TMI Blog2019 (12) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for Assessment Year [in short referred to as AY ] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-60, Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-60/IT-492/CPC(TDS)Rg-2/2013-14 dated 04/06/2018 on following grounds of appeal: - 1. On the facts and circumstances of the case and in law the Commissioner of Income Tax (A) [CIT-A] erred in not appreciating a fact that the Assessing Officer (AO) has levied the late fees without any authority under law. The appellant prays that the late fees levied by the AO be deleted. 2. On the facts and circumstances of the case and in law CIT-A erred in upholding the levy of Fees and dismissing the appeal of the appellant without appreciating a fact that the decision of Hon'ble Karnataka High Court in the case of Shree Ayappa Educational Charitable Trust (Writ Petition 618/2015) was dtd. 12th December, 2017, which is subsequent to the decision of Gujarat High Court dtd. 20th June, 2017 and as per the judicial discipline of our country, it has a binding effect and applicable to appellant. The action of learned CIT-A is against the provision of judicial system of our country and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral cases, few of which have already been enumerated in the impugned order. This decision of Hon ble Karnataka High Court was stated to be followed in by same court in its subsequent decision dated 12/12/2017 rendered in Writ Petition No. 618/2015 filed by Shree Ayappa Educational Charitable Trust . However, it was also pointed out that there was a conflicting decision by Hon ble Gujarat High Court in Rajesh Kourani V/s Union of India (297 CTR 502 20/06/2017) wherein it was held that Section 234E was a charging provision creating a charge for levy of fees for defaults in filing of TDS statements and the same could be levied even without a regulatory provision being found in Section 200A for computation of fees. In the above background, it was submitted that in case of conflicting judgement of two non-jurisdictional High Courts, the view favorable to the assessee should be taken in terms of the decision of Hon ble Supreme Court rendered in CIT V/s Vegetable products Ltd. (1972 88 ITR 192). 2.2 The learned CIT(A), going by the law of stare decisis as explained by Hon ble Bombay High Court in CIT V/s Thana Electric Supply Ltd. (206 ITR 727) concluded that in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Rules, 1962 (hereinafter referred to as 'Rules') 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 March - 15th May of the following financial year. 9 . It may be recorded that Section 200(3) requiring to file formal TDS statement within the aforesaid each quarter was inserted on 1.4.2005 and at the relevant point of time, Section 272A(2)(k) provided for the penalty of ₹ 100/- per day for each day of default in filing TDS statement and such provision also came to be inserted with effect from 1.4.2005. On 1.4.2010, Section 200A was inserted providing for the processing of the TDS statement and the consequent issuance of the intimation to the deductor, the same determined as payable by it or refundable by it. But, the relevant aspect is that, in initial provisions of Section 200A, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishes incorrect information in the statement which is required to be delivered or caused to be delivered under sub section (3) of section 200 or the proviso to subsection (3) of section 206C. (2) The penalty referred to in sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. (3) Notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub section (3) of section 200 or the proviso to sub-section (3) of section 206C before the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement. (4) The provisions of this section shall apply to a statement referred to in subsection (3) of section 200 or the proviso to sub section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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. 13 . When the returns for TDS filed by the respective appellant-petitioners were processed in purported exercise of the power under Section 200A, the amount of fee under Section 234E is computed and determined. The demand is made and the intimation given under Section 200A includes the computation and the determination of the fee payable by the appellant-petitioners. 14 . We may now deal with the contentions raised by the learned counsel for the appellants. The first contention for assailing the legality and validity of the intimation under Section 200A was that, the provision of Section 200A(1)(c), (d) and (f) have come into force only with effect from 1.6.2015 and hence, there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payable is provided but the mechanism provided was that if there was failure to furnish statements within the prescribed date, the penalty under Section 271H (1) and (2) could be imposed. However, under sub-section (3) of Section 271H, the exception is provided that no penalty shall be levied for the failure referred to under clause (a) of sub-section (1) if the person proves that after paying TDS with the fee and interest the amount is credited and he had delivered or caused to deliver the statement within one year from the time prescribed for 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 subITA section (3) of Section 271H. Hence, it can be said that the fee provided under Section 234E would take out from the rigors of penalty under Section 271H but of course subject to the