SUSHIL KUMAR MARLECHA,PALI vs. DEPUTY/ASSTT, CIT (CPC-TDS) / ITO, TDS-1,, GHAZIABAD / JODHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM ITA Nos. 123/Jodh/2022 (ASSESSMENT YEAR- 2013-14) Sushil Kumar Marlecha Vs Deputy/Assistant 498, V.D. Nagar Suraj Pole, Commissioner of Pali-306401. Income Tax, (CPC- TDS), Ghaziabad. (Appellant) (Respondent) PAN NO. AFEPM 5532 N

(Virtual hearing) Assessee By Shri Amit Kothari-C.A. Revenue By Shri S.M. Joshi, JCIT-DR Date of hearing 13/07/2023 04/10/2023 Date of Pronouncement O R D E R PER: Dr. S. Seethalakshmi, JM

The assessee has filed an appeal against the order of the National Faceless Appeal Centre, Delhi [herein after “NFAC/Ld.CIT(A)”] dated 11.08.2022 for the assessment year 2013-14. 2. The assessee has raised the following grounds of appeal:- “1. The order passed by the ld. CIT(A) confirming the order made u/s 200A by CPC-TDS, Ghaziabad, levying the late filing fee of Rs. 18800/- u/s 234E for delay in furnishing the statement of 4th Quarter/26Q for F.Y. 2012-13 prescribed u/s 200(3) id bad in law and bad on facts. The variation made in the returned

2 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha income is bad in law and bad on facts and without proper jurisdiction. 2. The CIT(A) has erred in not accepting the appellants submission that that prior to amendment of section 200A w.e.f. 01.06.2015 which authorized the computation of fee u/s 234E on processing of the statement furnished u/s 200, on fees can be levied u/s 234E of the Act proper to 01.06.2015. 3. The appellant crave liberty to add, amend, alter or modify any of the ground of appeal on or before its hearing before your honour.”

Reply filed by the appellant has been considered. 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-

3 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha (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 fee, if any, 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 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.

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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 205C, 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 2060 which is to be delivered or caused to be delivered for fax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July 2012.”

In this regard, Hon'ble High Court of Gujarat in civil application no. 302 of 2014 on 20.06.2017, in the case of Rajesh KouraniVs Union of India has held that Section 234E is a charging provision creating a charge for levying fee for certain defaults in filing statements, and fee prescribed under section 234E could be levied even without a regulatory provision being found in section 200A for computation of fee.

The relevant part of the decision in the case of Rajesh Kourani Vs Union of India (Supra) is being reproduced as under.

5 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha 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 be imposed if the tax is deposited with fee and interest and the statement is filed within one year of the due date. With addition to these two provisions prescribing fee and penalty respectively, clause (k) of sub-section (2) of section 272A became redundant and by adding a proviso to the said section, this effect was therefore limited upto 01.07.2012.

6 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha 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.

7 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha KouraniVs Union of India (Supra). Therefore, the assessee is liable to pay the due fee u/s 234E and order passed u/s 200A is correct and as per law. Reliance is also placed on:

The appellant has mainly submitted that-

"In view of the above submissions order u/s 2004 of the Act imposing late fees u/s 234E has to be cancelled and quashed, as the same view in taken by the Hon'ble High Court of Karnataka in the matter of Fatheraj Singhvi Vs UOI ( Kamataka High Court)"

However while delivering the judgment in the case of Rajesh KouraniVs Union of India the case law cited by the appellant has been duly considered.

Also as per the Hon,ble High Court of Karnataka in the case of Lakshminirman Bangalore(P) Ltd vs. Dy. Commissioner of Income tax- Ghaziabad.

It was held that-

Section 234E of the Income-tax Act, 1961- Deduction of tax at source-Fee for defaults in furnishing statements (Constitutional validity)- Whether any delay in furnishing TDS statements by deductor would result in perennial problems being faced by Department while processing return of income and it would result in financial burden to Government namely on account of late payment of refund interest- Held, yes- Whether since section 234E levies a fee to regularize said late filing, it could not be hied that section 234E suffered from any vices for being declared to be ultra vires of Constitution- Held, yes [Paras 21 and 24]

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In the instant case, the appellant has failed to comply with all the provisions of section 200A. Therefore, the assessee is liable to pay the due fee u/s 234E and order passed u/s 200A is correct and as per law, Accordingly, the appeal is dismissed on merits. There arises no occasion for condonation of delay.”

