THE HEAD MISTRESS, AKILIYATH LP SCHOOL,KANNUR vs. THE ACIT, COCHIN

Per George George K., JM

This appeal at the instance of the assessee is directed against CIT(Appeals)’s order dated 30.12.2016. The relevant financial year is 2012-2013 (4th Quarter).

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Income Tax Act read with Section 200A of the Income Tax Act, for the 4th quarter of the financial year 2012-13. 3. The intimation passed u/s 200A of the Income Tax Act 1961, by the Deputy Commissioner of Income Tax, Centralised Processing Cell - TDS, Ghaziabad for the period is against the facts of the circumstances of the appellant's case and hence opposed to the provisions of the Income Tax Act. 4. There is no charging sections/ provisions in the Income Tax Act 1961, giving powers to the Department to charge and collect late fees u/s 234E for the relevant period. The Section 200A was amended only with effect from 01/06/2015 to give the assessing officer the power to impose late fee under section 234E.Hence the imposition of late fee under section 234E for the period under reference is illegal and proceedings are void ab initio. 5. The Appellant submits that the principle of Quid-Pro-quo being absent, the charging of fees for late filing of e-TDS returns is unwarranted, against principles of natural justice and hence is unconstitutional. 6. For the above and for other reasons to be adduced at the time of hearing it is prayed that justice be done to the appellant by setting aside the order appealed against.”

ITA No.145/Coch/2017. 3 The Headmistress AV High School. authority. The CIT(A) dismissed the appeal of the assessee and observed that in view of the provisions of section 200A and 234E of the I.T.Act, the assessee was liable for the levy of fee u/s 234E for the delayed filing of TDS statement. Against the order of the CIT(A), the assessee has filed the present appeal before the Tribunal.

“8. We have heard the rival submissions and perused the material on record. The Finance Act, 2015 has amended section 200A of the Act with effect from 1.6.2015. The amendment is as follows: In section 200A(1) of the Act, for clause (c) to (e), the following clauses were substituted with effect from the 1st day of June 2015, namely:- (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

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(f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor."

8.1 Thus, post 1st June 2015, in the course of processing of a TDS statement and issuance of intimation u/s 200A in respect thereof, an adjustment could also be made in respect of the 'fee', if any, shall be computed in accordance with the provisions of section 234E". Prior to 1st June 2015, there was no enabling provision therein for raising a demand in respect of levy of fees u/s 234E of the Act.

8.2 This issue has been elaborately considered by the Amritsar Bench of the Tribunal in the case of Sibia Healthcare (P) Limited Vs. Deputy Commissioner of Income Tax (2015) 61 Taxmann.com 70 and held that levy of fee u/s. 234E is beyond the scope of permissible adjustments contemplated u/s.200A. The relevant portion of the order of the Amritsar Bench of the Tribunal reads as follows:

"In view of the above discussions, in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments, contemplated under section 200A. This intimation is an appealable order under section 246A(1)(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Learned CIT(A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is

ITA No.145/Coch/2017. 5 The Headmistress AV High School. unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act......"

8.3. The Ahmedabad Bench of the Tribunal, in the case of Lions Club of North Surat Charitable Trust Vs. Income Tax Officer, (TDS)-II 2015 (9) TMI 1231 and the Chennai Bench of the Tribunal in the case of Smt. G. Indhrani Vs. Deputy Commissioner of Income Tax, Centralized Processing Cell(TDS) (2015) 60 Taxmann.com 312 have followed the views taken by the Amritsar Bench of the Tribunal and decided the issue in favour of the assessee.

8.4 In view of the aforesaid reasoning and respectfully following the orders of the coordinate benches of the Tribunal, we delete the levy of late filing fee u/s 234E of the Act. It is ordered accordingly. 9. In the result, the appeal filed by the assessee is allowed.”

5.1 Further, the Karnataka High Court in the case of Fatheraj Singhvi & Ors. Vs. Union of India reported in 289 CTR 602 has held as under: “When the intimation of the demand notices under Section 200A is held to be without authority of law so far as it relates to computation and demand of fee under Section 234E, the question of further scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under Section 234E of the Act. At this stage, the learned counsels appearing for the appellant had also declared that if the impugned notices under Section 200A are set aside, so far as it relates to computation and intimation for payment of fee under Section 234E, the appellant-petitioners would not press the challenge to the constitutional validity of Section 234E of the Act. But, they submitted that the question of constitutional validity of Section 234E may be kept open to be considered by the Division Bench and the Judgment of the learned Single Judge may not conclude the constitutional validity of Section 234E of the Act. (Para 25)

Under these circumstances, no further discussion would be required for examining the constitutional validity of Section

ITA No.145/Coch/2017. 6 The Headmistress AV High School. 234E of the Act. Save and except to observe that the question of constitutional validity of Section 234E of the Act before the Division Bench of this Court shall remain open and shall not be treated as concluded. (Para 26) In view of the aforesaid observations and discussion, the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. It is clarified that the present judgment would not be interpreted to mean that even if the payment of the fees under Section 234E already made as per demand/intimation under Section 200A of the Act for the TDS for the period prior to 01.04.2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect accordingly. It is further observed that the question of constitutional validity of Section 234E shall remain open to be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge. (Para 27) The appeals are partly allowed to the aforesaid extents”

5.2 Since the facts of the present case are similar to the facts considered by the Karnataka High Court (supra) and by this Tribunal (supra) wherein it was held that there cannot be levy of late fee u/s. 234E for the period prior to 01/06/2015, we are inclined to delete the levy of late fee u/s. 234E of the Act.

Order pronounced on this 17th day of September, 2018.

Sd/- Sd/- (Chandra Poojari) (George George K.) ACCOUNTANT MEMBER JUDICIAL MEMBER

Cochin ; Dated : 17th September, 2018. Devdas*

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Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) Kozhikode. 4. The CIT (TDS) Kochi. 5. The DR, ITAT, Cochin 6. Guard file.

BY ORDER,

(Asstt. Registrar) ITAT, Cochin