outer limit of one year as prescribed under sub-section (3) of Section 271H. It can also be said that when the Parliament intended to insert the provisions of Section 234E providing for fee simultaneously the utility of such fee was for conferring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(m) to deliver or cause to be delivered a statement within the time as may be prescribed under sub-section (2A) of section 200 or sub-section (3A) of section 206C,] he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: Provided that the amount of penalty for failures in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns under sections 206 and 206C and 71[statements under sub-section (2A) or sub section (3) of section 200 or the proviso to sub-section (3) or under sub-section (3A) of section 206C] shall not exceed the amount of tax deductible or collectible, as the case may be: Provided further that no penalty shall be levied under this section for the failure referred to in clause (k), if such failure relates to a statement referred to in subsection (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. ** ** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. Further, when any provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee independently simultaneously mode and the manner of its enforceability is also required to be considered and examined. Not only that, but, if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects will be required to be considered before one considers regulatory mechanism or provision for regulating the mode and the manner of recovery and its enforceability as retroactive. If at the time when the fee was provided under Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the learned counsel for respondent-Revenue that insertion of claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent. 25 . As such, as recorded earlier, it is on account of the intimation received under Section 200A for making computation and demand of fees under Section 234E, the same has necessitated the appellant to challenge the constitutional validity of Section 234E. When the intimation of the demand notices under Section 200A is held to be without authority of law so far as it relates to computation and demand of fee under Section 234E, we find that the question of further scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under Section 234E of the Act. At this stage, we may also record that the learned counsels appearing for the appellant had also declared that if the impugned notices under Section 200A are set aside, so far as it relates to computation and intimation for payment of fee under Section 234E, the appellant-petitioners would not pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and depositing the tax in the Government within the time prescribed. With effect from 01.07.2012, section 234E was introduced in the Act for levying fee for default in furnishing the statement of tax deducted or collected at source. As per rule 31A of the Rules, the person responsible for deduction of tax in terms of sub-section (3) of section 200 would have to file quarterly statements in prescribed form. Sub-rule (2) of rule 31A prescribed dates by which such statements would have to be filed. 4 . Section 200A of the Act pertains to processing of statements of tax deducted at source. This provision provides for processing the statement filed by person deducting the tax. Prior to 01.06.2015, this provision did not contain any reference to the adjustment of fee to be computed in accordance with the provisions of section 234E of the Act. This provision was made only with effect from 01.06.2015. 5 . In the petition, the petitioner has raised following threefold grievances: I. That section 234E of the Act is ultra-vires and unconstitutional. II. Rule 31A of the Rules insofar as it prescribes longer period for the Government to file the statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singhvi v. Union of India [2016] 73 taxmann.com 252, in which, the Court has taken a view that the amendment in section 200A with effect from 01.06.2015 cannot have retrospective effect. 8 . On the other hand learned counsel Shri Manish Bhatt for the department opposed the petition contending that two different time limits for filing statements under rule 31A are for Government and nonGovernment agencies. Looking to the multilayered system of operation of the Government agencies and overall workload, the legislature thought it fit to grant 15 days additional time to the Government agencies to file the statements. This is therefore not a case of discrimination, but a case of reasonable classification. 9 . With respect to the amendment in section 200A, counsel submitted that the charging provision is section 200E of the Act. Section 200A merely provides a mechanism. Such a provision cannot govern the charging provision. Even in absence of amendment in section 200A, the Assessing Officer was always authorized to levy fee in terms of section 200E of the Act. At best, the amendment in the said provision should be seen as clarificatory or providing a mechanism whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in subsection( 3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. 