TMI Blog2021 (12) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... to 01.06.2015 then it cannot claim the refund since the Hon ble Karnataka High Court has held its order to be prospective in operation. - Decided in favour of assessee. - I.T.A. No. 415/Kol/2021 And ITA Nos. 416 to 420/Kol/2021 And ITA Nos. 421 & 422/Kol/2021 - - - Dated:- 17-12-2021 - Shri P. M. Jagtap, Vice President (KZ) And Shri A. T. Varkey, Judicial Member For the Appellant : Shri K. M. Roy, FCA For the Respondent : Shri Biswanath Das, Addl. CIT ORDER PER BENCH: All these appeals are preferred by the individual assessee which are against the orders of Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi (Ld. CIT(A) for AY 2013-14 (for ITA No. 415/Kol/2021) dated 23.08.2021, AY 2014-15 (for ITA Nos. 416 to 420/Kol/2021) dated 18.08.2021, 19.08.2021 23.08.2021) and AY 2015-16 (for ITA No. 421 422/Kol/2021) dated 19.08.2021 23.08.2021). According to Ld. AR, Shri K. M. Roy, the impugned action of Ld. CIT(A) is without appreciating the fact that the Assessing Officer, TDS (AO) has levied the late fees in respect of deduction of TDS without any authority of law; and, therefore, assessee pleads that the late fee l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the Tribunal, the levy of late fees is beyond the scope of the adjustment provided u/s. 200A of the Act and the Tribunal held that no fees can be levied u/s. 234E of the Act in terms of section 200A of the Act, as admittedly the date of filing of TDS statement and date of intimation are much prior to 01.06.2015. Thereafter, the Ld. CIT(A) after considering the Tribunal s order in M/s. Prakash Industries Ltd. (supra) and after taking note of the decision of the Hon ble Gujarat High Court in the case of Rajesh Kourani Vs Union of India (2017) 83 Taxmann.com 137 (Guj) wherein the Hon ble High Court had concluded that section 234E of the Act is a charging provision creating a charge for levying fee for certain defaults in filing statements, and fee prescribed u/s. 234E of the Act can be levied even without a regulatory provision being found in section 200A for computation of fee, the Ld. CIT(A) heavily relied on the said decision of Hon ble Gujarat High Court in Rajesh Kourani (supra) wherein it was held that the appellant s/assessee s case that the late filing fee which is levied u/s. 234E of the Act is legal and is correct and, therefore, according to him, the late fee levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging provision for the levy of fees for defaults in filing of TDS statement, the same could have been levied and, therefore, the action of the authorities below should not be disturbed. We note that the issue is no longer res integra and since there is favourable order of the Hon ble Karnataka High court in favour of the assessee in the case of Fatehraj Singhvi (supra) and following that ratio, the Mumbai Tribunal as well as the Pune Bench has decided the issue in favour of assessee in the light of the decision of the Hon ble Supreme Court in Vegetable Products (supra). We note that the Hon ble Karnataka High Court in Shri Ayappa Educational Charitable Trust (supra) has held on this issue as under: 6. We have heard learned Senior Counsel Mr.Kumar and Mr.A.Shankar, appearing for the appellants and Mr.K.V.Aravind, learned counsel appearing for Income Tax Department. 7. We may at the outset record that, learned counsel appearing for both sides have made submissions which shall be dealt with appropriately at the later stage. But, in order to appreciate the controversies including that of the background, certain aspects deserve to be taken note of which are as under: 8. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (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. 11. Similarly, Section 271H was inserted with effect from 1.7.2012 providing for imposition of penalty for default in filing TDS statement and also for furnishing of incorrect information in such TDS statement. The proviso was inserted in Section 272A providing for no penalty under the said section will be imposed after 1.7.2012 for failure to file TDS statement on time possibly because a separate Section 271H was inserted in the Act. Section 271H will be relevant for our purpose and same for ready reference is reproduced and it reads as under: Penalty for failure to furnish statements, etc. 271H. (1) Without prejudice to the provisions of the Act, [the Assessing Officer may direct that a person shall pay by way of] penalty, if, he-- (a) fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; or (b) furnishes incorrect information in the statement which is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , shall be computed in accordance with the provisions of section 234E; (d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; (e) 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 (d); and (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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 200A (1) (c), (d), (e) and (f) would not result into nullifying the liability to pay fee under Section 234E of the Act. Hence, in his submission, it cannot be said that the demand or the intimation by way of computation of the fee under Section 234E is invalid or unwarranted or is without jurisdiction. 