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1.5. The provisions of section 234E and section 200A reads as under : 234E. Fee for defaults in furnishing statements (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 subsection (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 the 1st day of July, 2012 200A: Processing of statements of tax deducted at source (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 refund due to, the deductor 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) the amount of refund due to the deductor in pursuance of the determination under clause (c) 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 with the provisions of this Act;

10 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha (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 subsection. 1.6. By way of Finance Act 2015, and with effect from 1st June 2015, there is an amendment in Section 200A and this amendment, as stated in the Finance Act 2015. In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:— “(c) the fee, if any, 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. 1.7. This is a technical default with no loss to the revenue. This is practically the first year, in which the penal provisions of 234E had become applicable and is only a technical default, and the same therefore deserves to be condoned and waived. It is not possible for the assessee himself to submit such returns on account of lack of expertise and awareness to file such returns online. He has to depend upon the consultants who depending upon their priorities and other occupation may submit the online returns. The fact that the tax had been deposited in due time, the default in submission of return was therefore liable to be condoned. 1.8. It will also be worthwhile to submit that the Board was also considering the difficulties being faced genuinely by the taxpayers in making such compliance and that the penal provisions under section 234E may be too harsh to be implemented. The penalty of Rs. 200/- for such technical defect was too high, and therefore a Circular was issued vide F.No. 275/27/2013-IT dated 1st August, 2016 to examinee the genuine hardship justifying waiver of such fee under section 234E and the said circular reads as under : “The Board is examining the desirability and expediency of prescribing situation/circumstances under which levy of fee under Section 234E may cause genuine hardship to the taxpayers, so as to prescribe guidelines for waiver of such fees by virtue of the powers of the Board under Section 119(2)(a) of the Income-tax Act, 1961.

11 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha In this connection, I am directed to request you to kindly forward your suggestions and recommendations for conditions/ circumstances which justify waiver of fee under Section 234E for an assessee or a class of assesses. These may kindly be furnished by 31.08.2016.” 1.9. It is respectfully submitted that prior to insertion of Section 234E of the Act, the AO had the power to impose penalty of Rs. 100/- for each days delay in filing the TDS statement, in terms of Section 272A (2)(k) of the Act. However, the statute made it clear that before imposing of such penalty, the assessee should be given an opportunity of being heard. In terms of Section 273B, if the assessee is able to prove that there is reasonable and sufficient cause for the default, penalty shall not be imposed. However, by incorporating Section 234E, late fee has become mandatory and unless the late fee is paid along with the TDS statement, the deductor will not be in a position for filing TDS statement. 1.10. There is genuine difficulty in uploading the TDS statement within the time and therefore imposing fee for delayed filing without being heard clearly amounts to arbitrariness. It is also submitted that the levy of fee under Section 234E does not stand the test of Quid Pro Quo, it is discriminatory, unreasonable and therefore violative of the principles of natural justice. It is submitted that in so far as the fee under Section 234E is concerned, no services are rendered or no benefit or privilege is conferred to the assessee. It is further submitted that when TDS is deducted, normally it is remitted promptly to the Income Tax department. Even if there is delay in depositing the amount, interest is charged as provided under Section 201(1A) of the Act. Penalty proceedings are also prescribed under Section 221 of the Act for committing default in remitting the TDS or if there is delay in remitting without good and sufficient reasons. Therefore, when substantial provisions have already been incorporated to ensure payment of TDS in time, the powers to levy fee for the delay in filing the statement without an opportunity to be heard is illegal. 1.11. Your kind attention is also invited towards the following decisions which supports the contention of the appellant that for these technical defaults, it will not be justified to impose any penalty u/s 234E and the same may kindly be deleted. a. Vijay Hemant Finance & Estates Ltd. vs. ITO (1999) 238 ITR 282 (Mad) : (1999) 155 CTR (Mad) 257 : In my view, though the ITO may be correct in his view that s. 194A of the Act does not provide for any opportunity to be given to the petitioner to rectify the defects found in the declarations (Form No. 15H) filed by the person responsible for paying interest, a reasonable construction of s. 194A of the Act would warrant, in my opinion, an opportunity to be granted to the person responsible for paying interest to rectify the defects found in the declarations. It may be true, that some of the declarations were not signed by the payee, but

