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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 1657/Mum/2022 (A.Y. 2013-14) ITA No. 1658/Mum/2022 (A.Y. 2014-15) Shubham Spaces, 001-002, Sai Prasad Apartment, Behind Shiv Om Hospital, Mira-Bhayander (East), Maharashtra-401107. PAN: PNES34322B ...... Appellant Vs. National Faceless Appeal Centre (NFAC)-Delhi. ..... Respondent Appellant/Assessee by : None Respondent/Revenue by : Sh. Satyapal Kumar, Sr.DR Date of hearing : 21/09/2022 Date of pronouncement : 16/12/2022 ORDER PER GAGAN GOYAL, A.M: These two appeals by assessee are directed against the order of National Faceless Appeal Centre, Delhi [for short ‘NFAC’] vide common order dated 26.04.2022 for Assessment Years (AY) 2013-14 & 2014-15 respectively. We shall first take up appeal of assessee for A.Y. 2013-14 as lead case. The assessee has raised the similar grounds of appeal for both the AYs, which are as under:
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“1) The Ld. CIT (Appeal) erred in confirming the TDS CPC the levying a sum of Rs.152485/- towards late filing fees u/s 234E of the Act by way of raising intimation u/s 200A of the Act. It is prayed that Ld. CIT (Appeal) be directed to waive the said fees 2) The Ld. CIT (Appeal) failed to appreciate that the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to Section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01/6/2015. Levy of the fees u/s 234E while issuing intimation u/s 200A of the Act for the period prior to 01-06-2015 without having power to collect is invalid and void ab initio. 3) The Ld. CIT (Appeal) erred in confirming TDS CPC while calculating a sum of Rs 128484/- (as per latest justification report) towards the consequential interest u/s 220(2) of the Act on levy of late filing fees u/s 234E of the Act. It is prayed that Ld. CIT (Appeal) be directed to waive such consequential interest.” 2. Brief facts of the case are that assessee is a partnership firm filed its quarterly statement of TDS for quarter -2, 3 & 4 for Financial Year (FY) 2012-13 on 02.11.2013 whereas due dates for filing was 15.10.2012, 15.01.2013 and 15.05.2013 respectively i.e. TDS returns on quarterly basis were filed delayed. 3. CPC, TDS imposed a late fee under section 234E as under: Fin Year Quart Due date Date of Delay Demand Interest u/s Intimation er of TDS Filing of days U/s 234E 220(2) as u/s 200A Return TDS Return per latest order u/s 154 dated 10.03.2021 2012-13 Q2 15.10.2012 02.11.2013 383 76,600 66642 28.12.2013 days 2012-13 Q2 15.01.2013 02.11.2013 292 41,685 36192 28.12.2013 days 2012-13 Q2 15.05.2013 02.11.2013 171 34,200 25650 28.12.2013 days
Before adjudicating the matter, it is essential to discuss the provisions of section 234E and section 200A (1) (c) of the Act as under:
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[G.—Levy of fee in certain cases 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 the 1st day of July, 2012.] Section - 200A, Income-tax Act, 1961 - FA, 2022 [Processing of statements of tax deducted at source. 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:- (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;
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(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:] 5. The issue which arises in the present set of appeals is against intimation issued by the Assessing Officer under section 200A of the Act, wherein fees payable under section 234E of the Act have been charged by the Assessing Officer. The Legislature had inserted clause (c) to section 200A (1) of the Act specifically w.e.f. 01.06.2015 and the case of assessee before us was that in such circumstances where the said amendment was introduced w.e.f. 01.06.2015 and there was nothing to suggest that the said amendment was clarificatory or retrospective in nature, then no such late fees could be charged under section 234E of the Act in respect of TDS statements which were filed prior to 01.06.2015. 6. Briefly, in the facts of the case, the assessee was required to deduct tax at source out of payments made on account of interest for the respective quarters in the accounting periods 2012-13, 2013-14 and 2014-15. The assessee was required to file quarterly TDS returns intimating the tax deducted at source from various payments made in each of the quarter, as per section 200(3) of the Act. Further, the requirement of the Act was to file the said TDS returns within stipulated period as provided under the section. Admittedly, in the present appeals, the TDS returns were filed belatedly. The Assessing Officer while processing the TDS returns issued intimation to the respective assessee under section 200A of the Act and levied late filing fees under section 234E of the Act.
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In appeal, the CIT (A) held that the Assessing Officer was empowered to raise the said demand under section 234E of the Act while issuing intimation under section 200A of the Act.
As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision.
