M/S. COMET CARS SALES AND SERVICES,SURAT vs. THE DY.CIT, TDS RANGE, SURAT

26-72-)8 IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT Before Shri C.M.GARG, Judicial Member, and Shri O.P. MEENA, Accountant Member ITA No.2075 & 2076/AHD/ 2015 Assessment Year: 2013-14 M/ s Kaushal Enterprenuer Pvt. Ltd, 3, Kathak Row House , Honey Park Road, Opp. Jyotindra Dave Garden , Adajan Surat 395009 (Appellant) PA: No. AACCK8159M DCIT TDS Range, Surat T Vs. Respondent axeielyy ITA No.2575 /AHD/2015 Assessment Year: 2014-15 54yc _ Jigisha Corporation, 101 to 106, Super Yarn Market, Zampa Bazaar, Surat 395003 (Appellant) PA No: AABFJ9650Q DCIT TDS Range, Surat TI Vs. (Respondent Assessee_ by Shri Rashesh Shah, CA Revenue by Shri B. P K Panda Sr . DR Final Date of_Hearing: 11701/2018 Date of Order: /01/2018 2 M/s Kaushal Enterprenuer Pvt. Ltd & Others ITA No.2075 _ 2076 , 2575, 1930,1931/A/2015 ITA No.1930, 1931/AHD/2015 Assessment Year: 2013-14 M/ s Comet Car Sales and Services, Chikuwadi T Complex, GHB Road, Vs_ Pandesara, Post Office Fateh Nagar, Surat 395220 (Appellant) PA. No. AAECC4818M DCIT TDS Range , Surat Respondent Assessee by Written Submission Revenue by Shri B P K. Panda Sr_ DR Final Date of Hearing: 11/01/2018 Date of Order: 23/01/2018 4927- HT LORDER Per C_M_Garg JM: These appeals have been filed by the respective assessee against the orders of the learned CIT (Appeals) 3 , Surat whereby addition made by the Assessing Officer has been confirmed u/s 234E of the Income Tax Act; 1961 (hereinafter referred to as 'the Act). 2 In the beginning of the hearing both the parties agreed to the fact that facts and circumstances of all five cases are similar and identical. Admittedly, facts and circumstance of the case of ITA No. 2075/AHD/2015 /SRT are quite similar 3 M/s Kaushal Enterprenuer Pvt: Ltd & Others ITA No.2075 , 2076 _ 2575 _ 1930,1931/A/2015 to the other four cases therefore, we are taking and identical lead for adjudication . In this appeal the this case as case assessee has raised the following grounds: - "(i) On the facts and circumstance of the case as well as law on the subject; that the Ld. Assessing Officer (TDS CPC) has erred in confirming the action of the Assessing Officer in levying late filing fees of Rs. 76,840/ - as per Section 234E for Quarter 2 of A.Y: 2013 -14 & Passing order U/ s 154 r.w.s. 200A of the IT: Act, 1961 (i) On the facts and circumstances of the case as well as law on the subject, section 200A of the act does not permit processing of TDS statement of default in payment of late fees u/ s 234E, except any arithmetical error, or incorrect claim, or default in payment of interest and TDS payable or refundable etc for A.Y. 2013-14. Hence, late fees for TDS quarterly statement cannot be recovered by way of processing under section 200A. Therefore, demand notice cannot be issued under this section, and even if issued, then it is illegal and liable to be quashed #n> 3 Brief facts giving rise to these cases are that the assessee TDS statement in form No. 260 of 2nd filed its Quarterly of F.Y 2012-13 on 20th September , 2013 which was Quarter due to be filed on 15th October, 2012 and therefore there was a of 340 days in filing quarterly statement. The Ld_ delay Officer (TDS CPC) imposed late filing fees of Rs. Assessing 234E for delay in filing of Quarterly TDS 68,000/ - u/s statement The aggrieved assessee carried the matter before who confirmed the penalty now, the empty handed CIT (A) 4 M/s Kaushal Enterprenuer Pvt: Ltd & Others ITA No.2075 , 2076 2575, 1930,1931/A/2015 before this Tribunal with the grounds as assessee is reproduced above. 4 of both the sides and carefully We have arguments record placed before uS. The Ld_ perused the relevant (AR) submitted that the cause of Assessee's Representative delay in furnishing the return is delay in depositing TDS and has already compensated the revenue by the assessee late payment of TDS and it is a well depositing interest on settled principle that person cannot be compensated twice for the same mistake He also submitted that as per Sec. 201(2) of has failed to deposit tax and the Act states that if a person interest then it shall be a charge upon all the assets of that as it does not cover late fee amount, so it is clear person and that the intention of law is not to cover /recover any late fee if not deposited along with TDS statement: Therefore, the Ld: AR made by the Assessing Officer and submitted that addition may kindly be deleted. The Ld_ AR confirmed by the CIT (A) also placed reliance on the decision of Hon ble Karnataka High Court in the case of Fatheraj Singhvi & Ors. Vs_ Union of India We have also carefully reported as (2016) 289 CTR 0602 (Kar) gone through the written submissions dated 21/11/2017 filed by the appellants in ITA No. 1930, 1931/AHD/2015/SRT for A.Y. 2013-14. No other arguments have been placed on behalf of the appellants. aual7 5 M/s Kaushal Enterprenuer Pvt. Ltd & Others ITA No.2075, 2076 . 2575, 1930,1931/4/2015 5 Replying to the above, the Ld_ Departmental Representative (DR) strongly supported the action of the Assessing Officer and submitted that the first appellate authority was right in upholding the addition, which is in con firmatory and as per ratio of the decision of Hon ble Jurisdictional High Court of Gujarat in the case of Rajesh Kourani Vs Union of India (2017) 83 Taxmann.com 137(Gujarat)_ 6 On careful consideration of above rival submissions at the very outset, from the relevant part of the decision of Hon ble High Court of Gujarat in the case of Rajesh Kourani (Supra) we observed that their Lordship speaking for Jurisdictional High Court on the issue and after considering the all available decisions of Hon ble Supreme Court & High Courts and distinguishing the decision of Hon ble Karnataka High Court in the case of Fathera Singhvi (Supra), held thus: 16. We now come t0 the petitioner's central challenge viz; of non permissibility to levy . fee under section 234E of the Act till section 200A of the Act was amended with effect from 01.06.2015. We