TMI Blog2020 (1) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to charge fee u/s 234E of the Act, hence, the intimation issued by the Assessing Officer u/s 200A in the appeals before us, does not stand, therefore, the demand raised by way of charging fee u/s 234E is not valid, resultant, the same is deleted as the intimation issued by the Assessing Officer in the present case, for the period prior to 01/06/2015, is beyond the scope of adjustment provided u/s 200A of the Act. Thus, the appeals of the assessee are allowed. - I.T.A. Nos. 6257,6258,6259/Del/2018 - - - Dated:- 15-1-2020 - Shri H. S. Sidhu, Judicial Member And Before Shri A.N. Misshra, Accountant Member For the Assessee : Sh. Gautam Acharya, C.A. For the Revenue : Sh. Saras Kumar, Sr. DR. ORDER PER H.S. SIDHU, JM These 03 appeals filed by the assessee against the common order of the Ld. Commissioner of Income Tax (Appeals) dated 26.08.2018 for the assessment years 2013-14 to 2015-2016. Since the issue involved in all the appeals are common, therefore, these appeals were heard together and are being decided by this consolidated order. The grounds raised by the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 234E where order u/s 200A dated 08/01/2018 is apparently time barred and beyond the purview of law. 2. At the time of hearing, learned counsel for the assessee stated that the issue involved in all these four appeals have already been adjudicated and decided in favour of the assessee by the ITAT Delhi Benches vide its order dated 09.11.2017 passed in the case of Samikaran Learning Private Limited vs. TDS Officer, Delhi in ITA Nos. 4050 to 4054/Del/2016 in Assessment Years 2014-15 to 2015-16. He further stated that the issue involved in these appeals have also been adjudicated and decided by various Benches of ITAT. The details of the same he has given in the in the paper book filed by the assessee. He has also filed a copy of order dated 09.11.2017 passed in ITA No. 4050 to 4054/Del/2016 Samikaran Learning Private Limited vs. TDS Officer. He further stated the order dated 09.11.2017 passed by the ITAT Delhi Benches has also been followed in ITA No. 5321 to 5331/Del/2017, Assessment Years 2013-14 to 2015-16 in which the Judicial Member was the party and therefore, he requested that respectfully following the order of ITAT Delhi Benches (Supra), the aforesaid app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that clause (c) to section 200A(1) of the Act was inserted w.e.f. 01.06.2015, under which levy of fees was provided for late filing the quarterly statements of TDS. He further stated that earlier to that, there was no provision of levy of fees. Similarly, amendments were made in section 246A of the Act. The first issue raised by the learned Authorized Representative for the assessee was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority to levy the fees prior to 01.06.2015. He referred to the ratio laid down by the Hon'ble Supreme Court in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1, which had laid down the proposition that in cases where the cost of acquisition of the assets were Nil, then no capital gains has to be computed in the hands of assessee since there was no mechanism to charge capital gains. He further stressed that the 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 199 of the Act provides credit of tax deducted at source and section 200 of the Act lays down the duties of person responsible to deduct the tax. He further stressed that it was mandatory that after deduction, the deductor shall pay the tax in the account of Treasury, there was no discretion with the deductor vis- -vis rate of deduction, at what time and when to be paid. The learned CIT-DR further stated that TDS was one of the modes of recovery which works 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was pointed out that the amount of fees is to be deposited before delivering the statement. He stressed that the provisions of section 234E of the Act was charging section wherein the liability was upon the assessee that he shall pay and when the same is to be paid is also specified therein. The Legislature in this regard was clear that defaulter itself would make the compliance. Hence, the question is if as per section 234E(1) of the Act, the assessee is liable to pay late 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble but after the amendment, it is so provided that capital gains would be chargeable in some cases where the cost of acquisition was Niland hence, it is the statute which empowers the authorities to levy fees, charges or taxes. In the absence of such power, there is no merit in levy of fees under section 234E of the Act. 15. 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 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 tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed 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 by the authority. 17. Under section 200(1) of the Act, it is provided that any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Under section 200(2) of the Act, any person 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished in paper form and later by way of amendment, the procedure for furnishing the statement electronically was provided. Once the statement has been so submitted by the deductor of tax deducted at 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest; (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. 20.As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. 21. Section 234E(1) of the Act provides that where a person fails to deliver or cause to be delivered, a statement within time prescribed in section 200(3) of the Act or the proviso to section 206C(3) of the Act, he 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deductible in addition to the amount of tax deducted at source, which is to be paid to the account of Treasury by the deductor. In case of any default, interest is to be charged against such deductor and the same is to be computed as per provisions of section 200A(1)(b) of the Act. Further, in addition to both these amounts, clause (c) to section 200A of the Act provides fees to be levied which 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2) Act, 2015 w.e.f. 01.06.2015. Once the power has been given, under which any levy has to be imposed upon taxpayer, 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 applied prospectively. There is no merit in the claim of Revenue that even without insertion of clause (c) under section 200A(1) of the Act, it was incumbent upon the assessee to pay fees, in case there is default in furnishing the statement of tax deducted at source. Admittedly, the onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of section 234E of the Act was challenged. The Hon'ble High Court noted the fact that where the deductor was required to furnish periodical quarterly statements containing the details of deduction of tax made during the quarter, by the prescribed due date and the delay in furnishing such TDS returns 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 deductors were not filing their TDS returns/statements within prescribed time frame, then it lead to an additional 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 note of the provisions of Chapter XVIIB, under which the person deducting tax i.e. deductor was required to file quarterly tax deduction at source statement containing the details of deduction of tax made during the quarter by the prescribed due dates. Similar responsibility is on a person required to collect tax of certain specified receipts under section 206C of the Act. In order to provide effective deterrence against the delay in furnishing TDS/TCS statements, the Finance Act, 2012 nserted 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 section200A 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 provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount payable or refundable to the deductor, under which the provision was also made for charging of interest. However, since the provisions of section 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 per son 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 amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge/levy the fee under section 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in by the Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment where empowerment is given to the Assessing Officer to levy or charge the fees cannot be said to be clarificatory in nature and hence, applicable for pen ding assessments. 31. The Hon'ble Supreme Court in Vatika Township (P.) Ltd's. case (supra) has explained the general principle concerning retrospectivity and have held that of the various rules guiding how a legislation has to be interpreted, one established rule is that unless contrary intention appears, a legislation is presumed not to be intended 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 determination of fees payable under section 234E of the Act at the time of processing of TDS statements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 234E of the Act. We have already referred to the decision of Hon'ble Bombay High Court in Rashmikant Kundalia v. Union of India's case (supra) in this regard, wherein the constitutional validity of section 234E of the Act has been upheld. 33. 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 same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. 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 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnected issue raised by the learned Authorized Representative for the assessee by way of ground in some of the appeals appeal No. 1 that whether any appeal is maintainable against the intimation issued under section 200A of the Act and/or order passed under section 154 r.w.s. 200A of the Act by Assessing Officer in charging the fees under section 234E of the Act. Both the learned Authorized Representatives have raised varied arguments in respect of said issue and the learned DR has referred to the order of CIT(A), who had held that no appeal is maintainable against the order of Assessing Officer passed while processing the TDS returns/statements and charging of fees under section 234E of the Act. Without going into various aspects of the issue, we make reference to the Memorandum explaining the Finance Bill, 2015, under which the heading was rationalization of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). The said memorandum categorically recognized that under the existing provisions of the Act, after processing of TDS statements, an intimation is generated specifying the amount payable or refundable. It was further not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is appealable order before the CIT(A) under section 246A(1)(a) of the Act, then such appealable order passed by the CIT(A) under section 250 of the Act is further appealable before the Tribunal under section 253 of the Act. Hence, we admit the present appeals filed by the assessee even on this preliminary issue. We have already adjudicated the issue of charging fees under section 234E of the Act by the Assessing Officer while processing returns/statements in the paras hereinabove and in view thereof, we hold that the Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed. 37. In the result, all the appeals filed by different assessees for Different quarters relating to different years are allowed. 2.3. If the observation made in the assessment order, impugned orders, orders of the Tribunal, material facts available on record along with the arguments from both sides, kept in juxtaposition and ana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer u/s 200A of the Act, in the appeals before us, does not stand, therefore, the demand raised by way of charging fee u/s 234E of the Act is not valid, resultantly, the same is deleted as the intimation issued by the Assessing Officer in the present case, for the period prior to 01/06/2015, is beyond the scope of adjustment provided u/s 200A of the Act. Thus, the appeals of the assessee are allowed. Finally, the appeals of the assessee are allowed. This order was pronounced in the open court in the presence of the ld. representatives from both sides at the conclusion of the hearing on 9/11/2017. 3.2 After perusing the aforesaid finding of the Tribunal as well as relevant provisions of law on the issue in dispute, I am of the view that as per newly substituted clause w.e.f. 01.6.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause , there was no such provision. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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