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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 619/JP/2018
PER VIJAY PAL RAO, JM :
This appeal by the assessee is directed against the order dated 19th February,
2018 of ld. CIT (A), Kota for the assessment year 2014-15. The assessee has raised
the following grounds :-
“ 1. That the on the facts, in the circumstances of the case and in law the order passed by the learned Lower Authorities is against the law and facts of the case and deserves to be quashed.
That the learned CIT (Appeals) erred in passing ex-parte order without giving any opportunity of hearing to the appellant which is against the Principal of natural justice.
That the ld. Assessing Officer has erred in charging fees u/s 234E vide order u/s 200A in the amount of Rs. 28,000/- for late filing of TDS return statement and charging Interest of Rs. 321/- thereon for late payment by brushing aside the explanation of the appellant and the learned CIT (Appeals), Kota also erred in confirming the same without there being any basis.
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The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.”
Since there was a delay in filing the quarterly TDS statement in Form 26Q as
per provisions of section 200(3) of the IT Act for the assessment year under
consideration, the AO levied the fee for default in furnishing the statement while
processing the statement under section 200A of Rs. 28,320/- as provided under
section 234E of the IT Act. The assessee challenged the action of the AO before the
ld. CIT (A) but could not succeed.
Before us, the ld. A/R of the assessee has submitted that since section 234E has been inserted by Finance Act 2012 with effect from 1st July, 2012, therefore, the levy of fee for delay in furnishing the TDS statement can be levied only from 1st July,
2012 onwards. Further, he has pointed out that prior to the amendment with effect
from 01.06.2015, the AO did not have power to charge fee under section 234E while
processing the TDS statement. In support of his contention, he has relied upon the decision of Coordinate Bench of this Tribunal dated 29th October, 2018 in case of
Geeta Star Hotels & Resorts Pvt. Ltd. vs. DCIT in ITA No. 14/JP/2017.
On the other hand, the ld. D/R has relied upon the orders of the authorities
below and submitted that when the provisions of section 234E was introduced with
effect from 01.07.2012, therefore, any delay in submitting quarterly statement will
attract the said provision. Accordingly, the ld. D/R has submitted that the order of
levying the fee under section 234E is valid and as per the provisions of the Act.
We have considered the rival submissions as well as the relevant material on
record. Though the provisions of section 234E was introduced with effect from
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01.07.2012, however, the AO was not given the power to levy the fee while
processing the TDS statement under section 200A of the Act until the amendment
was brought in the said provision with effect from 01.06.2015. In the case in hand, the present order was passed on 16th February, 2014 and on that day there was no
enabling provision empowering the AO to levy the fee while processing the TDS
statement under section 200A of the Act. At the outset, we note that this Bench in
the case of Geeta Star Hotels & Resorts Pvt. Ltd. vs. DCIT (supra) while considering
an identical issue has held in para 6 to 8 as under :-
“6. Now coming on merits of the case, briefly, the facts of the case are that the AO has imposed late filing fees of Rs. 14,400/- u/s 234E while processing the TDS return (26Q) u/s 200A of the Act for the second quarter of the F.Y 2012-13 relevant to impugned assessment year and the intimation u/s 200A of the Act was passed on 15th December, 2013. Before the ld. CIT(A), the assessee has contended that prior to 01.06.2015, there was no enabling provisions in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to TDS by levying fee u/s 234E of the Act. The ld. CIT(A) however, referring to the decision of the Hon’ble Rajasthan High Court in case of M/s Dundlod Shikshan Sansthan v. Union of India [2015] 63 taxmann.com 243 and others vide order dated 28.07.2015 has held that there is no valid reason or justification to interfere with the compensatory fee imposed in late filing of the TDS return. Accordingly, the demand raised by the AO for late filing fee u/s 234E was confirmed. Now, the assessee is in appeal before us.
During the course of hearing, the ld. AR submitted that provisions of Section 200A of the IT Act, 1961, inserted w.e.f. 1.4.2010 are special provisions for processing of the TDS statements. The
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section sets out some exhaustive adjustments, which can be made while processing the statement.
Section 234E has been inserted by Finance Act, 2012 w.e.f. 1st 7.1 July, 2012 which provides for levy of Fee for delay in furnishing TDS Statement. Hence, from 1st July, 2012 onwards, a fee can be levied for the delay in submission of TDS Return.