have noticed the relevant statutory provisions The picture that emerges is that prior to 01.07.2012, the Act contained single provision in section 2724 providing for penalty in case of default in filing the statements in terms of section 200 or proviso to section 206C. Such penalty was prescribed at the rate of Rs.100 for every day during which the failure continued With effect from 01.06.2012, three major changes were introduced in the Act Section 234E aS introduced for the first time to provide for charging of fee for late filing of the statements: Such fee would be levied at the rate of Rs.200/- for every day of failure subject t0 the maximum amount of tax deductible or collectible as the case may be: Section 27HH was also introduced for the first time for levying penalty for failure to furnish the statements: Such penalty would be in the range of Rs.10,000/- and Rs.1 Iakh No penalty would be imposed if the_ tax is deposited with fee and interest and the statement is filed within one year of 3z M/s Kaushal Enterprenuer Pvt: Ltd & Others ITA No.2075 _ 2076 . 2575, 1930,1931/4/2015 the due date . With addition to these two provisions prescribing fee and penalty respectively; clause (k) of sub-section (2) of section 2724 became redundant and by adding a proviso to the said section, this effect waS therefore limited upto 01.07.2012. 17. In essence, section 234E thus prescribed for the first time charging of fee for every day of default in filing of statement under sub-section (3) of section 200 Or any proviso to sub-section (3)of section 206C. This provision was apparently added for making the compliance of deduction and collection of tax at source, depositing it with Government revenue and filing of the statements more stringent: 18. In this context, we may notice that section 200A which pertains to processing of statements of tax deducted at source provides for the procedure once a Statement of deduction of tax at source is filed by the person responsible to do S0 and authorizes the Assessing Officer to make certain adjustments which are prima-facie Or arithmetical in nature. The officer would then send an intimation of a statement to the assessee: Prior to 01.06.2015,this provision did not include any reference to the fee payable under section 234E of the Act. By recasting sub- section (1), the new clause-c permits the authority to compute the fee, if any, payable by the assessee under section 234E %f the Act and by virtue %f clause-d adjust the said sum against the amount paid under the various provisions of the Act. section 200A of the Act is (1 machinery provision 19. In plain terms, providing mechanism for processing a Statement Of deduction of tax at source and making adjustments, which are (IS noted earlier; arithmetical or prima-facie for in nature. With effect from 01.06.2015, this provision specifically provides for computing the fee payable under section 234E of the Act; On the other hand, section 234E is 4 charging provision creating @ charge for levying fee for certain defaults in filing the statements: Under no circumstances @ machinery provision can override Or overrule a charging provision: We are unable to see that section 2004 of the Act creates any charge in any manner: It only provides a mechanism for process ing a Statement for tax deduction and the method in which the same would be done When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating Viewing section 200A aS creating new charge would bring the same charge_ a dichotomy. the provision in our understanding is In plain terms; ( about machinery provision and at best provides for mechanism for processing and computing besides other; fee payable under section 234E for late filing of the statements: 20. Even in absence of section 2004 of the Act with introduction of section 234E, it was always open for the Revenue to demand and collect the fee for late Section 2004 would merely regulate the manner in which filing f the statements: the computation of such fee would be made and demand raised In other words, we cannot subscribe to the view that without 4 regulatory provision being found for section 2004 for computation of fee, the fee prescribed under section 234E cannot be levied Any such view would amount to charging section yielding t0 7 M/s Kaushal Enterprenuer Pvt: Ltd & Others ITA No.2075, 2076 , 2575, 1930,1931/A/2015 the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision; as noted, it waS always open for the Revenue to charge the fee in terms of section 234E' of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. This would have one direct effect. An order passed under section 2004 of the Act is rectifiable under section 154 of the Act and is also appealable under section 246A. In absence of the power of authority t0 make such adjustment under section 200A of the Act, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open t0 any rectification Or appeal. Upon introduction of the recasted clause (c) , this situation also would be obviated Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act: The Karnataka High Court in case of Fatheraj Singhvi (supra) held that section 200A was not merely a regulatory provision, but was conferring substantive power on the authority. The Court was also of the opinion that section 234E' of the Act was in the nature of privilege t0 the defaulter if he fails to pay fees then he would be rid of rigor of the penal provision of section 271H of the Act. With both these propositions; with respect, we are unable t0 concur. Section 200A is not asource of substantive power: Substantive power to levy fee can be traced to section 234E of the Act Further the fee under section 234E' of the Act is not in lieu of the penalty of section 271H of the Act. Both are independent levies. Section 271H only provides that such penalty would not be levy if certain conditions are fulfilled. One of the conditions is that the tax with fee and interest is paid The additional condition being that the statement is filed latest within one year from the due date.