12 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha in cases where there are certain minor defects crept in the declaration unnoticed either by the payee or by the person paying interest and if the declarations are rejected on account of such defects, the ultimate income-tax liability would fall on the person paying interest. If an opportunity is granted to the person paying interest to rectify the defects, then it will enable the person to get the declarations rectified by the declarants. It is essential to notice that s. 194A of the Act imposes an obligation on the person paying interest and for his failure to deduct tax at source, he would be liable to pay the tax of the payee. In my view, if the section is so construed in the manner that the declarations once filed cannot be allowed to be rectified, whatever may be the nature of the defects, either minor or insignificant one, the operation of the section would work in a harsh manner against the person paying interest income to the payee. The object of s. 194A of the Act is that tax on the interest income to the payee is realised and collected and if that is the object, the mere defective nature of the declaration should not fasten the liability of the payee on the person paying interest income. In other words, the liability should not be imposed on technical grounds or for minor violation of not filling up of the declarations as required and if defects are found and if the defects can be rectified, in my view, the AO should give an opportunity to the person responsible for paying interest to rectify the defects which would facilitate the person paying interest to get the defects rectified by the declarant. The tax liability is not intended to be imposed for defective nature of the declaration in Form No. 15H, but it is intended to be imposed for the failure to deduct tax on the interest income to the payee. In my view, the section should be interpreted in a reasonable and fair manner so that the liability of tax is not imposed on the person paying interest for filing defective declarations. I also hold that it is well-settled that unless the provisions of the statute warrant or there is a necessary implication on reading of the section that the principles of natural justice are excluded, the provisions of the section should be construed in a manner incorporating the principles of natural justice and if declarations in Form No. 15H are found to be defective, the ITO in conformity with the provisions of the principles of natural justice, should give an opportunity to the petitioner for rectification of the defects in the declarations. The case of the Department that if such an opportunity is given to the petitioner, there will be no case of liability under s. 194A being imposed is not a ground to hold that an opportunity need not be given to rectify the defective nature of the declarations. As already held by me, the section is not intended to impose the liability for filing defective declaration forms, but the liability is sought to be imposed for the failure to deduct income-tax. Further, the liability is imposed on the person paying interest and the section should be construed strictly and reasonably. The Bombay High Court in the case of Dattatraya Gopal Shette vs. CIT (1984) 41 CTR (Bom) 393 : (1984) 150 ITR 460 (Bom), has also taken the same view. The Bombay High Court was dealing with a case where an application for renewal of registration was not signed by one of the partners and it was rejected on the ground that the application was defective. The question arose whether the action of the ITO was justified and whether the ITO was required

13 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha to give an opportunity to the assessee to rectify the defects in the application filed for renewal of registration of the firm. Sujatha V. Manohar J. (as her Lordship then was) speaking for the Bench of the Bombay High Court referred to a circular issued by the Central Board of Revenue dt. 11th April, 1955 (Circular No. 14 (XL-35) of 1955) and held as under : "It is now well-settled that even if the contents of a circular may amount to a deviation on a point of law, a circular of the Central Board of Revenue which confers some benefit on the assessee is binding on all officers concerned with the execution of the Income-tax Act ; and they must carry out their duties in the light of the circular. In the present case, therefore, it was, in the first place, the duty of the ITO to have drawn the attention of the assessee-firm to the defect in the application for renewal of registration. The ITO, however, granted registration to the firm. In such a situation it was equally the duty of the Commissioner of Income-tax to have given an opportunity to the assessee-firm to remedy the defect in their application. The Commissioner of Income-tax, in view of this circular, clearly should not have cancelled the renewal of registration of the assessee-firm without giving an opportunity to the assessee- firm to remedy the defect in the application." Following the decision of the Bombay High Court, I hold that it is the duty of the ITO to give an opportunity to rectify the defects in the declarations in Form No. 15H and imposition of tax liability without giving an opportunity to the petitioner to rectify the defects in the declarations in spite of the petitioner asking for an opportunity to rectify the defects is not justified in the eye of law. Therefore, the impugned order passed by the first respondent is quashed and the result is, the matter is remitted to the ITO to grant an opportunity to the petitioner for the rectification of the defects noticed in the declarations in Form No. 15H and then proceed in accordance with law. b. Escorts Employees Ancillaries Ltd. vs. CIT Source (2000) 74 ITDT 1 (Del)(TM) : (2000) 69 TTJ (Del)(TM) 316 The assessee explained before the CIT who levied the impugned penalty in this case and also reiterated in the appeal before the Division Bench that the delay had occurred because the broker Shri R.C. Singh was responsible for collecting deposits and Form 15H from the depositors had given Form 15H to the assessee as late as on 12th Aug., 1998, and soon thereafter on 17th Aug., 1998 the assessee had filed and submitted that same to the CIT. Thus, the delay was on account of delay on the part of the broker who could not collect Form 15H from the depositors in time and therefore, he gave the same to the assessee as late as on 12th Aug., 1998. The assessee had also pointed out before the Division Bench that it had asked the broker to give From 15H in time and the broker had promised to do so but he could not do so because the depositors had given their respective Forms 15H late. As will be seen from the various reasons for the delay as submitted before the CIT as reproduced above that in some cases where FDR applications of the depositors had indicated that Form 15H would be submitted but were not actually accompanied by such forms, the company had reminded the broker to collect necessary Form 15H and furnish the same to the company. However, this was done only

