NIRMAL MODI,RANCHI vs. ACIT CPC TDS , GHAZIABAD

For that the levy of penalty/Fee u/s.234E of the I.Tax Act 1961 prior to 01.06.2015 is unsustainable in law as the enabling provision to levy the fee has been inserted w.e.f.01.06.2015. 3. For that under the similar facts & circumstances the Ld. Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in the case of “Sibia Healthcare Pvt. Ltd. Vs. DCIT(TDS), Ghaziabad” has held that the impugned levy of fees u/s.234E is unsustainable in law.

For that any other ground or grounds relief or reliefs shall be urged at the time of hearing.

Brief facts of the case are that the assessee filed TDS statement electronically in Form N.26Q for Quarter-3 in assessment year 2013-2014 on 17.10.2013, for Quarter-4 in assessment year 2014-2015 on 26.09.2014 and for Quarter-2 in assessment year 2015-2016 on 10.04.2015, respectively. Subsequently, the aforesaid TDS statements were processed by TDS CPC Ghaziabad u/s.200A of the Act and demanded a sum of Rs.2980/- being late fee u/s.234E of the Act for Quarter-3 in assessment year 2013-2014, Rs.26,930/- for Quarter-4 in assessment year 2014-2015 and Rs.10,007/- for Quarter-2 in assessment year 2015-2016, respectively. Thereafter the assessee filed a petition u/s.154 of the Act before the ACIT TDS Circle-Ranchi for rectification of the demand, during pendency of the same, final demand notice on account of late filing fee u/s.234E of the Act was served on the assessee on 29.04.2016 in all the cases. Against, which the assessee preferred appeal before the CIT(A). However, the CIT(A) relying on the decision of Hon’ble Gujarat High Court in the case of Ramesh Kaurani Vs. Union of India, [2017] 249 Taxmann 402 dismissed the appeal of the assessee holding that the late fee has correctly been levied for certain defaults in filing the statements.

Now, the assessee is in further appeals before the Tribunal.

Ld. AR, at the outset, submitted that the amendment brought in the Finance Act 2015 w.e.f.01.06.2015 in Section 200A of the Income Tax

On contrary, ld. DR relied on the orders of lower authorities.

I have heard rival submissions of both the parties and perused the material available on the record of the Tribunal along with the judicial pronouncement placed by the ld. AR of the assessee. I find that in all the three cases late fees for filing the statement has been levied u/s.234E of the Act by the tax authorities. However, in respect of TDS statement filed for a period prior to 01.06.2015, no late fee could be levied in the intimation issued u/s.200A of the Act. I am also in agreement with the contention of the ld. AR that the amendment brought in the Finance Act 2015 w.e.f.01.06.2015 in Section 200A of the Income Tax Act, 1961 is prospective in nature, therefore, no computation of late fee or demand or intimation u/s.234E of the Act could be made for TDS deducted in 4 ITA No.82-84/Ran/2018 respective statements prior to 01.06.2015 and processed u/s.200A of the Act. I have also gone through the decision of coordinate bench of the Tribunal placed by the ld. AR of the assessee in the case of State Bank of India, Gwalior Vs. CIT(A), ITA No.442/Ag/2018, order dated 09.04.2018, wherein the Tribunal in para 13 has held as under :- “8. Heard the rival contention and perused the material relevant. We find that while deciding the issue against the appellant assessee the ld. CIT(A) has placed reliance on 'Rajesh Kaurani vs. Union of India', 83 Taxmann.com 137 (Guj.) wherein it was held that Section 200A of the Act is a machinery provision providing the mechanism for processing a TDS statement of deduction of tax at source and for making adjustment. The Ld. CIT(A) has further held that this decision was delivered after considering numerous ITAT and High Court decisions and therefore this decision in 'Rajesh Kaurani' (Supra), holds the fields.

It is seen that prior 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E of the Act. The provision of Section 234E of the Act is charging provision i.e. substantive provision which could not be applied retrospectively, unless it is expressly provided in the Act, to levy the late fee for any delay in filing the TDS statement for the period prior to 01.06.2015. The counsel for the assessee has rightly contended that in the absence of enabling provisions u/s 200A of the Act, such levy of late fee is not valid relying on Group of SBI and Ors. The decisions in the cases of 'CIT vs. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC), 'Sudarshan Goyal vs DCIT (TDS)' ITA No.442/Agr/2017 and Fatehraj Singhvi Vs. UOI (2016) 289 CTR 0602 (Karn) (HC). The decisions relied on by the Ld. DR are distinguishable on facts, as the issue involved in those cases pertains to interest u/s 201(1) and 201(1A) on the amount of TDS whereas in the present cases the issue were pertains to liability of late fee u/s 234E of the Act for delay in filing TDS statement which was inserted from 01.06.2015. 10. On similar facts, we have decided the same issue in the assessee's own case 'Sudershan Goyal vs. DCIT (TDS)', in ITA No. 442/Agra/2017 dtd. 09.04.2018 authored by one of us (the Ld. J.M.). The relevant part of the order is reproduced as follows:

