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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & SHRI CHANDRA POOJARI
O R D E R Per Bench
These are a batch of 80 appeals filed by different branches of the Assessee/Appellant Bank, against different orders passed by the National Faceless Appeal Centre (NFAC), Delhi, relating to Assessment Years 2011-12 to 2015-16. The details of the various branches and the orders of the NFAC, Delhi, are given as an annexure to this order.
Late to 672/Bang/2022 DATE OF ITAT Financial Form Fees CIT(A) Appeal ITA No Branch Name TAN of Branch Qtr CIT(A) Appeal Year Type u/s No ORDER Filing Date Page 4 of 16 234E NFAC/2011- ITA 593/Bang/2022 ARASIKERE BLRK12215A 2012-13 26Q Q4 6000 12/10069899 09-Jun-22 01-08-2022 NFAC/2013- ITA 594/Bang/2022 ARASIKERE BLRK12215A 2014-15 26Q Q4 5000 14/10065206 09-Jun-22 01-08-2022 NFAC/2013- ITA 595/Bang/2022 BAGESHPURA BLRK12188B 2014-15 26Q Q2 1548 14/10067413 17-Jun-22 01-08-2022 NFAC/2011- ITA 596/Bang/2022 BALEHONNUR BLRK12371C 2012-13 26Q Q3 8291 12/10069886 14-Jun-22 01-08-2022 NFAC/2011- ITA 597/Bang/2022 BALEHONNUR BLRK12371C 2012-13 26Q Q4 12800 12/10069712 14-Jun-22 01-08-2022 NFAC/2013- ITA 598/Bang/2022 BALEHONNUR BLRK12371C 2014-15 26Q Q1 1400 14/10067412 14-Jun-22 01-08-2022 NFAC/2011- ITA 599/Bang/2022 BANDIHOLE BLRK12396G 2012-13 26Q Q3 5737 12/10068101 14-Jun-22 01-08-2022 NFAC/2012- ITA 600/Bang/2022 BANDIHOLE BLRK12396G 2013-14 26Q Q1 2000 13/10069342 28-Jun-22 01-08-2022 NFAC/2012- ITA 601/Bang/2022 BANDIHOLE BLRK12396G 2013-14 26Q Q2 1600 13/10069182 14-Jun-22 01-08-2022 NFAC/2011- ITA 602/Bang/2022 BELADHARA BLRK12200G 2012-13 26Q Q4 3800 12/10069723 17-Jun-22 01-08-2022 NFAC/2011- ITA 603/Bang/2022 BELUR BLRK12381F 2012-13 26Q Q4 1200 12/10068103 14-Jun-22 01-08-2022 NFAC/2013- ITA 604/Bang/2022 BELUR BLRK12381F 2014-15 26Q Q1 3710 14/10066811 14-Jun-22 01-08-2022 NFAC/2013- ITA 605/Bang/2022 BHOGADI BLRK12257A 2014-15 26Q Q3 212689 14/10067411 14-Jun-22 01-08-2022 NFAC/2011- ITA 606/Bang/2022 BLRK12204D 2012-13 26Q Q4 1188 12/10068251 09-Jun-22 01-08-2022 CHANNAKESHAVAPURA NFAC/2012- ITA 607/Bang/2022 BLRK12204D 2013-14 26Q Q4 3200 13/10069108 09-Jun-22 01-08-2022 CHANNAKESHAVAPURA NFAC/2012- ITA 608/Bang/2022 BLRK12462C 2013-14 26Q Q2 2000 13/10069185 28-Jun-22 01-08-2022 CHANNARAYAPATNA NFAC/2012- ITA 609/Bang/2022 BLRK12462C 2013-14 26Q Q3 3200 13/10069177 10-Jun-22 01-08-2022 CHANNARAYAPATNA NFAC/2012- ITA 610/Bang/2022 CHICKPET BLRK13009D 2013-14 26Q Q2 7200 13/10069351 14-Jun-22 01-08-2022 NFAC/2013- ITA 611/Bang/2022 CHICKPET BLRK13009D 