14 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha at the time of filing of return in Form 26A when the complete reconciliation of interest paid etc. was carried out. The broker had then proceeded to collect the forms and filed with the company. On receipt of the forms they were immediately filed with the Department on 17th Aug., 1998. It was further explained to the CIT in the course of penalty proceeding that the delay in delivery of forms to the company was caused owing to the difficulties faced by the broker at his end. Affidavit from the broker in this regard was enclosed. It was contended that the delay in submission of forms if any was only for reasons beyond the control of the company. The assessee had already explained to CIT that the depositors had not furnished the Form 15H in time to the broker and hence the broker gave the Form 15Hto the assessee on 12th Aug., 1998 and the assessee submitted the same to the CIT immediately thereafter on 14th Aug., 1998. Since the depositors had not furnished the declaration in Form 15H on or before 31st March, 1998 the assessee was not responsible to submit the same to CIT by 7th April, 1998. In the absence of any evidence to the contrary it had to be accepted that the broker had received the declaration in Form 15H from 288 depositors on or immediately before 12th Aug., 1998, when he gave them to the assessee. The assessee submitted the same to the CIT on 14th Aug., 1998, and thus there was no default for which the assessee could be liable to penalty under s. 272A(2)(f). There was no cause for action under s. 272A(2)(f) as the assessee had not committed default under s. 197(2). In this view of the matter also penalty under s. 272A(2)(f) was not exigible in the case. c. Gobinder Singh Jiwan Singh vs. ITO (2004) 90 TTJ (Chd) 772 Penalty under s. 272A(2)(f)—Delay in furnishing declaration in Form No. 15H—Non deposit of Form 15H for two persons—Interest credited being less than Rs. 2,500—Form No. 15H filed along with Form No. 27A—No mala fide intention—Technical default—Bona fide belief of submission of Form No. 15H on interest amount exceeding Rs. 2,500—Hence, levy of penalty under s. 272A(2)(f) not valid d. Argus Golden Trades India Ltd. vs. JCIT (2017) 189 TTJ (Jp) 589 : (2017) 165 ITD 318 (Jp) Penalty under s. 272A(2)(k)—Delay in filing TDS returns—Reasonable cause—Penalty under s. 272A(2)(k) is leviable for the failure to deliver a copy of the statement within the time specified in s. 200(3) or proviso to s. 206C(3)—In the instant case, there is no such factual situation rather there is a delay in filing of quarterly e-TDS returns which is covered under the provisions of s. 272A(2)(c)—Hence, on this ground itself, the impugned levy of penalty under s. 272A(2)(k) cannot be sustained—Even otherwise, during the relevant financial year, i.e., 2010-11, a change was introduced whereby it was necessary to mention 100 per cent valid PANs of the payees to whom the payments had been made and thereafter only the e-TDS return could be validated and uploaded in the IT system—Since there were large number of deductees scattered throughout the country, a fact not disputed by the Revenue, it took the assessee some time to collect the PANs of these deductees and