13 . With effect from 01.07.2012, the legislature also introduced section 271H of the Act providing penalty for failure to furnish statements required to be filed under subsection (3) of section 200 or under proviso to sub-section (3) of section 206C of the Act. As per sub-section (2) of section 271H in case of default to file the statements, the assessee may be liable to penalty of not less than rupees ten thousand but not more than rupees one lakh. Under sub-section (3) of section 271H however, such penalty would be avoided if the assessee proves that he had paid the tax deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. With effect from 01.06.2015, sub-section (1) of section 200A was amended. In the amended form, the same provision reads as under: Section 200A(1) Processing of statements of tax deducted at source. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed forms as required under sub-section (3) of section 200. Sub-rule (2) of rule 31A lays down the time limit for filing such quarterly statements and provides as under: (2) Statements referred to in sub-rule (1) for the quarter of the financial year ending with the date specified in column (2) of the Table below shall be furnished by- (i) the due date specified in the corresponding entry in column (3) of the said Table, if the deductor is an office of Government; and (ii) the due date specified in the corresponding entry in column (4) of the said Table, if the deductor is a person other than the person referred to in clause (i) TABLE Sl. No. Date of ending of quarter of financial year Due date Due date (1) (2) (3) (4) 1 30th June 31st July of the financial year 15th July of the financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y statements required at many stages, in our opinion, the same was perfectly legitimate. Looking to the differences between the Government agencies and private assessees in the context of providing the last date for filing the statements, do not form a homogeneous class which cannot be further bifurcated. 16 . We now come to the petitioner's central challenge viz. of non permissibility to levy fee under section 234E of the Act till section 200A of the Act was amended with effect from 01.06.2015. We have noticed the relevant statutory provisions. The picture that emerges is that prior to 01.07.2012, the Act contained a single provision in section 272A providing for penalty in case of default in filing the statements in terms of section 200 or proviso to section 206C. Such penalty was prescribed at the rate of ₹ 100 for every day during which the failure continued. With effect from 01.06.2012, three major changes were introduced in the Act. Section 234E as introduced for the first time to provide for charging of fee for late filing of the statements. Such fee would be levied at the rate of ₹ 200/- for every day of failure subject to the maximum amount of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision can override or overrule a charging provision. We are unable to see that section 200A of the Act creates any charge in any manner. It only provides a mechanism for processing a statement for tax deduction and the method in which the same would be done. When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements. 20 . Even in absence of section 200A of the Act with introduction of section 234E, it was always open for the Revenue to demand and collect the fee for late filing of the statements. Section 200A would merely regulate the manner in which the computation of such fee would be made and demand raised. In other words, we cannot subscribe to the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etty (supra) was rendered in entirely different background. Issue involved was of charging capital gain on transfer of a capital asset. In case on hand, the asset was in the nature of goodwill. The Supreme Court referring to various provisions concerning charging and computing capital gain observed that none of these provisions suggest that they include an asset in the acquisition of which no cost can be conceived. In such a case, the asset is sold and the consideration is brought to tax, what is charged is a capital value of the asset and not any profit or gain. This decision therefore would not apply in the present case. 22 . In the result, petition fails and is dismissed. 3.4 Admittedly, there is no decision by Hon ble Bombay High Court on the stated issue. The decision of Mumbai Tribunal as referred to in the impugned order has been rendered prior to the aforesaid decision of Hon ble Gujarat High Court and therefore, no guidance could be obtained from the same. 3.5 The Ld. CIT(A), observing the conflicting decisions, chose to prefer the later decision of Hon ble Gujarat High Court following the law of stare decisis as explained by Hon ble Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle of binding precedent. This will take us to the question whose decision binds whom. For deciding whose decision is binding on whom, it is necessary to know the hierarchy of the courts. In India, the Supreme Court is the highest court of the country. That being so, so far as the decisions of the Supreme Court are concerned, it has been stated in article 141 of the Constitution itself that : The law declared by the Supreme Court shall be binding on all courts within the territory of India. In that view of the matter, all courts in India are bound to follow the decisions of the Supreme Court. Though there is no provision like article 141 which specifically lays down the binding nature of the decision of the High Courts, it is a well-accepted legal position that a single judge of a High Court is ordinarily bound to accept as correct judgments of courts of co-ordinate jurisdiction and of the Division Benches and of the Full Benches of his court and of the Supreme Court. Equally well-settled is the position that when a