2014-15 26Q Q1 7200 14/10066672 13-Jun-22 01-08-2022 NFAC/2013- ITA 612/Bang/2022 CHICKPET BLRK13009D 2014-15 26Q Q2 4800 14/10066668 13-Jun-22 01-08-2022 NFAC/2012- CHIKKANAYAKANAYAKANA ITA 613/Bang/2022 BLRK12434C 2013-14 26Q Q1 3600 13/10069354 20-Jun-22 01-08-2022 HALLY NFAC/2011- ITA 614/Bang/2022 CHIKMAGALUR BLRK12441C 2012-13 26Q Q3 8200 12/10069882 10-Jun-22 01-08-2022 NFAC/2011- ITA 615/Bang/2022 CHIKMAGALUR BLRK12441C 2012-13 26Q Q4 7400 12/10069709 10-Jun-22 01-08-2022 NFAC/2012- ITA 616/Bang/2022 CHIKMAGALUR BLRK12441C 2013-14 26Q Q3 43200 13/10069352 10-Jun-22 01-08-2022 NFAC/2013- ITA 617/Bang/2022 CHIKMAGALUR BLRK12441C 2014-15 26Q Q1 5800 14/10066673 10-Jun-22 01-08-2022 NFAC/2013- ITA 618/Bang/2022 CHIKMAGALUR BLRK12441C 2014-15 26Q Q2 2800 14/10066669 10-Jun-22 01-08-2022 NFAC/2012- ITA 619/Bang/2022 DEVARAPURA BLRK12431G 2013-14 26Q Q4 16600 13/10069355 20-Jun-22 01-08-2022 NFAC/2011- ITA 620/Bang/2022 DODDABALLAPURA BLRK12519D 2012-13 26Q Q4 11600 12/10068098 17-Jun-22 01-08-2022 NFAC/2012- ITA 621/Bang/2022 DODDABEMMATHI BLRK12317E 2013-14 26Q Q4 10000 13/10069331 17-Jun-22 01-08-2022
NFAC/2012- ITA 622/Bang/2022 DODDATHOGUR BLRK12282E 2013-14 26Q Q1 7200 13/10069332 14-Jun-22 01-08-2022 NFAC/2012- ITA 623/Bang/2022 SIRA BLRK12435D 2013-14 26Q Q4 23200 13/10069353 20-Jun-22 01-08-2022 NFAC/2011- ITA 624/Bang/2022 NARASIPURA BLRK12224C 2012-13 26Q Q3 6930 12/10068249 10-Jun-22 01-08-2022 NFAC/2012- ITA 625/Bang/2022 NARASIPURA BLRK12224C 2013-14 26Q Q1 2400 13/10069477 10-Jun-22 01-08-2022 MALLAMA NFAC/2011- ITA 626/Bang/2022 KANAPURA BLRK12210C 2012-13 26Q Q4 1495 12/10069722 28-Jun-22 01-08-2022 NFAC/2011- ITA 627/Bang/2022 MARTALLY BLRK12162D 2012-13 26Q Q4 12140 12/10069724 09-Jun-22 01-08-2022 NFAC/2012- ITA 628/Bang/2022 MARTALLY BLRK12162D 2013-14 26Q Q4 2800 13/10069333 10-Jun-22 01-08-2022 NFAC/2011- ITA 629/Bang/2022 MAVATHUR BLRK12151G 2012-13 26Q Q4 5800 12/10069896 09-Jun-22 01-08-2022 NFAC/2013- ITA 630/Bang/2022 MAVATHUR BLRK12151G 2014-15 26Q Q1 246400 14/10065205 09-Jun-22 01-08-2022 NFAC/2011- ITA 631/Bang/2022 MUDALAHIPPE BLRK12297F 2012-13 26Q Q4 13600 12/10069898 14-Jun-22 01-08-2022 NFAC/2011- ITA 632/Bang/2022 MYLANAHALLY BLRK12407D 2012-13 26Q Q3 5800 12/10069883 13-Jun-22 01-08-2022 NFAC/2011- ITA 633/Bang/2022 MYLANAHALLY BLRK12407D 2012-13 26Q Q4 10800 12/10069708 13-Jun-22 01-08-2022 NFAC/2012- ITA 634/Bang/2022 MYLANAHALLY BLRK12407D 2013-14 26Q Q1 3400 13/10069165 13-Jun-22 01-08-2022 NFAC/2011- ITA 635/Bang/2022 NELAMANGALA BLRK12398B 2012-13 26Q Q3 12600 12/10069884 13-Jun-22 01-08-2022 