15 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha thereafter, it was able to upload the e-TDS returns in the IT system maintained by the Revenue—Further, taxes have been deducted and deposited at the prescribed rate with delay of few days—Hence, assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of s. 273B and, therefore, penalty under s. 272A(2)(k) is not leviable even on merits. e. Collector Land Acquisition vs. Addl CIT (2013) 12 NYPTTJ 2247 (Chd) : (2012) 52 SOT 81 (Chd) There was a delay in filing of e-TDS quarterly returns for the financial years 2006-07, 2007-08, 2008-09 and 2009-10. The total number of days of default was 6116. A show cause notice was issued on 14th Dec., 2010. In reply, the PR has informed that due to non availability of PAN number, the e-TDS quarterly returns could not be filed in time but the tax was well deducted in time and deposited with the government account. Learned Counsel for the assessee further submitted that Collector Land Acquisition, Department of Industries is a Government Organization. The Organization is acquiring land on behalf of the Punjab Government. The land compensation is paid by the Organization to the land owners through the District / High Courts. The TDS is deducted at source on the interest payment to the land owners. But the compensation and interest is deposited in the Court and not paid directly to the land owners. The land owners / agriculturists do not have PAN numbers. The Department was not able to find the PAN numbers of these land owners. The PR submitted that it had issued letters to individual land owners for PAN numbers at the available addresses but no response was received due to improper address. As the PAN numbers were not provided by the deductee, so the e- TDS return could not be filed in time. Shri Harry Rikhy, Learned Counsel for the assessee further submitted that it is accepted that there was delay in filing the e-TDS returns but there was no malafide intention of the PR / Department. The TDS was deducted at the rates prescribed by the Income Tax Department. Tax was deposited will in time in the Government Treasury. The Department has fulfilled their responsibility for deduction of tax and depositing of the tax. On the other side it was the responsibility of the deductee to inform about the PAN Number to the deductor so that TDS return could be filed with the Income Tax Department and tax credit goes to deductee. There was only a technical and venial breach to the provisions contained in Rule 31A(2) of the IT Rules, 1962 requiring the assessee to submit quarterly returns statement of Tax Deducted at Source which were required to be filed on due date as per s. 200(3) of the IT Act. As regards the delay in submitting TDS returns, it was explained by the assessee that due to non- furnishing of PAN numbers, the TDS certificate could not be filed in time, but the tax was deducted in time and deposited with the government account. It is also explained that the Collector Land Acquisition, Department of Industries is a Government Organization. The Organization is acquiring land on behalf of Punjab Government. The Land Compensation is paid by the Organization to the land owners through the District / High Courts. The TDS is deducted at source on the interest payment to the land owners. But the compensation and interest is deposited in the Court and not paid directly to the land owners. It is

16 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha also explained that generally the land owners / agriculturists do not have PAN numbers. The Department was not able to find PAN numbers of these land owners. It is also explained by the assessee that the Department has issued letters to individual land owners for PAN numbers at the available address but no response was received due to improper addresses. However, it is also explained that as the PAN numbers were not provided by the duductees, so the e-TDS returns could not be filed in time. In our view, the assessee has satisfactorily explained the reasons regarding non filing of TDS returns in time, therefore, no penalty should be levied in these cases. Even otherwise also, the assessee did not derive any benefit whatsoever by not filing the e- TDS returns in time, as the amount of TDS was duly deposited in the government treasury within prescribed time. Such delay has not caused any loss to the Revenue / Income Tax Department. The Hon'ble Supreme Court in the case of Hindustan Steels Ltd. vs. State of Orissa (supra) inter alia held as under:-"An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was a guilty or conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. There was only a technical and venial breach to the provisions contained in Rule 31A (2) of the Income Tax Rule, 1962 read with s. 200(3) of the IT Act, 1961. Considering the entire facts and circumstances of the present case, we are of the considered opinion that no penalty can be validly levied on the facts and circumstances of the present case. f. Br. Manager, SBI vs. Addl. CIT Source (2013) 15 NYPTTJ 2879 (Ctk) : (2014) 62 SOT 119 (Ctk) We find from the order that assessee is a nationalized bank and committed a technical default by not filing e-TDS return in time. It is the case of the assessee that s. 272A(2)(k) has been introduced w.e.f. 1st April, 2005 and assessee was completely ignorant about provisions of law. Moreover, this was a technical in nature and DDO was not conversant with the submission of statement with the IT ,Department after duly introduction of s. 272A(2)(k). Thus, there was a delay in filing the statement. When the Bank Manager knew this technical flaw, he engaged an advocate for expending the statement to IT Authorities through NSDL. The advocate who was engaged with the job for preparing statement found difficult in completing the details submission in absence of PAN of all customers at the relevant time. Therefore, the advocate has taken time to get this information. Moreover, there are frequent transfers of Branch Manager and other staff, for which, there was delay in submitting the statement to I.T authorities. We find that as per s. 273B no penalty is leviable on the assessee for any failure if he proves that there was reasonable cause for the said failure. We are of the view that assessee had reasonable cause as narrated above for non-filing of the return. We find that Hon’ble apex