Section 234E (1) of the Act provides that where a person fails to deliver or cause to be delivered, a statement within time prescribed in section 200(3) of the Act or the proviso to section 206C (3) of the Act, he shall be liable to pay, by way of fees, sum of Rs.200/- for every day during which the failure continues. The said provisions were inserted by the Finance Act, 2012 w.e.f. 01.07.2012. Under sub- section (2), it is further provided that the amount of fees referred to in sub- section (1) shall not exceed the amount of tax deductible or collectable, as the case may be. Sub-section (3) further lays down that the amount of fees referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section 200(3) of the Act or the proviso to section 206C(3) of the Act. The provisions of said section have been made applicable to a statement to be delivered or cause to be delivered on or after the first day of July, 2012.
Reading the above said provisions of the Act, it transpires that where tax has been deducted at source by a deductor out of the account of deductee, then the onus is upon the deductor under section 200 of the Act to prepare a statement in such form and verified in such manner which is prescribed under the
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Act in which the particulars of tax deduction at source are to be provided and the said statement is to be delivered or cause to be delivered within such time as may be prescribed. Rule 31A of the Rules provided the time limit for the furnishing of statement for tax deduction at source on quarterly basis. Section 234E of the Act levies fees for default in furnishing the statements of tax deducted at source. Such fees is to be paid before delivering or causing to be delivered a statement in accordance with section 200(3) of the Act or proviso to section 206C(3) of the Act. In other words, in case the assessee has defaulted in not delivering the statement or causing to deliver the statement within time prescribed, then he is liable to pay the fees which is so prescribed under the Act and such fees shall not exceed the amount of tax deductible or collectable at source but the same has to be paid along with statement which is to be delivered under the provisions of section 200(3) of the Act. Though the statement of tax deducted at source has to be furnished by the deductor, no doubt, under section 200 of the Act, but the same has to be processed by the prescribed authority as per provisions of section 200A of the Act. In case there is any variation in the tax, sum deductible under the Chapter and / or their payment, the Assessing Officer is empowered to make adjustments in this regard and also reject incorrect claim made by the deductor which is apparent from the information in the statement filed by the deductor. Further, the Income - tax authority is authorized to charge interest, if any, and the same shall be computed on the basis of sums deductible in addition to the amount of tax deducted at source, which is to be paid to the account of Treasury by the deductor. In case of any default, interest is to be charged against such deductor and the same is to be computed as per provisions of section 200A(1)(b) of the Act. Further, in addition to both these amounts, clause (c)
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to section 200A of the Act provides fees to be levied which shall be computed in accordance with the provisions of section 234E of the Act. The said provision to charge fees by the prescribed authority has been substituted for earlier provisions by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to the said substitution though the provisions of section 234E of the Act for payment of fees for default in furnishing the statement were inserted by the Finance Act, 2012 w.e.f. 01.07.2012, the prescribed authority did not have the power to charge the said fees, while processing the quarterly statements / returns under section 200A of the Act.
Now, looking at various provisions of the Act, the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the Assessing Officer which processing the intimation under section 200A of the Act could charge late fee under the provisions of section 234E of the Act. The assessee claims that the Assessing Officer at best could charge the difference in tax deducted and not paid in Treasury from the deductor and / or any interest payable on such deduction of tax at source. However, till substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015, the Assessing Officer was not empowered to charge fees under section 234E of the Act. The case of Revenue on the other hand, was that it was the duty of deductor while furnishing the statement under section 200(3) of the Act to deposit the fees referred to in section 234E(1) of the Act. The learned CIT-DR stressed that fees referred to in sub-section (1) had to be paid while delivering or causing to deliver the statement in accordance with provisions of section 200(3) of the Act or the proviso to section 206C(3) of the Act. However,
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various regulations and the statutory provisions in this regard point out that undoubtedly, the responsibility of the deductor was to deposit the tax deducted at source in time and if not so, then with interest and consequently, where the tax was not paid in time and interest was not paid in time and then, where the statement of tax deducted at source could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees under section 234E of the Act. However, in case any default occurs due to the non-payment of fees by the assessee in this regard, then the provisions which has to be considered is section 200A(1)(c) of the Act. The power to charge / collect fees as per provisions of section 234E of the Act was vested with the prescribed authority under the Act only on substitution of earlier clause (c) to section 200A of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Once any provision of the Act has been made applicable from a respective date, then the requirement of the statute is to apply the said provisions from the said date.