Section 200A was amended by Finance Act 2015 and w.e.f 1st 7.2 June, 2015 clause (c) to subsection (1) has been substituted. The updated clause is as under:
“Section 200A - Processing of statements of tax deducted at source. (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:— (c) the fee, if any, shall be computed in accordance with the provisions of section 234E;”
7.3 Hence, for the above it is clear that although prior to 1.6.2015, fees u/s 234E can be levied, yet the same cannot be levied while processing TDS statement u/s 200A.
7.4 In the present case, the assessee filed its TDS return for Q2 on 26.12.2012. The same was processed u/s 200A vide order dated 15.12.2013. However, Ld. AO erred in levying fees u/s 234E while processing the TDS statement for a period prior to 1.6.2015.
7.5 It was submitted that as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly
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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) of sub- section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect.
7.6 Thus the action of Ld. AO is bad in law since the impugned intimation u/s 200A was processed in the period prior to 1.6.2015. Hence, the action of Ld. AO is outside the scope and purview of the section 200A. 7.7 Further, it is submitted that ld. CIT(A) has misplaced his reliance on the decision of Hon’ble Jurisdictional High Court in the case of Dundlod Shikshan Sansthan v. Union of India [2015] 63 taxmann.com 243. The Hon’ble Court has placed reliance on the decision of Hon’ble Bombay High Court in the case of Rashmikant Kundalia v. Union of India 373 ITR 268 and has adjudicated the issue relating to whether the fees charged is legal or illegal and has upheld the constitutional validity of levy of fess u/s 234E. The Court has not touched upon the mechanism to levy the fees u/s 234E in the TDS Statement processed u/s 200A. Thus, CIT(A) has erred in interpreting the decision of Hon’ble Rajasthan High Court.
7.8 It was further submitted that the assessee’s case is squarely covered by the undernoted judgments of Hon’ble ITAT Jaipur, which have also considered the decision of Hon’ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan (supra) and have decided in the favour of the assessee. Relevant extracts has been set out here for your convenience.
• M/s Mentor India Limited vs. DCIT - ITA No.738/JP/2016 “..We find that the Hon’ble Jurisdictional High Court in the case of Dundlod Shikshan Sansthan Vs. Union of India (supra) has ITA 738/JP/2016 &
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Ors. ITAs_ M/s Mentor India Ltd. Vs DCIT with other 10 cases 7 also considered the decision of the Hon’ble Bombay High Court in the case of Rashmikant Kundalia Vs. Union of India (2015) 229 Taxman 596 wherein the Hon'ble High Court has decided the nature of demand. The Hon'ble High Court has held that Section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the department has to prove due to the late filing of the TDS statements. Hence from both the decisions relied upon by the ld. DR, the issue of power of imposing late fee is not decided but the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs. Union of India & Ors. (supra) has decided the issue in favour of the assessee and held that the late fee U/s 234E of the Act has raised vide impugned demand notice U/s 200A of the Act. We find force in the contention of the ld. AR of the assessee. If there is conflicting views taken by the two Hon'ble Courts, then the view, which favours the assessee should be adopted. In this regard, the ld AR of the assessee has relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township P. Ltd. (2014) 367 ITR 466 (SC). In view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township (supra), the demand so raised are directed to be deleted…”
M/s. Sandeep Jhanwar Advisory Services Pvt. Ltd. Vs. The TDS CPC (ITA No. 722 & 723/JP/2016)
“..We find merit into the contention of ld. Counsel that the jurisdictional High Court has decided the validity of section 234E, but has not decide the issue of power of AO for levy of tax under section 234E in the judgment rendered in the case of M/s. Dundlod Shikshan Sansthan and Others (supra) as relied by ld. CIT (A). We have considered the recent decision of Hon’ble Karnataka High Court in the case of Shri Fatheraj Singhvi & Ors (supra) wherein the issue of levy of fees u/s 234E on statements processed u/s 200A before
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01.06.2015 has been categorically discussed by the Hon’ble High Court and in para 24 of the said order it was held that “no demand for fee u/s 234E can be made in intimation issued for TDS deducted u/s 200A before 01.06.2015”. We have also gone through the judgment of Hon’ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd. (supra) wherein the Hon’ble Apex Court has discussed in detail the general principle of concerning retrospectively and held that unless contrary intention appears, a legislation is presumed not to have a retrospective operation. Respectfully following the above judgments of Hon’ble Supreme Court and Hon’ble Karnataka High Court, we set aside the order of ld. CIT (A) and direct the AO to drop the demand raised of Rs. 4,200/- u/s 234E on statements processed u/s 200A before 01.06.2015. Thus grounds raised by the assessee are allowed…”