17 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha Court in the case of Hindustan Steel Ltd. vs. State of Orissa, 83 ITR 26 held that penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not be imposed because it is lawful to do so. Therefore, following the decision of Hon’ble Supreme Court in the case Hindustan Steel Ltd (supra), we are of the view that assessee has reasonable cause for non-filing the e-TDS return in time. 1.12. The above issue is also covered in favour of the assessee by several judicial decisions in which it has been held that the said levy for the earlier years is not justified. Your kind attention is invited towards the following decisions : a. FATHERAJ SINGHVI & ORS. vs. UOI (2016) 289 CTR (Kar) 602 TDS—Fees under s. 234E—Levy by way of intimation under s. 200A vis-a-vis amendment of s. 200A w.e.f. 1st June, 2015—Sec. 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement—If at the time when the fee was provided under s. 234E, the Parliament also provided for its utility for giving privilege under s. 271H(3) that too by expressly put bar for penalty under s. 272A by insertion of proviso to s. 272A(2), it can be said that a particular set up for imposition and the payment of fee under s. 234E was provided but, it did not provide for making of demand of such fee under s. 200A payable under s. 234E—Substitution made by cls. (c) to (f) of sub-s. (1) of s. 200A w.e.f 1st June, 2015 can be read as having prospective effect and not having retroactive character or effect— Resultantly, the demand under s. 200A for computation and intimation for the payment of fee under s. 234E could not be made in purported exercise of power under s. 200A for the period of the respective assessment years prior to 1st June, 2015—When the intimation of the demand notices under s. 200A is held to be without authority of law so far as it relates to computation and demand of fee under s. 234E, the question of further scrutiny for testing the constitutional validity of s. 234E would be rendered as an academic exercise b. SREE AYYAPPA EDUCATIONAL CHARITABLE TRUST vs. DCIT (2018) 301 CTR (Kar) 150 TDS—Fees under s. 234E—Levy by way of intimation under s. 200A— Demand under s. 200A for computation and intimation for payment of fees under s. 234Ecould not be made in the purported exercise of power under s. 200A prior to 1st June, 2015—Impugned intimations under s. 200A issued by the Centralized Processing Cell (TDS) by the concerned Dy. CIT are set aside—Matters are remanded back to the local assessing authority of the assessees to pass fresh orders in accordance with law, if at all called for and necessary, after giving an opportunity of hearing to the assessees—Fatheraj Singhvi & Ors. vs. Union of India & Ors. (2016) 142 DTR (Kar) 281 : (2016) 289 CTR (Kar) 602 followed c. GAJANAN CONSTRUCTIONS vs. DCIT (2016) 161 ITD 313 (Pune)

