TMI Blog2017 (11) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue : Shri S.S. Rana CIT-DR For The Assessee : Shri Pratap Gupta ORDER Per Bench This bunch of five appeals is by the assessee against the impugned orders all dated 29/04/2016 of the Ld. First Appellate Authority, New Delhi, challenging the confirmation of levy of late filing fee of ₹ 1600/-, ₹ 6800/- and ₹ 6800/- (AY 2014-15), ₹ 14,400/- ₹ 14,400/- (A.Y. 2015-16), respectively, u/s 234E against the order passed u/s 200A of the Income Tax Act, 1961 (hereinafter the Act). 2. During hearing, Shri Pratap Gupta, ld. counsel for the assessee, claimed that on identical fact, the issue under hand is covered by the decision of the Pune Bench of the Tribunal in the case of Gajanan Constructions vs DCIT, CPC (TDS), (2016) 73 taxman.com 380 (Pune Trib.). The assessee has challenged the power of the officer to charge/collect fee as per the provision of section 234E, whether vested prior to substitution of clause (c) to section 200A of the Act by the Finance Act, 2015 w.e.f. 01/06/2015 and enabling provision in section 200A for raising demand in respect of levy of fee u/s 234E of the Act. On the other hand, Shri S. S.Rana, ld. CIT- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under clause (d) 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, an 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) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act. ( 2) For the purposes 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 sub-section. We are also reproducing hereunder section 234E of the Act for ready reference:- Fee for default in furnishing statements. 234E. ( 1) Without prejudice to the provisions of the Act, where a person fails to deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and / or order passed under section 154 of the Act in charging fees payable under section 234E of the Act. We therefore take up ITA No.1292/PN/2015 as the lead case. The issue raised in the set of appeals is charging of fees payable under section 234E of the Act prior to amendment to section 200A(1)(c) of the Act vide Finance Act, 2015 w.e.f. 01.06.2015, while processing the TDS returns. The assessee has also pointed that the Legislature had inserted clause (c) to section 200A(1) of the Act specifically w.e.f. 01.06.2015 and where there is nothing to suggest that the said amendment was clarificatory or retrospective in nature, hence in respect of TDS statements filed for the period prior to 01.06.2015, late fees charged under section 234E of the Act could not be levied in the intimation issued under section 200A of the Act. 5. In order to adjudicate the issue raised in these appeals, few material facts have to be considered. The assessee was required to deduct tax at source out of payments made on account of salary, interest, etc. for the respective quarters in the accounting period. The Act required the assessee to file quarterly TDS returns intimating the tax deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where the Assessing Officer had issued the intimation under section 200A of the Act, then the same is appealable under which fees had been charged under section 234E of the Act. An application for condoning the delay in filing the appeals was also filed as referred to by the learned Authorized Representative. Referring to the order passed by the CIT(A), the learned Authorized Representative for the assessee pointed out that the order of Assessing Officer was not passed under section 234E of the Act but was passed under section 200A of the Act. The CIT(A) had relied on the ratio laid down by the Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra), which settled the constitutional validity of section 234E of the Act. The arguments before the Hon'ble Bombay High Court were that there was no right to insert the said section. However, no arguments were advanced in respect of applicability of said section for the period prior to 01.06.2015. He further pointed out that firstly, there has to be mechanism to charge fees under section 234E of the Act and prior to insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, there was no mechanism to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Rajasthan High Court in Dundlod Shikshan Sansthan v. Union of India [2015] 235 Taxman 446/63 taxmann.com 243, judgment dated 28.07.2015 had adjudicated the issue relating to whether the fees charged is legal or illegal and had not touched upon the mechanism to levy the fees. In this regard, the learned Authorized Representative for the assessee referred to the ratio laid down by the Hon'ble Bombay High Court in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727, wherein while explaining the principle of obiter dicta it was pointed out that casual representation in order would not decide the order in one way or the other. The learned Authorized Representative for the assessee pointed out that the provisions of section 200A of the Act were inserted earlier. However, section 234E of the Act was inserted later and where section 200A of the Act does not provide for levy of fees by the Assessing Officer till before the amendment w.e.f. 01.06.2015, there was no merit in charging the said levy. He further pointed out that after the amendment w.e.f. 01.06.2015, the Assessing Officer had power to make adjustments in intimation passed under section 200A of the Act itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks on the principle of paying as you earn. He further stated that TDS is source of revenue to the Government to carry out various programmes. Once the tax was deducted, then it was not