AMARAVATI RPERESENTED BY ITS MANAGING PARTNER MOHANDAS P S vs. INCOME TAX OFFICER (TDS)

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WP(C)/16664/2022HC KeralaKLHC01033716202224 May 2022Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS8 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the levy of late fee under Section 234E for the periods from 2012-13 to 2014-15 was not legally sustainable. The Court relied on its previous decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which held that the amendment to Section 200A, enabling the levy of late fees under Section 234E, was prospective and effective only from June 1, 2015. Therefore, the jurisdiction to levy late fees under Section 234E arose only from that date. Regarding the respondents' contention about delay, the Court found it unmeritorious because the petitioner's challenge was based on a total lack of jurisdiction. In cases of a complete lack of jurisdiction, delay cannot be a ground to deny relief. The cited precedents were distinguished as they did not involve a total lack of jurisdiction. Consequently, the intimations demanding late fees for the period from 2012-13 until June 1, 2015, were quashed.

What were the facts?

The petitioner, Amaravati, a taxpayer, deducted Tax Deducted at Source (TDS) and remitted it to the Income Tax Department. The petitioner experienced delays in filing TDS remittance statements for the assessment years 2012-13 to 2014-15. Consequently, the second respondent, the Deputy Commissioner of Income Tax, levied late fees under Section 234E of the Income Tax Act, 1961, through intimations P1 to P5. The petitioner challenged these demands, arguing that Section 234E, though introduced in 2012, could not be applied to levy late fees for periods prior to the amendment of Section 200A(1)(c) which came into effect on June 1, 2015. The respondents contended that the intimations were appealable orders, the demands had become final due to the petitioner's failure to appeal, and the delay in filing the writ petition should disentitle the petitioner to relief.

What were the issues?

1. Whether the levy of late fee under Section 234E of the Income Tax Act, 1961, is legally sustainable for periods prior to June 1, 2015, given that Section 200A(1)(c) was amended to incorporate the computation of such fees only from that date? (Question of law) Assessee's contention: The petitioner argued that Section 234E was introduced by the Finance Act, 2012, effective July 1, 2012. However, the power to compute and levy late fees under Section 200A(1) was only enabled by the insertion of clause (c) with effect from June 1, 2015. Therefore, the petitioner contended that no liability for late fees under Section 234E could arise for periods before June 1, 2015. Revenue's contention: The respondents argued that the intimations were appealable orders under Section 246A, and the petitioner's failure to challenge them resulted in the demands becoming final. They also contended that the delay in filing the writ petition should disentitle the petitioner to relief, citing decisions like State of Maharashtra v. Digambar, G.C. Gupta v. N.K. Pandey, and State of M.P. v. Bhailal Bhai.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A,Section 246A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 24TH DAY OF MAY 2022 / 3RD JYAISHTA, 1944 WP(C) NO. 16664 OF 2022 PETITIONER: AMARAVATI RPERESENTED BY ITS MANAGING PARTNER MOHANDAS P S AGED 67 YEARS 12/707,PUTHUR ROAD, KOPPAM, PALAKKAD, PIN - 678001 BY ADVS. P.J.ANILKUMAR (A-1768) K.N.SREEKUMARAN N.SANTHOSHKUMAR RESPONDENTS: 1 INCOME TAX OFFICER (TDS) AAYKAR BHAVAN, PIN - 678101 2 DEPUTY COMMISSIONER OF INCOME TAX TDS CPC,AAYKAR BHAVAN, SECTOR-3,VAISHALI, GAZIABAD,UTTARPRADESH, PIN - 201010 3 CENTRAL BOARD OF DIRECT TAXES REPRESENTED BY ITS CHAIRMAN NORTH BLOCK, NEW DELHI, PIN - 110002 4 UNION OF INDIA REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE,DIRECT TAX DEPARTMENT,NEW DELHI, PIN - 110001 BY ADVS. CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.MANU.S, CGC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.05.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 16664 OF 2022 2 BECHU KURIAN THOMAS, J. ----------------------------------------- W.P.(C) No.16664 of 2022 ---------------------------------------- Dated this the 24th day of May, 2022

JUDGMENT As an assessee under the Income Tax Act, 1961, petitioner had deducted TDS, for payments made by him and remitted the same to the Income Tax Department. While filing the statement of returns regarding the remittance of TDS, delay occurred. When the returns were processed, the second respondent, on noticing the delay in filing the statement of TDS remittance, levied late fee under section 234E of the Act.

