SHREE BHASKARACHARYA PRATISHTHAN,CHH SAMBHAJINAGAR vs. LD. DEPUTY COMMISSIONER OF INCOME TAX, CPC-TDS

आदेश / ORDER

PER BENCH :

2. Since the issue raised in these two groups of appeals is identical, we proceed to dispose of these appeals by way of consolidated order for the sake of convenience and brevity.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

“1. I am the Authorized Signatory of the appellant in the above- mentioned appeals filed before the Income Tax Appellate Tribunal (ITAT).

2. The appeal pertains to the A.Y. 2017-18.

3. The applicants have filed a detailed appeal against the impugned order dated 04.08.2023 passed by the Ld. CIT (Appeals), NFAC, Delhi, Accordingly, the present appeal ought to have been filed on or before 27.10.2023. However, the appeal will be filed on 11.03.2024. Accordingly, there is a delay of 136 days in filing the present appeals.

4. I hereby declare that the appeal shall be filed beyond the prescribed time limit due to unavoidable circumstances.

5. The reason for the delay is as follows:

a. The father of the consultant appointed (CA Aditya Birla, Jalna) to handle my tax matters was diagnosed with pancreatic cancer during the relevant period. b. Despite our best efforts, the consultant's availability was severely impacted due to the need to care for the ailing father. c. Unfortunately, the consultant's father succumbed to the illness on 13.02.2024, leading to further delays in attending to the appeal process.

6. I submit that the delay was neither intentional nor deliberate but was solely due to the compassionate situation faced by the consultant. If the delay in filing the present appeals is not condoned, it would not render justice to the applicant/appellant and the applicant/appellant shall end up facing wrath due to a compassionate approach towards the previous consultant.

7. I further affirm that the facts stated herein are true and correct to the best of my knowledge and belief.”

4. So far as appeals relating to Shree Bhaskaracharya Pratishthan, registry has informed that there is delay of 75 days

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan in filing the appeals before this Tribunal. Affidavit for condonation of delay has been filed by the assessee explaining the reasons which led to delay in filing the appeals and the same reads as under:

“1. The appellant is a Trust having TAN bearing no. NSKS08600E who filed his TDS return of income for Assessment Year 2020-21 in Form 26Q and 24Q.

2. The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeals Center, Delhi ("Ld. CIT (A)") vide impugned Order dated 20.06.2024 upheld the demand by the Ld. DCIT, CPC-TDS, Ghaziabad and rejected the appeal filed by the appellant.

3. The applicants have filed a detailed appeal against the impugned order dated 20.06.2024 passed by the Ld. CIT (A). Accordingly, the present appeal ought to have been filed on or before 20.08.2024. However, the said appeal has been filed on 14.11.2024. Accordingly, there is a delay of 86 days in filing the present appeal.

5. There is admittedly a delay in filing the appeal before the Hon'ble Income Tax Appellate Tribunal. The said delay is bonafide and unintentional.

6. If the delay in filing the present appeal is not condoned, it would not render justice to the applicant-appellant. The Honorable Apex Court in the case of Collector of Land Acquisition vs. MST Katiji - 1987 (28) ELT 185 (SC) held that a justifiable liberal approach should be taken in condoning delay as an ordinary litigant does not stand to benefit by filing an appeal late and refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause justice being defeated.

7. Without prejudice, the applicant submits that the impugned order passed by the Ld. CIT (A) is an exparte order. Therefore, the same shall be set aside since it is in violation of the principles of natural justice. To support his contention, the appellant relies upon the decision of the Honorable Supreme Court in the case of Umanath Pandey and Ors. Vs.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan State of Uttar Pradesh and Ors. MANU/SC/0401/2009 wherein the Honorable Bench held that Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice.

