TMI Blog2018 (5) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER D.S. SUNDER SINGH, Accountant Member: These appeals filed by the assessee are directed against common order of the Commissioner of Income Tax (Appeals) {CIT(A)}, Vijayawada vide ITA No.201 202/CIT(A)/VJA/2015-16 dated 4.10.2017 for the assessment years 2013-14 2014-15. 2. All the grounds of appeal are related to the levy of late fee u/s 234E of the Income Tax Act, 1961 (hereinafter called as 'the Act'). The assessee required to submit E-statements of TDS u/s 200(3) of the Act for the quarter ending 2, 3 4 of the financial year 2012-13 relevant for the assessment year 2013-14. Since the assessee filed E-statements with a delay of 212 days for the quarter ending September, 120 days for the quarter ending December and 196 days for the quarter ending March-2013, the A.O. levied the late fee of ₹ 42,400/-, ₹ 24,000/- ₹ 39,200/- respectively for the quarters ending Sept, Dec and March 2012-13. The due dates for filing E-statements, date of filing the statement, the delay and the late fee charged u/s 234E of the Act is as under: S.No Q.No Form Type Ty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or levying fee for certain defaults in filing statements, and fee prescribed under section 234E could be levied even without a regulatory provision being found in section 200A for computation of late fee. The Ld. A.R. submitted that the coordinate bench of this Tribunal considered the decision of Hon ble Karnataka High court and decided the issue in favour of the assessee in Challapalli Exports Limited and others Vs. ITO (TDS) Ward-1, Guntur in ITA Nos.179 to 182/Vizag/2016 dated 16.2.2017 and held that the late fee u/s 234E of the Act cannot be levied while processing the TDS statements u/s 200A of the Act before 1.6.2015. The Ld. A.R. further submitted that there are two judgements of hon ble High courts with contradicting views, the decision of Hon ble Karnataka High Court is in favour of the assessee while the decision of Hon ble Gujarat High Court cited (supra) is in favour revenue for levy of late fee, in the circumstances Hon ble High Court of Andhra Pradesh jurisdictional High court in the case of State of Andhra Pradesh Vs. Commercial Tax Officer in 169 ITR 0564 held that the decision which is most favourable to the assessee required to be considered. Similarly, Hon ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of State of Andhra Pradesh Vs. Commercial Tax Officer 169 ITR 0564 cited (supra) which reads as under: 13. Reference may also be invited to the decision of the Bombay High Cour t in Subramanian, ITO vs. Siemens India Ltd. (1985) 36 CTR (Born) 197 (1985) 156 ITR 11 (Born), The question that arose for consideration in this case is whether the ITO is bound by the decision of a single Judge or a Division Bench of the Court within whose jurisdiction he is operating even if an appeal has been preferred against such decision and is pending. The following observations of the Bombay High Court may be extracted: So far as the legal posi tion is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is (functioning), irrespect ive of the pendency of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a confl ict between dif ferent High Courts, he must follow the decision of the High Court within w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer to determine fee u/s 234E of the Act, brought about w.e.f. 1.6.2015 held to be prospective, hence no computation of fee for demand or intimation for fee u/s 234E of the Act could be made for TDS deducted for respective assessment year prior to 1.6.2015. We find that the Hon ble High Court of Karnataka, in the said case held that u/s 200A of the Act, the A.O. cannot levy fee u/s 234E of the Act, before insertion of sub-clause (c) into section 200A of the Act, by the Finance Act, 2015 w.e.f. 1.6.2015. The relevant portion of the order is extracted below. As per section 200(3) read with rule 31A of the Income Tax Rules, 1962 a tax deductor is required to file quarterly statement of such taxes deducted at source by him as TDS and for the period in question, the relevant dates for filing of such statement is as follows: (i) 30th June 15th July of the financial year, (ii) 30th September - 15th October of the financial year; (iii) 31St December - 15th January of the financial year; and (iv) 31st Mar 15th May of the following financial year. [Para 8] It may be recorded that section 200(3) requiring to file formal TDS statement within the aforesaid each quarter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of furnishing of statements etc. Therefore, if there was failure to submit the statement for TD per section 234E, the fee payable is provided but the mechanism provided was that if there was failure to fur statements within the prescribed date, the penalty under section 271H (1) and (2) could be imposed. However, ut subsection (3) of section 271H, the exception is provided that no penalty shall be levied for the failure referred under clause (a) of sub-section (1) if the person proves that after paying TDS with the fee and interest the amount credited and he had delivered or caused to deliver the statement within one year from the time prescribed submission of the said statement. To put it in other words, for failure to submit the statements, the penalty provided under section 271(1 )(a) cannot be imposed if the deductor complies with the requirement of sub-section (3) of sec 271H. Hence, it can be said that the fee provided under section 234E would take out from the rigors of penalty u section 271H but of course subject to the outer limit of one year as prescribed under sub-section (3) of section 2 It can also be said that when the Parliament intended to insert the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been brought about with effect from 1-6-2015 cannot be said as only by way of a regulatory mode or a mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a mechanism by insertion of any provision made in the statute book, may have a retroactive character but, what provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also 1 which may be required to be considered before such provisions is held to be retroactive in nature. Further, provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee simultaneously mode and the manner of its enforceability is also required to be considered and examined. Not only if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects required to be considered before one considers regulatory mechanism or provision for regulating the mode and of recovery and its enforceability as retroactive. If at the time when the fee was provided under section 234E, the I also provided for its utility for giving privilege under section 271H(3) that too by expressly putti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand or the intimation for the section 234E could be made for the TDS deducted for the respective assessment year prior to 1-6-2015. Hence, ti notices under section 200A by the respondent authority for intimation for payment of fee under section 234E can without any authority of law and the same are quashed and set aside to that extent. [Para 24] As such, as recorded earlier, it is on account of the intimation received under section 200A for making computation demand of fees under section 234E, the same has necessitated the appellant to challenge the constitutional validity 234E. When the intimation of the demand notices under section 200A is held to be without authority of law s relates to computation and demand of fee under section 234E, it is found that the question of further scrutiny for constitutional validity of section 234E would be rendered as an academic exercise because there would not be an: the part of the petitioners to continue to maintain the challenge to constitutional validity under section 234E. At th may also be recorded that the appellant had also declared that if the impugned notices under section 200A are so far as it relates to computation and int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 while processing the intimation under section 200A could charge late fee under the provisions of section 234E. 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(l) by the Finance Act, 2015 with effect from 1-6-2015, the Assessing Officer was not empowered to charge fees under section 234E . The case of revenue on the other hand, was that it was the duty of deductor while furnishing the statement under section 200(3) to deposit the fees referred to in section 234E( I). The revenue stressed that fees referred to in sub-section (1) had to be paid while delivering or causing to deliver the statement in accordance with provisions of section 200(3) or the proviso to section 206C(3). However, various regulations and the statutory provisions in this regard point out that undoub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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, while exercising jurisdiction under section 200A . 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 1-6-2015, the Assessing Officer does not have the power to charge fees under section 234E 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 prior to 1-6- 2015.[Para 24] The perusal of Memorandum to the Finance Bill, 2015 explaining the provision relating to insertion of clause (c) to section 200A clarifies the intention of Legislature in inserting the said provision. The provisions of section 234E were inserted by the Finance Act, 2012, under which the provision was made for levy of fees for late furnishing TDS/TCS statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) has laid down the proposition that fees under section 234E is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A prior to 1-6- 201 5[Para 29] Another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 with effect from 1-6-2015 by way of insertion of clause (c) to section 200A(l) is clarificatory or is prospective in nature and is not applicable to the pending assessments. Undoubtedly, the provisions of section 234E were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements/returns were filed belatedly to pay the fees as per said section. However, in cases, where the assessee has failed to deposit the said fees, then in order to enable the Assessing Officer to collect the said fees chargeable under section 234E, 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 fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g made with effect from 1-6-2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns/statements prior to 1-6-2015. [Para 3 1 ] In recent judgment dated 26-8-2016. the Karnataka High Court in Writ Appeal Nos.2663-2674/2015(T IT) in Fatheraj Singhvi v. Union of India [2016] 73 taxmann.com 252 has quashed the intimation issued under section 200A levying the fees for delayed filing the TDS statements under section 234E. The High Court notes that the Finance Act, 2015 had made amendments to section 200A enabling the Assessing Officer to make adjustments while levying fees under section 234E was applicable with effect from 1-6 2015 and has held that it has prospective effect. Accordingly, the High Court held that intimation raising demand prior to 1- 6-2015 under section 200A levying section 234E late fees is not valid.However, the High Court kept open the issue on constitutional validity of section 234E . The decision of Bombay High Court in Rashmikant Kundalia's case (supra) has already been referred in this regard, wherein the constitutional validity of section 234E has been upheld.[Para 32] Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmise that first of all, no appeal is provided against the intimation issued under section 200A. Further, the Commissioner (Appeals) has also decided the issue on merits and the assessee is in appeal on both these grounds. Vis- -vis the first issue of maintainability of appeal against the intimation issued under section 200A, it is held that such intimation issued by the Assessing Officer after processing the TDS returns is appealable. The demand raised by way of charging of fees under section 234E is under section 156 and any demand raised under section 156 is appealable under section 246A( 1 )(a) and (c). Accordingly, the findings of Commissioner (Appeals) in this regard are reversed. Similar proposition has been down by Mumbai Bench of Tribunal in bunch of cases with lead order in Kash Realtors (P.) Ltd. v. ]TO [IT Appeal No.4199 (Mum.) of 2015, relating to assessment year 2013-14, consolidated order dated 27-7-2016, which had also decided the issue of charging of fees under section 234E in favour of the assessee following the decisions of other Benches of Tribunal. Once intimation issued under section 200A(l) is appealable order before the Commissioner (Appeals) under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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