person so authorized, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be provided. The duty is upon a person deducting any sum in accordance with various provisions under the Chapter and also upon an employer who is making deduction out of the payments made to the employees, then sub-section (3) requires that the deductor is to prepare a statement for such period .....

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terly statements to the Director General of Income Tax (Systems) or the persons authorized by them i.e. in respect of deductions under various provisions of the Chapter XVIIB. The Rule further provides that the statements referred to in sub-rule (1) are to be delivered quarterly and the stipulated period of due date of filing the said statement in respect of deductor being an office of the Government and the deductor being other than Government, are provided. The sub-rule (3) of Rule 31A of the .....

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t source, then processing of statement is as per the provisions of section 200A of the Act. The said section was inserted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. The said section 200A of the Act reads as under :- 200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:- (a) the sums .....

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section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and (e) the amount of refund due to the deductor in pursuance of the determination under clause (c) 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 .....

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poses of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said subsection. 20. Section 200A of the Act lays down the manner in which the statements of tax deducted at source are to be processed for issuing the intimation. First of all, the sums deductible under the Chapter are to be computed and inter .....

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paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and (e) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor. 21. As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be comput .....

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Finance Act, 2012 w.e.f. 01.07.2012. Under sub-section (2), it is further provided that the amount of fees referred to in sub-section (1) shall not exceed the amount of tax deductible or collectable, as the case may be. Sub-section (3) further lays down that the amount of fees referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section 200(3) of the Act or the proviso to section 206C(3) of the Act. The provisions of said s .....

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to be provided and the said statement is to be delivered or cause to be delivered within such time as may be prescribed. Rule 31A of the Rules provided the time limit for the furnishing of statement for tax deduction at source on quarterly basis. Section 234E of the Act levies fees for default in furnishing the statements of tax deducted at source. Such fees is to be paid before delivering or causing to be delivered a statement in accordance with section 200(3) of the Act or proviso to section .....

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furnished by the deductor, no doubt, under section 200 of the Act, but the same has to be processed by the prescribed authority as per provisions of section 200A of the Act. In case there is any variation in the tax, sum deductible under the Chapter and / or their payment, the Assessing Officer is empowered to make adjustments in this regard and also reject incorrect claim made by the deductor which is apparent from the information in the statement filed by the deductor. Further, the Incometax .....

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h shall be computed in accordance with the provisions of section 234E of the Act. The said provision to charge fees by the prescribed authority has been substituted for earlier provisions by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to the said substitution though the provisions of section 234E of the Act for payment of fees for default in furnishing the statement were inserted by the Finance Act, 2012 w.e.f. 01.07.2012, the prescribed authority did not have the power to charge the said fee .....

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that the Assessing Officer at best could charge the difference in tax deducted and not paid in Treasury from the deductor and / or any interest payable on such deduction of tax at source. However, till substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015, the Assessing Officer was not empowered to charge fees under section 234E of the Act. The case of Revenue on the other hand, was that it was the duty of deductor while furnishing the statement und .....

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d at source in time and if not so, then with interest and consequently, where the tax was not paid in time and interest was not paid in time and then, where the statement of tax deducted at source could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees under section 234E of the Act. However, in case any default occurs due to the non-payment of fees by the assessee in this regard, then the provisions which has to be considered is section .....

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t the prescribed authority has been vested with the power to charge fees under section 234E of the Act only with regard to levy of fees by the substitution made by Finance (No.2) Act, 2015 w.e.f. 01.06.2015. Once the power has been given, under which any levy has to be imposed upon tax payer, then such power comes into effect from the date of substitution and cannot be applied retrospectively. The said exercise of power has been provided by the statute to be from 01.06.2015 and hence, is to be a .....

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y by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to said substation, the Assessing Officer had no authority to charge the fees under section 234E of the Act while issuing intimation under section 200A of the Act. Before exercising the authority of charging any sum from any deductor or the assessee, the prescribed authority should have necessary power vested in it and before vesting of such power, no order can be passed by the .....

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does not have the power to charge fees under section 234E of the Act while processing TDS returns. In the absence of enabling provisions, levy of fees could not be effected in the course of intimation issued under section 200A of the Act prior to 01.06.2015. 26. The Amritsar Bench of Tribunal in Sibia Healthcare (P) Ltd. Vs. DCIT (2015) 121 DTR 81 (Asr) (Trib) had held that the adjustment in respect of levy of fees under section 234E of the Act was indeed beyond the scope of permissible adjustme .....

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al in M/s. Globe Ecologistics Ltd. Vs. DCIT in ITA Nos.2689 -2691/Ahd/2015, ITA No.2692/Ahd/2015, relating to assessment year 2014-15, ITA No.2693/Ahd/2015, relating to assessment year 2013-14 and ITA Nos.2694- 2695/Ahd/2014, relating to assessment year 2013-14, vide consolidated order dated 26.11.2015 and Chandigarh Bench of Tribunal in M/s. Khanna Watches Ltd. Vs. DCIT in ITA Nos.731 to 735/CHD/2015, relating to assessment years 2014-15 & 2013-14, order dated 29.10.2015. 27. While deciding .....

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eturns would have cascading effect. It was further observed by the Hon ble High Court that under the Income-tax Act, where there is an obligation on the Income-tax Department to process the income-tax returns within specified period from the date of filing, the returns could not be accurately processed of such person on whose behalf tax has been deducted i.e. deductee, until information of such deductions is furnished by the deductor within the prescribed time. Since the substantial number of de .....