NFAC/2011- ITA 636/Bang/2022 NELAMANGALA BLRK12398B 2012-13 26Q Q4 5600 12/10069710 13-Jun-22 01-08-2022 NFAC/2011- ITA 637/Bang/2022 NITTUR BLRK12293B 2012-13 26Q Q3 4000 12/10069890 10-Jun-22 01-08-2022 NFAC/2012- ITA 638/Bang/2022 NITTUR BLRK12293B 2013-14 26Q Q2 8006 13/10069175 09-Jun-22 01-08-2022 NFAC/2012- ITA 639/Bang/2022 NITTUR BLRK12293B 2013-14 26Q Q3 6194 13/10069018 09-Jun-22 01-08-2022 NFAC/2012- ITA 640/Bang/2022 NITTUR BLRK12293B 2013-14 26Q Q4 64200 13/10069016 09-Jun-22 01-08-2022 NFAC/2013- ITA 641/Bang/2022 NITTUR BLRK12293B 2014-15 26Q Q1 5074 14/10066806 28-Jun-22 01-08-2022 NFAC/2013- ITA 642/Bang/2022 NITTUR BLRK12293B 2014-15 26Q Q3 9808 14/10066671 09-Jun-22 01-08-2022 NFAC/2012- ITA 643/Bang/2022 TURUVEKERE BLRK12413C 2013-14 26Q Q1 4600 13/10069167 17-Jun-22 01-08-2022 NFAC/2013- ITA 644/Bang/2022 UNDIGANALU BLRK12186G 2014-15 26Q Q1 4600 14/10066809 28-Jun-22 01-08-2022 NFAC/2011- ITA 645/Bang/2022 PANCHAYATH BLRK12358D 2012-13 26Q Q4 1600 12/10069714 14-Jun-22 01-08-2022 NFAC/2013- ITA 646/Bang/2022 PANCHAYATH BLRK12358D 2014-15 26Q Q2 47794 14/10067258 14-Jun-22 01-08-2022 NFAC/2012- ITA 647/Bang/2022 GUBBI BLRK12414D 2013-14 26Q Q4 1600 13/10069166 17-Jun-22 01-08-2022 NFAC/2013- ITA 648/Bang/2022 GUNDLUPET BLRK12384B 2014-15 26Q Q4 12400 14/10067256 28-Jun-22 01-08-2022 NFAC/2012- ITA 649/Bang/2022 HEBBAL BLRK12167B 2013-14 26Q Q3 281200 13/10069336 09-Jun-22 01-08-2022 NFAC/2013- ITA 650/Bang/2022 HEBBAL BLRK12167B 2014-15 26Q Q3 208200 14/10066810 09-Jun-22 01-08-2022 NFAC/2011- ITA 651/Bang/2022 HIREMAGALUR BLRK12356B 2012-13 26Q Q3 4800 12/10069715 17-Jun-22 01-08-2022 NFAC/2012- ITA 652/Bang/2022 HIRISAVE BLRK13010E 2013-14 26Q Q3 1600 13/10069163 14-Jun-22 01-08-2022 NFAC/2013- ITA 653/Bang/2022 HIRISAVE BLRK13010E 2014-15 26Q Q2 2600 14/10067253 14-Jun-22 01-08-2022
NFAC/2013- ITA 654/Bang/2022 HOSAKOTE BLRK12402F 2014-15 26Q Q2 4391 14/10067255 17-Jun-22 01-08-2022 NFAC/2011- ITA 655/Bang/2022 HUSKUR BLRK12244B 2012-13 26Q Q4 29400 12/10069719 20-Jun-22 01-08-2022 NFAC/2012- ITA 656/Bang/2022 IMMADIHALLY BLRK12406C 2013-14 26Q Q1 4820 13/10069173 13-Jun-22 01-08-2022 NFAC/2012- ITA 657/Bang/2022 IMMADIHALLY BLRK12406C 2013-14 26Q Q2 3200 13/10069173 13-Jun-22 01-08-2022 NFAC/2012- ITA 658/Bang/2022 IMMADIHALLY BLRK12406C 2013-14 26Q Q3 3460 13/10069017 13-Jun-22 01-08-2022 NFAC/2013- ITA 659/Bang/2022 IMMADIHALLY BLRK12406C 2014-15 26Q Q1 24600 14/10066674 13-Jun-22 01-08-2022 NFAC/2013- ITA 660/Bang/2022 IMMADIHALLY BLRK12406C 2014-15 26Q Q2 5520 14/10066670 13-Jun-22 01-08-2022 NFAC/2012- ITA 661/Bang/2022 