TMI Blog2023 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... 234E of the Act. - Decided in favour of assessee. - ITA No. 736/LKW/2019 - - - Dated:- 9-1-2023 - Shri Mahavir Singh, Vice President And Shri Girish Grawal, Accountant Member For the Appellant : Shri S. N. Kapoor, CA For the Respondent : Smt. Alka Singh, DR ORDER PER BENCH: This appeal by the assessee is against order by Ld. CIT(A), Bareilly in Appeal No. 10243/ITO/TDS/BLY/2018-19 dated 21.06.2019 against intimation u/s. 154 read with section 200A of the Income-tax Act, 1961 (hereinafter referred to as the Act ) in respect of processing of TDS statement in Form 24Q dated 20.08.2016. 2. Grounds of appeal raised by the assessee are reproduced as under: i) Because the Ld. CIT(A) is not justified in confirming the levy u/s. 234E of Income Tax Act, 1961 without appreciating the facts of the case. ii) Because on the facts and in the circumstances of the case, the Ld. CIT(A) has confirmed the levy i.e. late filing fees for delay in submission of e-Tds statement u/s. 234E of the Act, where there is no enabling provision in the Act prior to 01.06.2015 renders the demand bad in law and be deleted. iii) Because the order passed is bad in law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es integra. The Hon ble Karnataka High Court in the case of Fatehraj Singhvi (supra) has held that the amendment in section 200A by way of insertion of clause (c) is only w.e.f. 01.06.2015 and therefore no fees would be payable by the assessee for any period prior to 01.06.2015. We find that reliance by the Ld. Counsel on the decision of Hon ble Karnataka High Court (supra) covers the issue involved in this case in favour of the assessee which was dealt in the order of coordinate bench of this tribunal in the case of Bhaskar Roy ITA No. 415/Kol/2021 and ITA Nos. 416 to 422/Kol/2021 vide order dated 17.12.2021. Coordinate Bench of this Tribunal while placing reliance on the decision of Hon ble Karnataka High Court also dealt with the decision of Hon ble Gujarat High Court in the case of Rajesh Kourani Vs Union of India [2017] 83 taxmann.com 137 (Guj) referred by Ld. CIT(A). Thus, the Tribunal held as under : 3. We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, the Ld. Counsel for the assessee Shri K. M. Roy submitted that the issue involved in all these appeals are pertaining to levy of late fee u/s. 234E and which is prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tehraj 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 per Section 200(3) of the Act read with Rule 31A of the Income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 subsection (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 delivered or caused to be delivered under sub section (3) of section 200 or the proviso to sub- section (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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.--For the purposes of this sub-section, an incorrect claim apparent from any information in the statement shall mean a claim, on the basis of an entry, in the statement-- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act. (2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivered 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 sub-section (1A) of section 206C; (k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-section (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 subsection (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 intim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Rs.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 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 Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.--For the purposes of this sub-section, an incorrect claim apparent from any information in the statement shall mean a claim, on the basis of an entry, in the statement-- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act; (2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 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 date specified in the corresponding entry in column (4) of the said Table, if the deductor is a person other than the person re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs.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 Rs.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 levying penalty for failure to furnish the statements. Such penalty would be in the range of Rs.10,000/- and Rs.1 lakh. No penalty would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 section yielding to the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would be in nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 are inclined to hold that the demand raised by the Income Tax Authorities for levying late fee u/s. 234E of the Act for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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