SMEARA ENTERPRISES vs. INCOME TAX OFFICER (TDS)

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WP(C)/29254/2021HC KeralaKLHC01072760202117 December 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the demand for late fee under Section 234E for the periods from 2012-13 to 2014-15 is legally unsustainable. The Court reasoned that although Section 234E was introduced in 2012, the mechanism for computing and levying such fees, as provided in Section 200A, was amended to include relevant clauses only with effect from June 1, 2015. Therefore, the amendment enabling the imposition of late fees is prospective. The Court followed its earlier decision in M/s. Sarala Memorial Hospital v. Union of India and Another, which held that the amendment to Section 200A was prospective. Consequently, the intimations demanding late fees for the period from 2011-12 till June 1, 2015, were quashed. The operative direction was to quash the impugned intimations to the extent they demanded late fee under Section 234E for the specified period.

What were the facts?

The petitioner, Smeara Enterprises, received intimations (Ext.P1 to Ext.P13) demanding late filing fee under Section 234E of the Income Tax Act, 1961. These demands pertain to the periods from 2012-13 to 2014-15. The petitioner contends that Section 234E, while introduced in 2012, became enforceable for imposing late fees only after amendments to Section 200A of the Act, specifically the incorporation of clauses (c) to (f) with effect from June 1, 2015. The petitioner argues that no liability for late fees under Section 234E can be imposed for periods prior to this date.

What were the issues?

1. Whether the late fee under Section 234E of the Income Tax Act, 1961, can be levied for the period prior to June 1, 2015, considering the amendments to Section 200A of the Act? (Question of law) Assessee's contention: The petitioner argues that Section 234E was introduced by the Finance Act, 2012, effective from July 1, 2012. However, the power to compute and levy late fees under Section 234E was enabled by amendments to Section 200A, specifically the incorporation of clauses (c) to (f), which took effect only from June 1, 2015. Therefore, no late fee can be demanded for periods before June 1, 2015. The petitioner relies on the decision in M/s. Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018). Revenue's contention: The judgment records no specific arguments from the revenue.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A

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 FRIDAY, THE 17TH DAY OF DECEMBER 2021/26TH AGRAHAYANA, 1943 WP(C) NO. 29254 OF 2021 PETITIONER: SMEARA ENTERPRISES SHOP NO.4, BAY PRIDE MALL, SHANMUGHAM ROAD, KOCHI - 682 031 (REPRESENTED BY SMT.MINI ASHRAFF, MANAGING PARTNER). BY ADVS. SRI.K.N.SREEKUMARAN SRI.P.J.ANILKUMAR (A-1768) SRI.N.SANTHOSHKUMAR SRI.N.JAYAKUMAR RESPONDENTS: 1 INCOME TAX OFFICER (TDS) AAYKAR BHAVAN, I.S.PRESS ROAD, ERNAKULAM - 682 018. 2 DEPUTY COMMISSIONER OF INCOME TAX TDS CPC, AAYKAR BHAVAN, SECTOR -3, VAISHALI, GAZIABAD, UTTARPRADESH - 201 010. 3 COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, NEW DELHI - 110 003. 4 CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI - 110 002, REPRESENTED BY ITS CHAIRMAN. 5 THE UNION OF INDIA MINISTRY OF FINANCE, DIRECT TAXES DEPARTMENT, W.P.(C) No.29254/21 -:2:- NEW DELHI - 110 001, REPRESENTED BY ITS SECRETARY. BY SRI.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.29254/21 -:3:- BECHU KURIAN THOMAS, J. ----------------------------------------- W.P.(C) No.29254 of 2021 ---------------------------------------- Dated this the 17th day of December, 2021

JUDGMENT By Ext.P1 to Ext.P13 intimations, petitioner has been called upon to pay the late filing fee under section 234E of the Income Tax Act, 1961 (for short,'the Act').

2.

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 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 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.”

3.

Though section 234E of the Act was introduced by the Finance Act, 2012 with effect from 1st July, 2012, since petitioner is being demanded by Ext.P1 late fee for not filing the statement of tax deduction at source, it is necessary to refer to section 200A of the Act. Section 200A(1) incorporated clause (c) to clause (f) with effect from 01.06.2015. Sub-clause 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.

4.

I have heard Sri.K.N.Sreekumaran, learned counsel for the petitioner, Sri.Christopher Abraham, learned Standing Counsel for the respondents 1 to 4 as well as Sri.S.Manu, learned Assistant Solicitor General of India for the fifth respondent.

5.

Learned counsel for the petitioner brought to my attention the decision in M/s.Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018) wherein an identical question arose for consideration. After considering the statutory provisions and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only with effect from 1st June, 2015 and is thus prospective in nature. It is submitted that the aforesaid judgment has become final and is binding upon the authorities.

6.

In view of the above, the demand in Ext.P1 to Ext.P13 intimations for the period from 2012-13 to 2014-15 is bereft of authority and cannot be legally sustainable.

7.

Accordingly, I quash Ext.P1 to Ext.P13 intimations to the extent it demands late fee under section 234E for the period from 2011-12 till 01.06.2015. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE vps

Appendix — schedule of exhibits
APPENDIX OF WP(C) 29254/2021 PETITIONER'S/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 A3 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 Q4 FOR F.Y.2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P4 TRUE COPY OF THE INTIMATION OF LEVY U/S. 234E, AGAINST 26Q OF Q1 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P5 TRUE COPY OF THE ORDER INTIMATION U/S. 234E, AGAINST 26Q OF Q2 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P6 TRUE COPY OF THE ORDER INTIMATION U/S. 234E, AGAINST 26Q OF Q3 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P7 TRUE COPY OF THE ORDER INTIMATION U/S. 2343, AGAINST 24Q OF Q4 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P8 TRUE COPY OF THE ORDER INTIMATION U/S.234E, AGAINST 26Q OF Q4 FOR 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P9 TRUE COPY OF THE ORDER INTIMATION U/S.234E, AGAINST 26Q OF Q1 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P10 TRUE COPY OF THE ORDER INTIMATION W.P.(C) No.29254/21 -:7:- U/S.234E, AGAINST 26Q OF Q2 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P11 TRUE COPY OF THE ORDER INTIMATION U/S.234E, AGAINST 26Q OF Q2 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P12 TRUE COPY OF THE ORDER INTIMATION U/S.234E, AGAINST 26Q OF Q4 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P13 TRUE COPY OF THE ORDER INTIMATION U/S.234E, AGAINST 24Q OF Q4 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P14 TRUE COPY OF THE INTIMATION LETTER DATED 8/5/2017 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P15 TRUE COPY OF THE ORDER DATED 29/11/2021 FOR THE ASSESSMENT YEAR 2013-14 ISSUED BY 3RD RESPONDENT. EXHIBIT P16 TRUE COPY OF THE ORDER DATED 29/11/2021 FOR THE ASSESSMENT YEAR 2014-15 ISSUED BY 3RD RESPONDENT. EXHIBIT P17 TRUE COPY OF THE ORDER DATED 29/11/2021 FOR THE ASSESSMENT YEAR 2015-16 ISSUED BY 3RD RESPONDENT.

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