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ra service which the Department had to provide due to the late filing of TDS statements. It was further held by the Hon ble High Court that late filing of TDS returns / statements was regularized by payment of fees as set out in section 234E of the Act. Therefore, the findings of Hon ble High Court were thus, that the fees sought to be levied under section 234E of the Act was not in the guise of tax sought to be levied on the deductor. The provisions of section 234E of the Act were held to be no .....

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ary equitable jurisdiction under Article 226/227 of the Constitution as the case may be. The Hon ble High Court therefore, observed that simply because no remedy of appeal was provided for the provisions of section 234E of the Act, the same cannot be said to be onerous and section 234E of the Act was held to be constitutionally valid. The constitutional validity of provisions of section 234E of the Act has also been upheld by the Hon ble Rajasthan High Court in M/s. Dundlod Shikshan Sansthan &am .....

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ot maintainable and also (b) there is no merit in the claim of the assessee that the Assessing Officer is not empowered to charge fees under section 234E of the Act before insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. The learned Authorized Representative for the assessee on the other hand, drew our attention to the Memorandum to the Finance Bill, 2015 while introducing the said clause (c) to section 200A(1) of the Act. The Finance Bill took no .....

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section 234E of the Act to provide for levy of fees on late furnishing of TDS / TCS statements. The Memo further took note of the fact that the Finance (No.2) Act, 2009 inserted section 200A in the Act, which provided for furnishing of TDS statements for determining the amount payable or refundable to the deductor. It further took note that however, as section 234E of the Act was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not .....

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CS returns and hence, a proposal was made to insert a provision in this regard and also the post provision shall incorporate the mechanism for computation of fees payable under section 234E of the Act. The Finance Bill further refers to the existing provisions of the Act i.e. after processing of TDS statement, intimation is generated specifying the amount payable or refundable. This intimation generated after processing of TDS statement is (i) subject to rectification under section 154 of the Ac .....

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of the scheme of payment of TDS / TCS by the Government, deductor / collector which are not relevant for deciding the issue in the present appeal and hence, the same are not being referred to. The Finance Bill further provided that the amendment would take effect from 01.06.2015. 29. The perusal of Memo explaining the provision relating to insertion of clause (c) to section 200A of the Act clarifies the intention of Legislature in inserting the said provision. The provisions of section 234E of t .....

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ction 234E of the Act were not on statute when the Finance (No.2) Act, 2009 was passed, no provision was made for determining the fees payable under section 234E of the Act at the time of processing the TDS statements. So, when section 234E of the Act was introduced, it provided that the person was responsible for furnishing the TDS returns / statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the a .....

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under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, then in such cases, the Assessing Off .....

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scenario, we find no merit in the plea of learned CIT-DR that the Hon ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) has laid down the proposition that fees under section 234E of the Act is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A of the Act prior to 01.06.2015. 31. Another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion .....

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essing Officer to collect the said fees chargeable under section 234E of the Act, it is incumbent upon the Legislature to provide mechanism for the Assessing Officer to charge and collect such fees. In the absence of enabling provisions, the Assessing Officer while processing the TDS statements, even if the said statements are belated, is not empowered to charge the fees under section 234E of the Act. The amendment was brought in by the Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment w .....

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ended to have a retrospective operation. Idea behind the rule is that current law should govern current activities . The Memo explaining the Finance Bill, 2015 very clearly also recognizes that and refers to the current provisions of sub-section (3) to section 200 of the Act, under which the deductor is to furnish TDS statements. However, as section 234E of the Act was inserted after insertion of section 200A in the Act, the existing provisions of section 200A of the Act did not provide for dete .....

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) to section 200A(1) of the Act w.e.f. 01.06.2015. The Legislature itself recognized that under the existing provisions of section 200A of the Act i.e. prior to 01.06.2015, the Assessing Officer at the time of processing the TDS statements did not have power to charge fees under section 234E of the Act and in order to cover up that, the amendment was made by way of insertion of clause (c) to section 200A of the Act. In such scenario, it cannot be said that insertion made by section 200A(1)(c) of .....

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lied to processing of TDS returns / statements prior to 01.06.2015. 33. We further find that in recent judgment dated 26.08.2016, the Hon ble Karnataka High Court in Writ Appeal Nos.2663-2674/2015(T-IT) & Ors in Sri Fatheraj Singhvi & Ors Vs. Union of India & Ors has quashed the intimation issued under section 200A of the Act levying the fees for delayed filing the TDS statements under section 234E of the Act. The Hon ble High Court notes that the Finance Act, 2015 had made amendment .....

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already referred to the decision of Hon ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) in this regard, wherein the constitutional validity of section 234E of the Act has been upheld. 34. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under .....

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he learned CITDR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani Vs. DCIT (supra) on another aspect wherein it was held that before 01.06.2015, whether the Assessing Officer had authority to pass a separate order under section 234E of the Act levying fees for delay in filing the TDS statements under section 200(3) of the Act; the Tribunal held yes that the assessing authority had such power and after 01.06.2015, the Assessing Officer was within his limit to levy fees under sec .....

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was in respect of amendment being retrospective or prospective and reliance was placed on the ratio laid down by Hon ble Delhi High Court in CIT Vs. Naresh Kumar (supra). However, in view of our decision in the paras hereinabove, where power is being enshrined upon the Assessing Officer to levy or charge while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The Hon ble Delhi High Court was conside .....

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