18 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha TDS—Fee under s. 234E—Chargeability for the period prior to 1st June, 2015—Power to charge/collect fees as per provisions of s. 234E was vested with the prescribed authority under the Act only on substitution of earlier cl. (c) to s. 200A by the Finance Act, 2015 w.e.f. 1st June, 2015 hence no fee under s. 234E could be charged for asst. yrs. 2013-14 to 2015-16 under consideration—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—Provisions of s. 234E of the Act were inserted by the Finance Act, 2012, under which the provision was made for levy of fees for late furnishing TDS/TCS statements—However, power enabling the AO to charge/levy the fee under s. 234E while processing the TDS returns/statements filed by a person did not exist when s. 234E was inserted by the Finance Act, 2012—The power to charge fees under the provisions of s. 234E while processing the TDS statements, was dwelled upon by the legislature by way of insertion of cl. (c) to s. 200A(1) by the Finance Act, 2015 w.e.f. 1st June, 2015—Accordingly, where the AO has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of cl. (c) to s. 200A(1) w.e.f. 1st June, 2015, then in such cases, the AO is not empowered to charge fees under s. 234E while processing the TDS returns filed by the deductor—Legislature itself recognized that under the existing provisions of s. 200A i.e. prior to 1st June, 2015, the AO at the time of processing the TDS statements did not have power to charge fees under s. 234E and in order to cover up that, the amendment was made by way of insertion of cl. (c) to s. 200A—The insertion categorically being made w.e.f. 1st June, 2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns/statements prior to 1st June, 2015 d. VIDYA VARDHANI EDUCATION AND RESEARCH FOUNDATION vs. DCIT (2017) 55 ITR_TRIB 78 (Pn) TDS—Fee under s. 234E for date filing of TDS statement—Applicability of s. 234Er/w s. 200A—Sec. 234E did not apply for the period prior to 1st June, 2015—For under s. 234E charged for the period prior to 1st June, 2015, not sustainable e. SPRIGTIME CLUBS & HOSPITALITY SERVICES (P) LTD. vs. AO (2017) 1 NYPTTJ 219 (Mumbai) TDS—Fees under s. 234E—Defaults committed before 1st June, 2015— Amendment to s. 200A(1) is prospective in nature and therefore, the AO, while processing the TDS statements/returns for the period prior to 1st June, 2015, was not empowered to charge fees under s. 234E—Hence, the demand raised by way of charging of the fees under s. 234E not being valid is deleted. f. SMT. G. INDHIRANI vs. DCIT (2015) 172 TTJ (Chennai) 239 TDS—Fees under s. 234E—Validity vis-a-vis levy by way of intimation under s. 200A—Prior to 1st June, 2015, there was no enabling provision in s. 200A for making adjustment in respect of the statement filed by the assessee with

19 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha regard to TDS by levying fee under s. 234E—Parliament for the first time enabled the AO to make adjustment by levying fee under s. 234E w.e.f. 1st June, 2015—Therefore, while processing the statement under s. 200A the AO could not make any adjustment by levying fee under s. 234E prior to 1st June, 2015—Hence, fee levied by the AO under s. 234E while processing the statement of TDS is beyond the scope of the adjustments provided under s. 200A—However, there is no substance in the argument that the assessee has to voluntarily pay the fee and the AO has no authority to levy fee—If the assessee fails to pay the fee for the period of delay, then the assessing authority has all the powers to levy fee while processing the statement under s. 200A by making adjustment after 1st June, 2015—However, prior to 1st June, 2015, the AO had every authority to pass an order separately levying fee under s. 234E—What was not permissible was levy of fee under s. 234Ewhile processing the statement of TDS and making adjustment—Parliament welcomes the citizens to come forward and comply with the provisions of the Act before filing the statement under s. 200(3)—However if the assessee fails to pay the fee before filing the statement under s. 200(3), the assessing authority could pass a separate order levying such a fee in addition to processing the statement under s. 200A—After 1st June, 2015, the assessing authority is well within his limit to levy fee under s. 234E even while processing the statement under s. 200A and making adjustment—Accordingly, impugned intimation under s. 200A levying fee under s. 234E is set aside and the levy of fee is deleted g. Station Headquarters (Army) vs. ACIT (2019) 200 TTJ (Jd) 1 TDS—Fees under s. 234E—Levy by way of intimation under s. 200A prior to amendment of s. 200A(1)(c) w.e.f. 1st June, 2015—Clause (c) of s. 200A(1) empowers the AO to levy late fee w.e.f. 1st June, 2015 and there is no indication either express or implied that the amendment of cl. (c) of s. 200A(1) is retrospective or clarificatory in nature—Finance Bill, 2015 clearly provides that the amendment is effective from 1st June, 2015—Therefore, no demand or intimation for late fee under s. 234E could be made for the TDS for the assessment years prior to 1st June, 2015—Consequently, the order of the CIT(A) is set aside—AO is well within his jurisdiction to levy late fee under s. 234E for the period starting only from 1st June, 2015 to the date of actual filing of the TDS return

h. Trimurty Buildcon P. Ltd. Vs. DCIT (2019) 174 ITD 252 (Jp) TDS—Processing fee under s. 234E—Leviability—AO while processing the TDS statements for the period prior to 1st June, 2015, was not empowered to charge fees under s. 234E—Sec. 200A as amended by the financial Act, 2015, w.e.f. 1st June, 2015 applied prospectively, hence, although prior to 1st June, 2015, fees under s. 234E can be levied, yet the same cannot be levied while processing TDS statement under s. 200A