17. The examination of the aforesaid contentions show that, Section 234E has come into force on 1.7.2012. Therefore, one may at the first blush say that, since Section 234E is a charging section for fee, the liability was generated or had accrued, if there was failure to deliver or cause to be delivered the statement/s of TDS within the prescribed time. But, in our view, Section 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement. As observed by us hereinabove, when Section 234E was inserted in the Act simultaneously, Section 271H was also inserted in the Act providing for the penalty for failure of furnishing of statements etc. Therefore, if there was failure to submit the statement for TDS as per Section 234E, the fee payable is provided but the mechanism provided was that if there was failure to furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken; or (e) to furnish the return of income which he is required to furnish under sub-section (4A) or sub-section (4C) of section 139 or to furnish it within the time allowed and in the manner required under those sub-sections; or (f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in section 197A; or (g) to furnish a certificate as required by section 203 or section 206C; or (h) to deduct and pay tax as required by sub-section (2) of section 226; (i) to furnish a statement as required by sub-section (2C) of section 192; (j) to deliver or cause to be delivered in due time a copy of the declaration referred to in subsection (1A) of section 206C; (k) to deliver or cause to be delivered a copy of the statement within the time specified in subsection (3) of section 200 or the proviso to sub-section (3) of section 206C; (l) to deliver or cause to be delivered the statements within the time specified in sub-section (1) of section 206A; [(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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 234E would meet with the test of quid pro quo. 21. However, if Section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under Section 200A which has been brought about with effect from 1.6.2015 cannot be said as only by way of a regulatory mode or a regulatory mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a regulatory mechanism by insertion of any provision made in the statute book, may have a ITA No.4902/Mum/2018 Assessment Year :2013-14 National Laminate Corporation retroactive character but, whether such provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also be a aspect which may be required to be considered before such provisions is held to be retroactive in nature. 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 examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E ITA No.4902/Mum/2018 Assessment Year :2013-14 National Laminate Corporation could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent- authority for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge. 28. The appeals are partly allowed to the aforesaid extent. 5. For the purpose of completeness, we would like to reproduce the order passed by the Hon ble Gujarat High Court rendered in the case of Rajesh Kourani (supra) which was held in favour of the revenue and the Ld. CIT(A) has followed the same while passing the impugned order : 2. Brief facts are as under. 3. The petitioner is a proprietor of one M/s Sai Baba Textiles which is engaged in the manufacture and trading of ladies garments. In course of the business, the petitioner would make payments to individuals and agencies, many of which would require deducting tax at source. The provisions under the Act would further require the petitioner to file periodic statements of such tax deducted at source 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment, there was no mechanism provided under the Act for collection of fee under section 234E of the Act. The Assessing Officer therefore could not have adjusted such fee in terms of section 200A of the Act. Counsel drew our attention to an intimation sent by the Assessing Officer, purported to be under section 200A of the Act, in which, he had adjusted a sum of ₹ 33,123/- by way of late filing fee under section 234E of the Act. Counsel relied on a decision of Pune Bench of ITAT in case of Gajanan Constructions v. Dy, CIT [2016] 73 taxmann.com 380/161 ITD 313 (Pune - Trib.), in which, the Tribunal held that prior to 01.06.2015, the Assessing Officer was not empowered to charge fee under section 234E of the Act. Counsel also relied on a decision of Division Bench of Karnataka High Court in case of Fatheraj 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and enables the Assessing Officer to make some adjustments and to intimate the final outcome to the assessee. 12. Section 234E which pertains to fee for default in furnishing the statements was introduced for the first time by the Finance Act, 2012, with effect from 01.07.2015. Section 234E reads as under: Fee for default in furnishing statements. 234E.(1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub- section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or 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 sub- section(3) of section 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 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) 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 15. In view of such statutory provisions, we may consider the petitioner's two challenges. Coming to the question of discriminatory nature of rule 31A of the Rules, it can be seen that sub-rule (1) of rule 31A of the Rules provides for filing of the statements in prescribed forms as required under sub-section (3) of section 200. ITA No.4902/Mum/2018 Assessment Year :2013-14 National Laminate Corporation Subrule (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 tax deductible or collectible as the case may be. Section 271H was also introduced for the first time for lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner. It only provides a mechanism for processing a statement for ITA No.4902/Mum/2018 Assessment Year :2013-14 National Laminate Corporation 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 section 234E cannot be levied. Any such view would amount to a charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITA No.4902/Mum/2018 Assessment Year :2013-14 National Laminate Corporation 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. 6. We note that there is no decision of the Hon ble Calcutta High Court on the issue in hand. Therefore, we are inclined to follow the ratio decidendi of the Hon ble Karnataka High Court in the case of Fatehraj Singhvi (supra) and Shri Ayappa Educational Charitable Trust (supra) in the light of the Hon ble Supreme Court decision in Vegetable Products (supra) that if there is no jurisdictional High Court s decision on an issue then the view taken in favour of the assessee can be followed. Therefore, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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