Division Bench of the High Court gives a decision on a question of law, it should generally be followed by a co-ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view, the result would be utter confusion. The position would be equally bad where a judge sitting singly in the High Court is of opinion that the previous decision of another single judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench. The above decision was followed by the Supreme Court in Baradahanta Mishra v. Bhimsen Dixit, AIR 1972 SC 2466, wherein the legal position was reiterated in the following words (at page 2469) : It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wati J. (as his Lordship then was) in Addl. District Magistrate, Jabalpur v. Shivahant Shukla, AIR 1976 SC 1207, 1378, would undoubtedly be entitled to great weight, but an obiter cannot take the place of the ratio. Judges are not oracles . Such observations do not have any binding effect and they cannot be regarded as conclusive. As observed by the Privy Council in Baker v. The Queen [1975] 3 All ER 55 (at page 64), the court's authoritative opinion must be distinguished from propositions assumed by the court to be correct for the purpose of disposing of the particular case. This position has been made further clear by the Supreme Court in a recent decision in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297, at page 320, where it was observed : It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing decision and direct the papers to be placed before the Chief Justice to enable him to constitute a larger Bench to examine the question (see Food Corporation of India v. Yadav Engineer and Contractor, AIR 1982 SC 1302). (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench. (iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of the earlier decisions. (d) The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount of stretching of the doctrine o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged under section 234E of the Act. The case of assessee before us is that the issue is squarely covered by various orders of Tribunal, wherein the issue has been decided in respect of levy of late filing fees under section 234E of the Act, in the absence of empowerment by the Act upon Assessing Officer to levy such fees while issuing intimation under section 200A of the Act. The Tribunal vide order dated 21.09.2016 with lead order in Maharashtra Cricket Association v. Dy. CIT [2016] 74 taxmann.com 6 (Pune - Trib.) relating to assessment years 2013-14 and 2014-15 for the respective quarters deliberated upon the issue and held as under:- 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 section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts enforceability as retroactive. If at the time when the fee was provided under Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the learned counsel for respondent-Revenue that insertion of clause (c) to (f) under Section 200A(1) should be treated as retroactive in character and not prospective. 22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st day of June, 2015 even where the returns were filed belatedly by the deductor after 1st June, 2015, where it clearly related to the period prior to 01.06.2015. 16 . We hold that the issue raised in the present bunch of appeals is identical to the issue raised before the Tribunal in different bunches of appeals and since the amendment to section 200A of the Act was prospective in nature, the Assessing Officer while processing TDS returns / statements for the period prior to 01.06.2015 was not empowered to charge late filing fees under section 234E of the Act, even in cases where such TDS returns were filed belatedly after June, 2015 and even in cases where the Assessing Officer processed the said TDS returns after June, 2015. Accordingly, we hold that intimation issued by Assessing Officer under section 200A of the Act in all the appeals does not stand and the demand raised by charging late filing fees under section 234E of the Act is not valid and the same is deleted. 17 . Before parting, we may also refer to the order of CIT(A) in relying on the decision of Hon'ble High Court of Gujarat in Rajesh Kourani (supra). On the other hand, the learned Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) in dismissing the appeals of assessee on this issue. 19 . We find similar issue has been decided by us in the case of Medical Superintendent Rural Hospital (supra) and vide para 15, order dated 21.12.2017 it was held as under:- 15. Further, before parting, we may also refer to the order of the CIT(A) in these two appeals. The CIT(A) had dismissed the appeals of the assessee being delayed for a period of two and half years. The CIT(A) had taken the date of intimation under section 200A(3) dated 07-08-2014 and computed the delay in filing the appeal late before him. However, the assessee had filed the appeal before the CIT(A) against the order passed under section 154 of the Act. The said application for rectification under section 154 was filed on 08-06-2017/09-03-2017 in the respective years. The said application was decided by the Assessing Officer on 09- 06-2017. The assessee filed an appeal against the dismissal of the rectification application filed under section 154 of the Act. The said fact is clear from the perusal of Form No.35 with special reference to Column 2(a) and 2(b). In the entirety of the above said facts and circumstances, we find no me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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