20 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha 1.13. In view of above facts and submissions it is very humbly submitted that the penalty/fees so levied u/s 234E may kindly be deleted.” 6. The ld. AR of the assessee also relied upon the decision in the case of Madhya Pradesh Gramin Bank vs. ACIT in ITA No. 222/Ind/2022 to 328/Ind/2022 dated 11.11.2022 wherein he has relied upon the finding of the Bench at page 9 & 10 of the said order of the ITAT Bench. Based on this submission the ld. AR of the assessee submitted that the late fee confirmed by the ld. CIT(A) is required to be reversed. The ld. AR for the assessee further submitted that though it is submitted before the ld. CIT(A) that power to charge fee u/s 234E of the Act has come into effect on 01.06.2015 and therefore, since amendment is prospective the same cannot be applied for the year under consideration. Based on this submission, the ld. AR of the assessee submitted that the late fee the levy and interest thereon is required to be vacated.

21 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha this facts when the levy was not supported by the law the demand is not in accordance with the law. Similar view is taken by the coordinate Bench in the case of Madhya Pradesh Gramin Bank vs. ACIT (supra) wherein in para 9 and 10 the Coordinate Bench has observed as under:- “9. We have considered the rival submissions of both sides and also perused the record. We would observe, in subsequent discussions, that the late fee u/s 234E could not have been levied in the intimations u/s 200A for delay in filing quarterly returns of TDS for the period prior to 01.06.2015. Therefore, by levying late-fee which was not leviable, the Ld. AO has certainly committed a mistake apparent on record. Additionally, we also observe that under the scheme of Income-tax Act, 1961, the assesseee have two remedies against the intimation u/s 200A, viz. (i) file rectification- application u/s 154, or (ii) file appeal u/s 246A. We observe that the remedy to file rectification u/s 154 is not only one of the available remedies but also a simpler remedy and practically resorted to by many of the assessees, particularly in the matter of the late-fee u/s 234E wrongly levied by revenue- authorities. We find that it is not a case of revenue that the rectification- application u/s 154 against the intimation u/s 200A is absolutely barred in the scheme of the Act. We also observe that when the late-fee is not leviable in the law and on facts, by levying the same the assessees have been fastened with the liability beyond and against the scheme of the Act, which should not happen. In this regard, we gainfully refer a recent decision of Hon'ble ITAT, Jodhpur Bench in the case of Akbar Mohammad, Nagaur Vs. ACIT, CPC, Bangalore ITA No. 108 & 109/Jodh/2021 order dated 31.01.2012 in which the Hon'ble Co-ordinate Bench has held thus:

"6.1 Of course, it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the cost of tax payer. Therefore, in the interest of substantial justice, we deem it expedient to restore the issue to the file of the Assessing officer with a direction to pass appropriate orders deleting the addition/ disallowance after duly

22 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha considering the settled judicial position in this regard, which have been decided in the three cases as enumerated above in Para 5." 10. Thus having observed that there was an apparent mistake in the intimations sent by Ld. AO u/s 154 and respectfully following the ratio of the above decision of Hon'ble ITAT, Jodhpur Bench, we are inclined to accept that the Ld. CIT(A) is not justified in dismissing the appeals of assessees. Therefore, Ground No. 1 is allowed.”

Since, the issue has already been decided in favour of the assessee that the late fees u/s 234E of the Act could not have been levied in the intimation u/s 200A for delay in filing quarterly returns of TDS the said power to levy fees has come into effect from 01.06.2015. Considering that aspect of the case we are of the considered view that the levy of late fees in this case before the amendment came into existence is not correct is not correct. Therefore, we vacate the levy u/s 234E of the Act. Based on this observation the appeal filed by the assessee is allowed.

In the result, the appeals of the assessee are allowed.

Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (RATHOD KAMLESH JAYANTBHAI) (DR. S. SEETHALAKSHMI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 04/10/2023 *Santosh

23 ITA Nos. 123Jodh/2022 Sushil Kumar Marlecha Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File

Assistant Registrar Jodhpur Bench