2.

By Ext.P1 to Ext.P5 intimations, petitioner was called upon to pay the late filing fee under section 234E of the Income Tax Act, 1961 (for short,'the Act'). As per the aforesaid intimations, amounts have been demanded as late fee for the periods from 2012-13 to 2014-15 on the basis of WP(C) NO. 16664 OF 2022 3 the provisions in section 234E of the Act, which is as follows: “234E-Fee

for default

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.”

3.

According to the petitioner, though section 234E of the Act was introduced by the Finance Act, 2012 with effect from 1st July, 2012, since petitioner is being demanded to pay, by Ext.P1 to Ext.P5, late fee for not filing the statement of tax deduction at source, it is necessary to refer to section 200A of the Act. It was further submitted that Section 200A(1) incorporated clause (c) only with effect from 01.06.2015. Sub-clause (c) to section 200A (1) refers to the fee if any to be computed in accordance with the provisions of section 200A(1)(e). It is the claim of the petitioner that till 01.06.2015 petitioner cannot be mulcted with any liability to pay late fee for non filing of any statement of tax deduction at source.

WP(C) NO. 16664 OF 2022 4

4.

A statement has been filed by the respondents objecting to the claim of the petitioner. It is averred that the demands of late filing fee under section 234E of the Act were raised by orders issued from 2013 till 2016 and that the demands are still outstanding. The intimations issued by the department were all appealable orders under section 246A of the Act and the petitioner failed to challenge the levy of late fee. In such circumstances, the demands have become final and the petitioner has accepted the demands. Respondents also pleaded that the delay is a ground to refuse an appropriate relief so as to avoid unsettling the settled things. Relying upon the decisions in State of Maharashtra v. Digambar (AIR 1995 SC 1991), G.C.Gupta and Others v. N.K.Pandey and Others [(1988) 1 SCC 316] and State of M.P. And Another v. Bhailal Bhai (AIR 1964 SC 1006), it was asserted that the delay must defeat the claim raised by the petitioner.

5.

I have heard Sri.P.J.Anilkumar, learned counsel for the petitioner, Sri.Christopher Abraham, learned Standing Counsel for the respondents 1 to 3 as well as Sri.S.Manu,

WP(C) NO. 16664 OF 2022 5 learned Assistant Solicitor General of India for the fourth respondent.

6.

I have considered the rival contentions.

7.

In the decision in M/s.Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018) an identical question arose for consideration. After considering the statutory provisions of section 234E and section 200A of the Act and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the juri iction to levy late fee under section 234E arises only from 01-06.2015 and not earlier.

8.

As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of juri iction of the respondents to impose late fee. Since in matters where total lack of juri iction is WP(C) NO. 16664 OF 2022 6 alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis.

9.

Further the decisions cited are distinguishable on the facts of those cases itself. In the decision in Digambar's case (supra), the delay of 20 years in approaching the High Court for grant of compensation for alleged utilization of the land was held as a decisive factor to disentitle the petitioner therein. Similarly in G.C.Gupta's case (supra) the issue related to seniority and petitioners challenged the orders of confirmation and determination of inter se seniority only after 15 years. In the decision in Bhailal Bhai's case (supra) the question related to refund of tax claimed belatedly. None of those cases related to a total lack of juri iction or authority.

10.

In view of the above, the demand in Ext.P1 to Ext.P5 intimations for the period from 2012-13 to 2014-15 is bereft of authority and cannot be legally sustainable.

WP(C) NO. 16664 OF 2022 7

11.

Accordingly, I quash Ext.P1 to Ext.P5 intimations to the extent it demands late fee under section 234E for the period from 2012-13 till 01.06.2015. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE AJM

WP(C) NO. 16664 OF 2022 8

Appendix — schedule of exhibits
APPENDIX OF WP(C) 16664/2022 PETITIONER’S EXHIBITS : Exhibit P1 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q2 FOR F.Y: 2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P2 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q3 FOR F.Y: 2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P3 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q2 FOR F.Y: 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P4 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q3 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P5 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q1 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P6 TRUE COPY OF THE NOTICE NO. ITBA/COM/F/ 17/2021-22/1037737501(1) DATED 13.12.2021 ISSUED BY THE 1ST RESPONDENT REGARDING TDS DUES INCLUDING LATE FEE UNDER 234E. RESPONDENT’S EXHIBITS :NIL //TRUE COPY// PA TO JUDGE

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