TEHSILDAR, BARI,DHOULPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CPC-TDS, GHAZIABAD

ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by the assessee against the order of ld.CIT(A), Alwar dated 09/10/2017 for the A.Y. 2015-16 in the matter of levy of penalty U/s 234E of the Income Tax Act, 1961 (in short, the Act).

“Late filing fee of Rs. 24,600/- U/s 234E for delay in filing of TDS return for Quarter 4 F.Y. 2014-15.” Thereafter the A.O. levied penalty for the period prior to 01/06/2015. It was the contention of the ld AR that levy of late fee for the period is not valid and in support of the same, the assessee placed on record the order of the Tribunal in the case of M/s Mentor India Limited Vs DCIT in dated 16/12/2016 wherein after considering the decision of Hon’ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan Vs Union of India (2015) 63 taxmann.com 243 (Raj.) wherein it was held that no demand of fees U/s 234E can be made in the intimation issued for TDS statement processed U/s 200A of the Act before 01/6/2015. The precise observation of the Tribunal was as under:

“8. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the authorities below. Recently the Coordinate Bench of Jaipur ITAT in the case of M/s. Sandeep Jhanwar Advisory Services Pvt. Ltd. Vs. The TDS CPC, Gaziabad in & 723/JP/2016 for the A.Y. 2013-14 / Q-3 & 4 has allowed the appeal of the assessee by observing as under:-

3 ITA 39/JP/2018 Tehsildar Vs ACIT “3.5. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. We have also gone through the case laws relied upon by the ld. Counsel. We find merit into the contention of ld. Counsel that he jurisdictional High Court has decided the validity of section 234E, but has not decide the issue of power of AO for levy of tax under section 234E in the judgment rendered in the case of M/s. Dundlod Shikshan Sansthan and Others (supra) as relied by ld. CIT (A). We have considered the recent decision of Hon’ble Karnataka High Court in the case of Shri Fatheraj Singhvi & Ors (supra) wherein the issue of levy of fees u/s 234E on statements processed u/s 200A before 01.06.2015 has been categorically discussed by the Hon’ble High Court and in para 24 of the said order it was held that “no demand for fee u/s 234E can be made in intimation issued for TDS deducted u/s 200A before 01.06.2015”. We have also gone through the judgment of Hon’ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd. (supra) wherein the Hon’ble Apex Court has discussed in detail the general principle of concerning retrospectively and held that unless contrary intention appears, a legislation is presumed not to have a retrospective operation. Respectfully following the above judgments of Hon’ble Supreme Court and Hon’ble Karnataka High Court, we set aside the order of ld. CIT (A) and direct the AO to drop the demand raised of Rs. 4,200/- u/s 234E on statements processed u/s 200A before 01.06.2015. Thus grounds raised by the assessee are allowed.” The Hon’ble Jurisdictional High Court in the case of Dundlod Shikshan Sansthan Vs. Union of India (supra) has decided the issue of vires of Section 234E of the Act. The Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs Union of India & Ors. (supra) has held that the demand U/s 200A for computation and intimation for the payment of fee U/s 234E could not be made in purported exercise of power U/s 200A for the period of the respective assessment years prior to 1st June, 2015. When the intimation of the demand notices U/s 200A is held to be without authority of law so far as it relates to computation and demand of fee U/s 234E, the question of further scrutiny for testing the 4 ITA 39/JP/2018 Tehsildar Vs ACIT constitutional validity of Section 234E would be rendered as an academic exercise. We find that the Hon’ble Jurisdictional High Court in the case of Dundlod Shikshan Sansthan Vs. Union of India (supra) has also considered the decision of the Hon’ble Bombay High Court in the case of Rashmikant Kundalia Vs. Union of India (2015) 229 Taxman 596 wherein the Hon'ble High Court has decided the nature of demand. The Hon'ble High Court has held that Section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the department has to prove due to the late filing of the TDS statements. Hence from both the decisions relied upon by the ld. DR, the issue of power of imposing late fee is not decided but the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs. Union of India & Ors. (supra) has decided the issue in favour of the assessee and held that the late fee U/s 234E of the Act has raised vide impugned demand notice U/s 200A of the Act. We find force in the contention of the ld. AR of the assessee. If there is conflicting views taken by the two Hon'ble Courts, then the view, which favours the assessee should be adopted. In this regard, the ld AR of the assessee has relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township P. Ltd. (2014) 367 ITR 466 (SC). In view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township (supra), the demand so raised are directed to be deleted.

Similarly identical findings have also been given in all the appeals of other assessment years.

Order pronounced in the open court on 08th August, 2019

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