7.9 Further, our attention was drawn to the decision of Coordinate Bench in the case of Maharashtra Cricket Association vs. DCIT [2016] 74 taxmann.com 6 (Pune - Trib.) who on placing reliance on the decision of Hon'ble Karnataka High Court in Writ Appeal Nos.2663- 2674/2015(T-IT) in Fatheraj Singhvi v. Union of India [2016] 73 taxmann.com 252 has held that prior to 1-6-2015, AO did not have power to charge fees under section 234E while processing TDS returns. Further the Hon’ble Court has held that Hon’ble Bombay High Court in the case of Rashmikant Kundalia (supra), has not upheld the applicability of section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. Relevant extract has been set out here for the sake of your convenience:
“..30. The Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra) has upheld the constitutional validity of said section introduced by the Finance Act, 2015 w.e.f. 01.06.2015 but was not
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abreast of the applicability of the said section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. In such scenario, we find no merit in the plea of learned CIT-DR that the Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra) has laid down the proposition that fees under section 234E of the Act is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A of the Act prior to 01.06.2015. ..” 33. We further find that in recent judgment dated 26.08.2016, the Hon'ble Karnataka High Court in Writ Appeal Nos.2663- 2674/2015(T-IT) in Fatheraj Singhvi v. Union of India [2016] 73 taxmann.com 252 has quashed the intimation issued under section 200A of the Act levying the fees for delayed filing the TDS statements under section 234E of the Act. The Hon'ble High Court notes that the Finance Act, 2015 had made amendments to section 200A of the Act enabling the Assessing Officer to make adjustments while levying fees under section 234E of the Act was applicable w.e.f. 01.06.2015 and has held that it has prospective effect. Accordingly, the Hon'ble High Court held that "intimation raising demand prior to 01.06.2015 under section 200A of the Act levying section 234E of the Act late fees is not valid". However, the Hon'ble High Court kept open the issue on constitutional validity of section 234E of the Act. We have already referred to the decision of Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra) in this regard, wherein the constitutional validity of section 234E of the Act has been upheld. 34. 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
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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 provided under section 200A of the Act and such adjustment could not stand in the eye of law…”
We have heard the rival contentions and perused the material available on record. In the present case, the undisputed facts are that the assessee filed its TDS return (Form 26Q) for the fourth quarter of financial year 2012-13 on 26.12.2012 and the same was processed and intimation under section 200A was issued vide order dated 15.12.2013 much prior to the amendment to section 200A of the Act w.e.f. 1.6.2015 empowering the Assessing officer levying the fees under section 234E of the Act. It is therefore not a case of continuing default where the assessee has defaulted in furnishing the TDS statement even after 1.6.2015 and thereafter, the demand for payment of fees under section 234E has been raised by the Assessing officer. In case of Fatheraj Singhvi (supra), the Hon’ble Karnataka High Court has held that the provisions of amended section 200A are prospective in nature. Further, the decision of the Hon’ble Rajasthan High Court in case of M/s. Dundlod Shikshan Sansthan and Others (supra) as relied by ld. CIT (A) is in the context of validity of section 234E, but not in the context of power of AO for levy of fee under section 234E prior to 1.6.2015. In view of the above, the Assessing Officer while processing the TDS statements for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted.”
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Following the order of this Tribunal, we hold that the amendment in section 200A is
prospective in nature and, therefore, the AO was not empowered to charge fee
under section 234E of the Act while processing the TDS statement for the period
prior to 01.06.2015. Undisputedly, the fee was levied by the AO for the period prior
to 01.06.2015 for which the AO has no jurisdiction. Accordingly the order passed by
the AO levying the fee under section 234E of the Act is not valid and consequently
the same is deleted.
In the result, appeal of the assessee is allowed.
Order is pronounced in the open court on 04/12/2018.
Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur Dated:- 04/12/2018. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant- M/s. Gold Creations, Kota. 2. The Respondent – The DCIT, Centralized Processing Cell-TDS, Ghaziabad. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 619/JP/2018) vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत
11 ITA No. 619/JP/2018 M/s. Gold Creations, Kota.