K R NAGAR BLRK12216B 2013-14 26Q Q3 196877 13/10069349 10-Jun-22 01-08-2022 NFAC/2013- ITA 662/Bang/2022 K R NAGAR BLRK12216B 2014-15 26Q Q3 208200 14/10066808 10-Jun-22 01-08-2022 KABBALLI (C R NFAC/2011- ITA 663/Bang/2022 PATNA) BLRK12318F 2012-13 26Q Q3 3400 12/10069716 20-Jun-22 01-08-2022 NFAC/2013- ITA 664/Bang/2022 KATTEPURA BLRK12153B 2014-15 26Q Q4 34800 14/10067414 20-Jun-22 01-08-2022 NFAC/2011- ITA 665/Bang/2022 KOLLEGALA BLRK12218D 2012-13 26Q Q3 1200 12/10069889 17-Jun-22 01-08-2022 NFAC/2011- ITA 666/Bang/2022 KUMBALAGODU BLRK12274D 2012-13 26Q Q3 5925 12/10069887 14-Jun-22 01-08-2022 NFAC/2011- ITA 667/Bang/2022 KUMBALAGODU BLRK12274D 2012-13 26Q Q4 1400 12/10069711 14-Jun-22 01-08-2022 NFAC/2011- ITA 668/Bang/2022 KUMBALAGODU BLRK12274D 2013-14 26Q Q2 1600 12/10069711 14-Jun-22 01-08-2022 KUVEMPUNAGAR NFAC/2011- ITA 669/Bang/2022 (HSN) BLRK12234F 2012-13 26Q Q3 1600 12/10069888 14-Jun-22 01-08-2022 KUVEMPUNAGAR NFAC/2012- ITA 670/Bang/2022 (HSN) BLRK12234F 2013-14 26Q Q4 15400 13/10069346 14-Jun-22 01-08-2022 NFAC/2011- ITA 671/Bang/2022 SAKALESHPURA BLRK12302D 2012-13 26Q Q4 10200 12/10069717 20-Jun-22 01-08-2022 NFAC/2011- ITA 672/Bang/2022 SHIRANGALA BLRK12471E 2012-13 26Q Q3 3612 12/10069713 17-Jun-22 01-08-2022
The assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.26Q for AY 2013-14 to 2015-16 (Financial Years 2012-13 to 2015-16) in respect of its various branches set out in the annexure to this order. The statement was processed by the respondent. There was a delay in filing the above TDS statement and therefore the AO by intimation u/s. 200A of the Income-Tax Act, 1961 [“the Act”] levied late fee u/s. 234E of the Income- Tax Act, 1961 [“the Act”]. Under Sec.234E of the Act, if there is a delay in filing statement of TDS within the prescribed time then the person responsible for making payment and filing return of TDS is liable to pay by way of fee a sum of Rs.200/- per day during which the failure continues. Section 234E of the Act inserted by the Finance Act, 2012 w.e.f. 1.7.2012. reads as follows:-
“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.”
Aggrieved by the aforesaid orders, the assessee filed appeals before the NFAC /CIT(A). The assessee’s contention before CIT(A) was that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. 1.7.2012. Section 200A of the Act is a provision which deals with how a return of TDS filed u/s.200(3) of the Act has to be processed and it reads as follows:-
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; (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.”
