TMI Blog2017 (12) TMI 1803X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act is prospective in nature and therefore the AO while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015 was not empowered to charge fees under section 234E - the intimation issued by the AO u/s 200A of the Act in this appeal is unsustainable and the demand raised by way of charging of the fees u/s 234E of the Act not being valid is deleted - we hold that the AO is not empowered to charge 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 and consequently allow the grounds of appeal raised by the assessee. - I.T.A. No. 4746/Mum/2016 - - - Dated:- 27-12-2017 - SSH. R. C. SHARMA AND SH. SANDEEP GOSAIN, JJ. Appellant by : Meghna T. Chandarana Respondentby : Arju Garodia ORDER Sandeep Gosain, J. The present Appeal filed by the assessee is against the order of Ld. Commissioner of Income Tax (Appeal) 1, Mumbai dated 21.03.16 for AY 2012-13 on the grounds mentioned herein below:- 1. That the Commissioner of Income Tax (Appeals) has dismissed the request of the Assessee in the appeal to waive the late fee levied u/s 234 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the appeal, including arising consequential to the points raised during the appeal proceedings till the final disposal of appeal, which are without prejudice to one another; 9. The appellant therefore prays for the relief requested in the above Grounds. 2. Order on petition for condonation of delay in filing this appeal. 2.1 Admittedly, there was a delay of 17 days in filing this appeal. The assessee has filed separate petition for condonation of delay. We have heard both the parties and perused the material on record. The Hon'ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji Others (1987) (167 ITR 471) (SC), while laying down the principles for considering matters of condonation of delay in filing appeals, has stated that substantial justice should prevail over technical considerations. The Hon'ble Court also explained that every day s delay must be explained, does not mean that a pedantic approach should be taken. The doctrine must be applied in a natural and pragmatic manner. Considering the aforesaid principles laid down by the Hon'ble Apex Court, the explanation put forth by the assessee and the material on record, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issue raised in the present appeal were decided by the Coordinate Bench of Hon ble ITAT, Mumbai Bench in the case of M/s Asian Pipes Profiles Pvt. Ltd. Vrs. AO, TDS and M/s Disha Distributors VRs. AO TDS in ITA No. 4740 4742/Mum/2016 for AY 2013-14. The operative portion of order of Hon ble ITAT while deciding these issues are as under:- 6.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. We find that the very same issue was considered at length and held in favour of the assessee by, inter alia, the decision of the ITAT Pune Bench in the case of Gajanan Constructions and others in ITA Nos.1292 1293/PN/2015 and others dated 23.09.2016 wherein at paras 15 to 37 it has been held a under: - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the person may also deliver to the prescribed 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 subsection (2A) of the Act, it is provided that where the sum has been deducted in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the statement referred to in sub-rule (1) may be furnished in any of the following manners i.e. by way of furnishing the statement in paper form or furnishing the statement electronically under digital signature or after verification. Initially, such statement had to be furnished 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 ITA Nos. 4740, 4741 4742/Mum/2016 Asian Pipes Profiles Disha Distributors 7 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. 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 subsection (2), it is further provided that the amount of fees referred to in subsection (1) shall not exceed the amount of tax deductible or collectable, as the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctible 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 after delay and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015. Once the power has been given, under which any levy has to be imposed upon tax payer, 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 substation, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Incometax 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 this perspective, section 234E of the Act was not punitive in nature but a fee which was a fixed charge for the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inserted 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 section 200A 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 person 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 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 Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... werment is given to the Assessing Officer to levy or charge the fees cannot be said to be clarificatory in nature and hence, applicable for pending assessments. 31. The Hon ble Supreme Court in CIT Vs. Vatika Township Pvt. Ltd. (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. In this regard, it was thus, proposed to amend the provisions of section 200A of the Act so as to enable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 CIT-DR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani Vs. DCIT (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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer in ITA Nos. 4740, 4741 4742/Mum/2016 Asian Pipes Profiles Disha Distributors 17 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 CITDR 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 6.2 Following the above referred decision of the Hon'ble ITAT Pune Bench in the case of Gajanan Constructions and others in ITA Nos.1292 1293/PN/2015 and others dated 23.09.2016, we hold that the amendment to section 200A(1) of the Act is prospective in nature and therefore the AO while processing the TDS statements/returns in the present three appeals for the period prior to 01.06.2015 was not empowered to charge fees under section 234E of the Act. Therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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