the deductor's money but it was deducted on account of third party, who claims it as part of his tax payment. The obligation on the deductor was to collect the said tax deducted at source and deposit the same and the deductee had all the rights to claim the benefit of such tax deducted by the deductor. Earlier, under the Act, the onus was upon the deductor to issue certificate for claiming TDS payments. However, since there were various frauds, because of certificate issued by the deductors, the provisions of sub-section 200(3) of the Act were inserted w.e.f. 01.04.2005. He further explained that any person referred to in section 192(1A) of the Act shall implies that it was obligatory and mandatory that statement of tax deducted had to be filed within prescribed time limit . He referred to the proviso to section 200(3) of the Act, which was inserted w.e.f. 01.10.2014, wherein it is provided that correction statement for rectification can also be issued. 12. The learned DR further poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees and as per sub-section (3), late fees has to be paid before filing the statement and where the provisions of both sub-section (1) and (3) to section 234E of the Act are mandatory, since the word used is, shall, then it is obligatory upon the person to pay the said fees. 13. Referring to the decision of Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra) wherein the constitutional validity was challenged, the learned DR referred to paras 13 to 15 and 18 of the said judgment and pointed out that the right to appeal was the creation of statute and the Hon'ble High Court was dealing with constitutional validity but also considered the purpose for which the said section was introduced. Referring to section 200A(1)(c) of the Act, he stated that though the word used is fees, if any, but that means where there is an error or where no fees has been paid, then although the amendment was w.e.f. 01.06.2015, but the amendment was procedural in nature. He stressed that once charging section is there, where the assessee has been asked to pay the fees, then only thing is that the provisions of section 200A of the Act were added in 2010, provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 source, the statute lays down the duty of the payer of certain amounts to deduct tax at source under sections 192 to 194LD, 195 to 196D of the Act. Under section 198 of the Act, it is provided that the tax deducted at source shall for the purpose of computing the income of assessee be deemed to be income received. Under section 199 of the Act, it is further provided that any deduction made in accordance with the provisions of Chapter and paid to the Central Government shall be treated as payment of 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. 16. 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n being an employer, as referred to in sub-section (1A) of section 192 of the Act shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board 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 such time as may be prescribed. Under section 200(3) of the Act, similar responsibility is on any person deducting any sum on or after first day of April, 2005 in accordance with foregoing provisions of the Chapter, including any person as an employer referred to in section 192(1A) of the Act. The onus is upon such person that he shall after paying the tax to the credit of Central Government within prescribed time, prepare such statement for such period as may be prescribed and deliver or cause to be delivered to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any 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 amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount 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 : Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be liable to pay, by way of fees, sum of ₹ 200/- for every day during which the failure continues. The said provisions were inserted by the 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 section have been made applicable to a statement to be delivered or cause to be delivered on or after the first day of July, 2012. 22. Reading the abovesaid provisions of the Act, it transpires that where tax has been deducted at source by a deductor out of the account of deductee, then the onus is upon the deductor under section 200 of the Act to prepare a statement in such form and verified in such manner which is prescribed under the Act in which the particulars of tax deduction at source are to be provided and the said statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed authority did not have the power to charge the said fees, while processing the quarterly statements/returns under section 200A of the Act. 23. Now, looking at various provisions of the Act, the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the Assessing Officer which processing the intimation under section 200A of the Act could charge late fee under the provisions of section 234E of the Act. The assessee claims 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 under section 200(3) of the Act to deposit the fees referred to in section 234E(1) of the Act. The learned DR stressed that fees referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to said substitution 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 prescribed authority in charging of such fees under section 234E of the Act, while exercising jurisdiction under section 200A of the Act. Thus, in the absence of enabling provisions, under which the prescribed authority is empowered to charge the fees, the Assessing