In respect of the issue raised before us, it is clear that the prescribed authority has been vested with the power to charge fees under section 234E of the Act only with regard to levy of fees by the substitution made by Finance (No.2) Act, 2015 w.e.f. 01.06.2015. Once the power has been given, under which any levy has to be imposed upon tax payer, then such power comes into effect from the date of substitution and cannot be applied retrospectively. The said exercise of power has been provided by the statute to be from 01.06.2015 and hence, is to be applied prospectively. There is no merit in the claim of Revenue that even without insertion of clause (c) under section 200A(1) of the Act, it was incumbent upon the assessee to pay fees, in case there is default in furnishing the statement of tax deducted at source. Admittedly, the
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onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to said substation, the Assessing Officer had no authority to charge the fees under section 234E of the Act while issuing intimation under section 200A of the Act. Before exercising the authority of charging any sum from any deductor or the assessee, the prescribed authority should have necessary power vested in it and before vesting of such power, no order can be passed by the prescribed authority in charging of such fees under section 234E of the Act, while exercising jurisdiction under section 200A of the Act. Thus, in the absence of enabling provisions, under which the prescribed authority is empowered to charge the fees, the Assessing Officer while processing the returns filed by the deductor in respect of tax deducted at source can raise the demand on account of taxes, if any, not deposited and charge interest. However, prior to 01.06.2015, the Assessing Officer does not have the power to charge fees under section 234E of the Act while processing TDS returns. In the absence of enabling provisions, levy of fees could not be affected in the course of intimation issued under section 200A of the Act prior to 01.06.2015.
The perusal of Memo explaining the provision relating to insertion of clause (c) to section 200A of the Act clarifies the intention of Legislature in inserting the said provision. The provisions of section 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. Before insertion of section 234E of the Act, the Finance (No.2) Act, 2009 had inserted section 200A in the Act, under the said
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section, mechanism was provided for processing of TDS statements for determining the amount payable or refundable to the deductor, under which the provision was also made for charging of interest. However, since the provisions of section 234E of the Act were not on statute when the Finance (No.2) Act, 2009 was passed, no provision was made for determining the fees payable under section 234E of the Act at the time of processing the TDS statements. So, when section 234E of the Act was introduced, it provided that the person was responsible for furnishing the TDS returns / statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge / levy the fee under section 234E of the Act while processing the TDS returns / statements filed by a person did not exist when section 234E of the Act was inserted by the Finance Act, 2012. The power to charge fees under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A (1) of the Act w.e.f. 01.06.2015, then in such cases, the Assessing Officer is not empowered to charge fees under section 234E of the Act while processing the TDS returns filed by the deductor.
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Another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) of the Act is clarificatory or is prospective in nature and is not applicable to the pending assessments. Undoubtedly, the provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements / returns were filed belatedly to pay the fees as per said section. However, in cases, where the assessee has failed to deposit the said fees, then in order to enable the Assessing Officer to collect the said fees chargeable under section 234E of the Act, it is incumbent upon the Legislature to provide mechanism for the Assessing Officer to charge and collect such fees. In the absence of enabling provisions, the Assessing Officer while processing the TDS statements, even if the said statements are belated, is not empowered to charge the fees under section 234E of the Act. The amendment was brought in by the Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment where empowerment is given to the Assessing Officer to levy or charge the fees cannot be said to be clarificatory in nature and hence, applicable for pending assessments.
Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment
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provided under section 200A of the Act and such adjustment could not stand in the eye of law.
The issue arising in the present appeals is identical to the issue before the Tribunal in bunch of appeals and where the amendment to section 200A (1) of the Act is procedural in nature, then the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Accordingly, intimation issued by the Assessing Officer under section 200A of the Act in all the appeals does not stand and the demand raised by charging the fees under section 234E of the Act is not valid and the same is deleted. The ground nos. 1 & 2 of appeal raised by the assessee are thus, allowed.
As far as Ground No.3 is concerned is related to charging of interest under section 220(2) of the Act on levy of late filing fees under section 234E of the Act is consequential in nature, hence, in view of our decision in favour of assessee need not be decided. But still we would like to comment on the same as the same has legal and academic value.
Interest under section 220(2) can be applied only in case of default/delay of tax is involved, section 220(2) cannot be invoked in case of penalty or fee. Hence, although not required still as discussed above, this Ground of appeal is also allowed.
In the result, appeal of assessee is allowed and CPC, TDS is directed to delete the demand raised under section 234E of the Act along with section 220(2) of the Act.
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ITA No. 1658/Mum/2022 (A.Y. 2014-15) 20. As the facts and issue involved in this appeal are similar to ITA No. 1657/Mum/2022 for A.Y. 2013-14, the results of ITA No. 1657/Mum/2022 are applicable mutatis mutandis to this appeal also.
In the result, ITA No. 1658/Mum/2022 is allowed and CPC, TDS is directed to delete the demand raised under section 234E of the Act along with section 220(2) of the Act.
In the result, both the appeals filed by assessee are allowed. Order pronounced in the open court on 16th day of December, 2022.
Sd/- Sd/- (KULDIP SINGH) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, िदनांक/Dated: 16/12/2022 SK, Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकर आयु�(अ)/The CIT(A)- 4. आयकर आयु� CIT 5. िवभागीय �ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड� फाइल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai