TMI Blog2019 (6) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under this section. In the absence of this procedure, a fine could be levied u/s 234E because it was a charging section; but, once a procedure has been provided by the legislature, then it does not give discretion to the Assessing Officer whether he is exercising such powers u/s 234E or he is exercising the powers while processing the statements. It is true that in the present case statements were not filed, but this fact came to the notice of the Assessing Officer while passing the order u/s 206C(6)/206C(7). He processed that fact from the date on which statements ought to be filed by the assessee. Once a procedure has been provided, then it is to be construed that the order has been passed by the Assessing Officer after following the procedures. Merely by mentioning Section 234E in the title of the order, it would not become an order passed u/s 234E in isolation - more particularly when subsequent development shows that these orders are patently invalid and not sustainable, because their foundation holding the assessee in-default and calculating fine from the date of default has been extinguished after the orders of the CIT(A) passed against the orders passed u/s 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, assessee was required to collect taxes at source from the buyer at the time of sale of scrap. Section 206C(1A) further provide that seller will not be required to collect the tax from the buyer if such buyer furnishes to the seller a declaration in writing (in duplicate) in prescribed form and verified in the prescribed manner to the effect that goods referred to in column (2) of the aforesaid table are to be utilised for the purpose of manufacturing, processing or producing article or things. In other words, if the buyer was going to use goods purchased from the assessees in manufacturing activities, and they give a declaration in specified form at the time of buying the goods, then TCS will not require to be collected from such buyer. Apart from these two conditions, the assessee was required to prepare and submit a statement in form no.27EQ to the prescribed income-tax authority within the prescribed time under Rule 31AA of the Income Tax Rules 1962. Thus, according to the AO all these assessees have committed a default within the meaning of section 206C(6) and 206C(7) of the Act. Orders under sections 206C(6) and 206C(7) were passed holding the assessees as assessee-in-defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs recorded in the case of Rakesh Basantilal Ladha as under: 5. The order u/s. 234E as well as written submission of the AR of the appellant as reproduced in initial paragraphs of this appeal order have been considered. The ground of appeal of the appellant is reproduced in initial paragraph of this appeal order. However, this submission of AR of the appellant is not found to be acceptable. It is mentioned that the order passed u/s. 234E of the Act levying the fee for late filing of quarterly statement in form 27EQ for the period prior to 01/06/2015 is not appealable as per section 246A of the IT Act. Charging of fee u/s. 234E has been made by recasting clause (c) of sub-section (1) of section 200A so as to make intimation/order u/s. 200A rectifiable u/s. 154 of the Act and appealable u/s. 246A of the Act only after 01/06/2015. 5.1 The ITO TDS Wd-3, Jamnagar has passed the order in the case of assessee u/s. 234E and not u/s. 200A of the Act. The Hon'ble H igh Court of Gujarat in the case of Rajesh Kourani Vs Union of India (2017),83 taxmann.com 137 has held that With effect from 1/06/20 15, this provision (i.e. provisions of section 200A) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to 01/06/2015 is not appealable as per section 246A of the IT Act. Charging of fee m/s. 234E has been made by recasting clause (c) of sub-section (1) of section 200A so as to make intimation/order u/s. 200A rectifiable u/s. 154 of the Act and appealable u/s. 246A of the Act only after 01/06/2015. 5.2 In view of the facts and legal position as discussed in just preceding paragraph of this appeal order, the appeal of the appellant as filed against the order u/s. 234E of the Act is here by dismissed. 5. The ld. Counsel for the assessee while impugning orders of the Revenue authorities relied on the decision of Maharashtra Cricket Association Vs. DCIT, 74 taxmann.com 6 and also Gajanan Constructions V. DCIT, 73 taxmann.com 380 and contended that intimation generated after processing TDS statement is subject to rectification under section 154 and appealable under section 246A, since demand issued by the AO is deemed to be a notice of payment under section 156. The ld.CIT(A) has dismissed appeals of the assessees on the basis of surmises without examining legality of the issue. He further submitted that subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 206C(6) and 206C(7) of the Act, foundation of order passed under section 234E stands extinguished. These orders are being depended upon the default of the assessee for collection of tax. In other words, if there was no TCS liability, the submission of the form stating zero tax collection in form no.27EQ will be merely a formality. It is more so that fine under section 234E could not exceed element of TCS liability required to be collected by the assessee. This development has taken place after order passed under section 234E as well as after decision of the ld.CIT(A). A perusal of the CIT(A) s impugned orders would indicate that the appeals of the assessees have been dismissed for reasons that no appeal is being provided under the Act against the order passed under section 234E. The ld.CIT(A) has made reference to the decision of Hon ble Gujarat High Court in the case of Rajesh Kourani (supra). Before considering this decision and appreciating the finding of the ld.CIT(A), we would like to take note of section 234E considered by the Hon ble Gujarat High Court w.e.f. 1.7.2015 and section 200A(1). It reads as under: Fee for default in furnishing statements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined to be payable by, or the amount of refund due to, him under clause (c); and (e) amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor: (f) the amount of refund due to the deductor in pursuance of the determination 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. Relevant discussion made by the Hon ble High Court reads as under: 17. In essence, section 234E thus prescribed for the first time charging of a fee for every day of default in filing of statement under sub-section (3) of section 200 or any proviso to sub-section (3) of section 206C. This provision was apparently added for making the compliance of deduction and collection of tax at source, depositing it with Government revenue and filing of the statements more stringent. 18. In this context, we may notice that section 200A which pertains to processing of statements of tax deducted at source provides for the procedure once a statement of deduction of tax at source is filed by the person responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w would amount to a charging section yielding to the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the Revenue to charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. This would have one direct effect. An order passed under section 200A of the Act is rectifiable under section 154 of the Act and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A of the Act, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act. The Karnataka High Court in case of Fatheraj Singhvi (supra) held that section 200A was not merely a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, no fine could be levied under Section 234E of the Act. This contention of the assessee was rejected by the Hon ble High Court and it was held that fine can be levied independently under Section 234E of the Act, because Hon ble Court was of the view that Section 234E is a charging section and for a levy of fee is not depended upon machinery provision. 10. The impugned orders alleged to have been passed under Section 234E by the learned CIT(A) were passed on 30.03.2017. The learned CIT(A), while holding that these orders were passed independently under Section 234E and therefore no appeal is maintainable, failed to take note the amendment carried out in Section 200A(1) with effect from 1st June 2015. It is pertinent to note that Section 200 casts a duty upon the person deducting tax to deposit the same with the Central Government. Sub-section (3) requires to submit statement of such deduction in prescribed form within prescribed time limit as provided under Rule 31AA of the Income-tax Rules, 1962. Such statements are to be processed under Section 200A and, while carrying out this exercise of processing, the Assessing Officer can levy fine as per Section 234E of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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