Officer while processing the returns filed by the deductor in respect of tax deducted at source can raise the demand on account of taxes, if any, not deposited and charge interest. However, prior to 01.06.2015, the Assessing Officer 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work burden upon the Department due to the fault of the deductor and in this light and to compensate for additional work burden forced upon the Department, fees was sought to be levied under section 234E of the Act. The Hon'ble High Court held that looking at this from this perspective, section 234E of the Act was not punitive in nature but a fee which was a fixed charge for the extra 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 not onerous on the ground that section does not empower the Assessing Officer to condone the delay in late filing the income tax returns or that no appeal is provided from arbitrary order passed under section 234E of the Act. The Hon'ble High Court held that the right to appeal was not a matter of righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided 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 provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. It was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. The Memo explaining the Finance Bill, 2015 very categorically held that currently there does not exist any provision in the Act to enable the processing of TCS 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 234E of the Act while processing the TDS returns/statements filed by a person did not exist when section 234E of the Act was inserted by the Finance Act, 2012. The power to charge fees 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 Officer is not empowered to charge fees under section 234E of the Act while processing the TDS returns filed by the deductor. 29. The Hon'ble Bombay High Court in Rashmikant Kundalia' case (supra) has upheld the constitutional validity of said section introduced by the Finance Act, 2015 w.e.f. 01.06.2015 but was not abreast of the applicability of the said section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. In such scenari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insertion of section 200A in the Act, the existing provisions of section 200A of the Act did not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. In this regard, it was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. In other words, the Assessing Officer is empowered to charge fees payable under section 234E of the Act in the intimation issued after insertion of clause (c) 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 the Act is retrospective in nature, where the Legislature was aware that the fees cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34. Before parting we may refer to reliance placed upon by the learned DR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani's case (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 section 234E of the Act even while processing the TDS statements under section 200A of the Act. In view of the present set of facts, where the Assessing Officer had charged fees under section 234E of the Act while processing the statements under section 200A of the Act before 01.06.2015, there is no merit in the reliance placed upon by the learned DR on the said proposition laid down by the Chennai Bench of Tribunal and we dismiss the same. 35. Another reliance placed upon by the learned DR was in respect of amendment being retrospective or prospective and reliance was placed on the ratio laid down by Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, an intimation is generated specifying the amount payable or refundable. It was further noted that this intimation generated after processing TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. Under the amendment, similar position was given to the processing of TCS statements. In other words, the Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is generated under which, if any amount is found to be payable, then such intimation generated after processing of TDS returns is subject to rectification under section 154 of the Act and/or is also appealable under section 246A of the Act, since the demand issued by the Assessing Officer is deemed to be a notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments from both sides, kept in juxtaposition and analyzed, we find that before us, the assessee has raised a question prior to 01/06/2015, there was no enabling provision in section 200A for raising the demand in respect of levy of fee u/s 234E of the Act. We find that the coordinate Bench of Pune in the case of Gajanan Constructions (supra) has made an elaborate discussion on the issue and decided in favour of the assessee. It is also noted that while coming to a particular conclusion, the Pune Bench of the Tribunal duly considered the decisions relied upon by the Ld. CIT-DR such as from Hon ble Bombay High Court in Rasmikant Kundalia (in para- 6), Hon ble Karnataka High Court in Laxmi Nirman, Bangalore (P.) Ltd. and also the decision of Hon ble Rajasthan High Court in Dundlod Shikshan Sansthan vs UOI (supra)(in para-9 of the order), in its order dated 23/09/2016 along with the decision from Hon ble Apex Court in the case of CIT vs Vatika Township Pvt. Ltd. (2014) 367 ITR 466(SC) to the effect of general principle concerning application of retrospectively of the amendment, wherein, it was held that a legislation is presumed not to be intended to have a retrospective operation. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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