Clause (c) to (f) of section 200A(1) was substituted by the Finance Act, 2015 w.e.f. 1.6.2015. The assessee contended before NFAC (CIT(A)/first appellate authority) that AO could levy fee u/s.234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by virtue of the provisions of Sec.200A(1)(c), (d) & (f) of the Act and those provisions came into force only from 1.6.2015 and therefore the authority issuing intimation u/s. 200A of the Act while processing return of TDS filed u/s.200(3) of the Act, could not levy fee u/s. 234E of the Act in respect of statement of TDS filed prior to 1.6.2015. The assessee, thus, challenged the validity of charging of fee u/s. 234E of the Act. The assessee relied on the decision of the Hon’ble High Court of Karnataka in the case of Fatehraj Singhvi v. UOI [2016] 73 taxmann.com 252 wherein the Hon’ble Karnataka High Court held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have been made for tax deducted at source for the assessment years prior to 1.6.2015.
The NFAC/CIT(Appeals) agreed with the contention that the issue has been decided by the Hon’ble Karnataka High Court in favour of the Assessee in the case of Fatehraj Singhvi (supra). The NFAC/CIT(A) however found that the Hon’ble Gujarat High Court in the case of Rajesh Kourani Vs. UOI (2017) 83 taxmann.com 137 (Guj) and Hon’ble Rajasthan High Court in the cae of M/S.Dundlod Shikshan Sansthan & another Vs. Union of India & others (D.V.Civil Writ Petition No.8672/2014 dated 28.7.2015 has taken a view that even in the absence of Sec.200A of the Act with introduction of Sec.234E of the Act it was always open to the revenue to demand and collect fee for late filing of statement of TDS and that Sec.200A merely regulates the manner in which the computation of such fee would be made and demand raised. The NFAC/CIT(A) referred to decisions rendered by ITAT Mumbai in Ravi Rajkumar Valecha Vs. Assessing Officer, TDS Ward, Kalyan in dated 15.6.2018 and another decision of ITAT Mumbai in the case of Nav-Alka Co-op.Housing Society Vs. DCIT(TDS) ITA No.4456 & 4457/Mum/2018 dated 4.10.2018 wherein the Tribunal after quoting the aforesaid two conflicting decisions of Hon’ble Gujarat and Karnataka High Court, held following decision of Hon’ble Supreme Court in the case of CIT Vs. Vegetable Poducts Ltd. 88 ITR 192 (SC) wherein it was held that when two views are possible, the view which favours the assessee may be adopted, held that levy of interest u/s.234-E prior to 1.6.2015 was not valid. The NFAC/CIT(A) however referred to the decision of the Constitutional Bench of five Judges in the case of CCI Mumbai Vs. M/S.Dilip Kumar and Co.& others (Civil Appeal No.3327 of 2007 dated 30.7.2018 wherein the Hon’ble Supreme Court held Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The NFAC/CIT(A) therefore upheld the levy of interest u/s.234E of the Act on the ground that if return of TDS is filed after 1.6.2015, then levy of interest u/s.234- E is valid. Thus the NFAC/CIT(A) took the view that the date of filing of the TDS return would be material to decide whether the levy of late fee u/s.234-E of the Act, is valid or not.
Aggrieved by the order of the CIT(A), the Assessee has preferred appeals before the Tribunal. We have heard the submission of the learned counsel for the Assessee who submitted that the decision of the Hon’ble Karnataka High Court being the decision of the jurisdictional High Court ought to have been followed by the NFAC. The learned DR reiterated the stand of the revenue as reflected in the order of the CIT(A).
We have considered the submissions of the learned DR and also the grounds of appeal filed by the Assessee. It is not in dispute that if the ratio laid down by the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra) is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015 and therefore levy of interest u/s.234E of the Act would not be valid, following the ratio laid down by the Hon’ble Karnataka High Court.
8. It is no doubt true that three Hon’ble High Courts of Gujarat and Rajasthan, have taken a view contrary to the view taken by the Hon’ble Karantaka High Court in the case of Fateeraj Singhvi (supra). If there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court. The Hon’ble Bombay High Court in the case of Subramaniam - vs.- Siemens India Ltd. (1985) 156 ITR 11 (Bom.) held that in the case where there is conflict of views between different High Courts, authorities must follow the decision of the High Court within whose jurisdiction he is functioning. The Court further added that in cases where there is a conflict between the decisions of non-jurisdictional High Courts, the ITO must take the view which is in favour of the assessee and not against him. In CIT -vs.- Sunil Kumar (1996) 212 ITR 238 (Raj.) it was held that the decision of the Jurisdictional High Court is binding on the Income tax Authorities and the Tribunal within the jurisdiction of the Court and the contrary decision of another High Court is not relevant, and that a point decided by the Jurisdictional High Court can no longer be considered to be a debatable issue. In Baradakanta Mishra -vs.- Bhimsen Dixit AIR 1972 SC 2466 it was held as follows: “It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violations of it. If a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer.”
In the case of Mahadev Cold Storage Vs. AO & 42/Agr/2021 order dated 14.6.2021, it was held that although a centralized NFAC had been created by the notifications, it had to be ensured that where an appellate order was passed by the NFAC, the decision of the jurisdictional high court with jurisdiction over the AO should be followed and applied by the NFAC. Relief should not be refused to the taxpayer merely because there was a conflicting decision of a non-jurisdictional high court. It was held that an appeal against the decision of the Agra ITAT would be before the Allahabad High Court; therefore, the decision rendered by that court was binding not only on the ITAT but also on the NFAC (notwithstanding that it is was sitting in Delhi) that was deciding the issue pertaining to the jurisdiction of the Agra ITAT and hence the Allahabad High Court. The NFAC was bound by the binding decision of the jurisdictional High Court, where the AO was situated.
In so far as the decision of the Hon’ble Supreme Court in the case of CCI Vs. M/S.Dilip Kumar & Co. & others (supra) is concerned, , it was a case where a Constitutional Bench was set up to examine the correctness of the ratio of the 3-Judge Bench decision in the case of Sun Export Corporation v. CC (1997) 6 SCC 564 (‘Sun Export Case’), namely the rule of construction to be applied while interpreting a tax exemption provision / notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. The Division Bench in Dilip Kumar & Co’s case was tackling the question as to whether the assessee was eligible for claiming benefit of concessional rate of import duty in respect of a consignment of ‘Vitamin E50 powder’ (‘animal feed supplement’), in terms of a notification. The revenue authorities contended that the notification was applicable only to ‘animal feed’. The assessee, on the other hand, argued that the concessional duty rate had to be extended to ‘animal feed supplement’ as well, in light of the Sun Export Case, wherein it was held that ‘in case of two views possible, it is well- settled, that one favourable to the assessee in matters of taxation has to be preferred’. After considering a catena of precedents, the Constitutional Bench answered the above question in the following manner:
(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export Case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled.
It is clear from the decision of the Hon’ble Supreme Court, that it has brought out distinction between interpretation of a charging section of a taxing statute and of an exemption notification / clause. The Court held that any ambiguity in a taxing statute should enure to the benefit of the subject / assessee. On the contrary, any ambiguity in the exemption clause must be conferred in favour of revenue and such exemption should be allowed to be availed only to those subjects / assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and they satisfy all the conditions precedent for availing exemption. The levy of late fee u/s.234-E of the Act, cannot be said to be an exemption clause but can be construed only as a charging section, in the sense that imposes a burden on an Assessee. In that view of the matter, we are of the view that the reliance placed by the NFAC, on the decision of Hon’ble Supreme Court in the case of M/S.Dilip Kumar & Co. (supra) to sustain the levy of interest u/s.234-E of the Act, cannot be sustained.
In the light of the above discussion, we are of the view that the levy of interest u/s.234E of the Act in the present case cannot be sustained and the same is directed to be deleted and the appeals of the Assessee are allowed.
In the result, the appeals are allowed.
Pronounced in the open court on the date mentioned on the caption page.