Heard. The ld. CIT(A), while deciding the matter against the assessee, has placed reliance on 'Rajesh Kaurani vs. UOI', 83 Taxmann.com 137 (Guj), wherein, it has been held that section 200A of the Act is a machinery provision providing the mechanism for processing a statement of deduction of tax at source and for 5 ITA No.82-84/Ran/2018 making adjustments. The ld. CIT(A) has held that this decision was delivered after considering numerous ITAT/High Court decisions and so, this decision in 'Rajesh Kaurani' (supra) holds the field.

We do not find the view taken by the ld. CIT(A) to be correct in law. As against 'Rajesh Kaurani' (supra), 'Shri Group of SBI and Ors. Fatehraj Singhvi and Others vs.UOI', 73 Taxmann.com 252 (Ker), as also admitted by the ld. CIT(A) himself, decides the issue in favour of the assessee. The only objection of the ld. CIT(A) is that this decision and others to the same effect have been taken into consideration by the Hon'ble Gujarat High Court while passing 'Rajesh Kaurani' (supra). However, while observing so, the ld. CIT(A) has failed to take into consideration the settled law that where there is a cleavage of opinion between different High Courts on an issue, the one in favour of the assessee needs to be followed. It has so been held by the Hon'ble Supreme Court in 'CIT vs. Vegetable Products Ltd.', 88 ITR 192 (SC). It is also not a case where the decision against the assessee has been rendered by the Juri ictional High Court qua the assessee.

In 'Shri Fatehraj Singhvi and Others' (supra) it has been held, inter alia, as follows:

It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the Group of SBI and Ors. Deductor to reopen the said question unless he has made payment under protest."

In view of the above, respectfully following 'Shri Fatehraj Singhvi and Others' (supra), 'Sibia Healthcare Pvt. Ltd. vs. DCIT (TDS)', order dated 09.06.2015 passed in ITA No.90/ASR/2015, for A.Y.2013-14, by the Amritsar Bench of the Tribunal, and 'Shri Kaur Chand Jain vs. DCIT, CPC (TDS) Ghaziabad', order dated 15.09.2016, in ITA No.378/ASR/2015, for A.Y. 2012-13, the grievance of the assessee is accepted as justified. The order under appeal is reversed. The levy of the fee is cancelled."

In the above view, respectfully following 'Shri Fatehraj Singhvi and Ors' (Supra), 'Sibia Healthcare Pvt. Ltd. Vs. DCIT (Supra), 'Shri Kaur Chand Jain vs. DCIT', (Supra), and our own finding in the case of 'Sudershan Goyal' (Supra), we accept the grievance of the assessees as genuine. Accordingly, the orders of the CIT(A) are reversed and the fee so levied under section 234E of the Act is cancelled.”

On perusal of the appellate order, I find that the CIT(A) has relied on the decision of Hon’ble Gujarat High Court in the case of Rajesh Kaurani (supra), which is against the assessee. However, if there is a cleavage of opinion between different Courts on an issue the one in favour of the assessee needs to be followed. Therefore, the decision relied upon by the CIT(A) cannot be accepted, whereas the reliance placed by the ld. AR of the assessee in case of State Bank of India, Gwalior (supra) favouring the assessee is sustained. Accordingly, respectfully following the above judicial pronouncement, I direct the Revenue to delete the levy of late fees u/s.234E of the Act in all the three cases i.e. Rs.2980/- for Quarter-3 in assessment year 2013-2014, Rs.26,930/- for Quarter-4 in assessment year 2014-2015 and Rs.10,007/- for Quarter-2 in assessment year 2015-2016, respectively. I order accordingly.

In the result, all the three appeals of the assessee are allowed. Order pronounced in the open court on 20/05/2019. (CHANDRA MOHAN GARG) न्यानयक सदस्य / JUDICIAL MEMBER रााँची Ranchi; ददनांक Dated 20/05/2019 Prakash Kumar Mishra, Sr.P.S.