8. Given the above, the applicants submit that the delay is purely unintentional, bonafide and hence, needs to be condoned. The appellants have been representing at all levels. In fact, the dues of approximately Rs. 40 lakh rupees were brought down to Rs. 28 lakhs by discharging the same. Further, all steps are being taken to minimise these dues indicating our intention to minimise the burden of litigation. It is well settled that a holistic and wholesome view needs to be taken rather than a pedantic approach while dealing with applications for condonation of delay. PRAYER In view of the foregoing, it is respectfully prayed that the Hon'ble ITAT may be pleased to:- (a) condone the delay in filing the present appeal and take up the appeal on merits; (b) grant a personal hearing to the applicants; (c) pass such other order or orders as may be deemed fit and proper in the facts and circumstances of the case.”

5. Ld. Departmental Representative opposed the condonation of delay.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan be adopted when some plausible cause for delay is shown. Hon’ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condoned delay of 1537 days sub-serving the cause of justice. It was held so while observing that the appeal filed by the appellant with a delay was unintentional, much less due to any deliberate laches, and was well-explained by the State before the High Court. Hon’ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the affidavits by these two assessees and considering the ratio laid down by the Hon’ble Court in the case of Inder Singh (supra), we are of the view that there was ‘reasonable cause’ which prevented the assessees in filing the appeals within the stipulated time. We therefore condone the delay of 160 days and 75 days respectively in filing of appeals by both the above captioned assessees and admit the appeals for adjudication.

7. The bunch of appeals pertaining to Chate Tutorials Pvt. Ltd. are recalled matters in as much as the earlier exparte order dated 04.06.2024 passed by this Tribunal has been recalled vide M.A.Nos.52 to 56/PUN/2024 order dated 31.12.2024.

8. We first take up bunch of appeals in respect of Chate Tutotials Pvt. Ltd. and as the lead case wherein assessee has raised following common grounds of appeal:

“1) That the instant demand is out of the purview of sec 200A and made without jurisdiction: a. Provisions of section 200A(1) provide for the manner of processing of TDS statement and section 200A(2) of the Act provides delegation of powers to CBDT for formulating a scheme. CBDT vide Notification No. 3/2013 dt. 15.01.2013 set up

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

Centralised Processing Cell/s (CPC) for such centralised processing as provided under section 200A(1). However, section 200A(2) only provides for the scheme to be formulated for centralized processing of returns limited to the determination of the tax payable or refund due. The said delegation of power under the scheme is not for determining late fees, or interest on TDS. The present demand is based on Justification reports issued by such TDS-CPC. b. There is a clear distinction between the terms 'tax' and 'interest'/'penalty' or 'late fees'. Tax can not be interpreted to mean and include interest and/or penalty. Thus, the literal reading of S. 200A(2) gives out that the said scheme empowering the centralized processing cell for processing of TDS Returns is only for the purpose of determining the amount of tax or refund thereof. c. Hence, it is a settled position in law that, in the absence of the enabling mechanism, the levy fails.

See: 1. Fatehraj Singhvi vs Union of India reported in 73 taxmann.com 252

2. Vivek J Thar Vs ITO (ITAT Mumbai) Appeal Number: ITA No. 1476/Mum/2022

3. Sun Dye Chem v. The Assistant Commissioner (ST), Tirupur 2020-TIOL-1858-HC-MAD

d. Thus, such late fees, interest and additional interest for TDS quarterly statement cannot be determined by TDS-CPC by way of processing under section 200A(2). Therefore, demand notice based on such justification report cannot be issued except for tax/refund, but if issued, then it is issued without jurisdiction. Hence liable to be quashed and set aside 2) The Ld. CIT (A) has erred in passing the order dated 04.08.2023 in as much as the Ld. CIT (A) has not even discussed section 200A(2) in his order and thus, the order is a non-speaking order.

3) That demand of late fees can not be made under section 156 after the said TDS statement has been delivered: a. As per the provisions of Sec. 234E of the Act, if a person fails to deliver or cause to be delivered a statement within the prescribed time period then he shall be liable to pay Late fees @ Rs.200/- per day before filing the TDS statement. b. Further, sub-section (3) of section 234E of the Act states that it shall be paid before delivering a TDS statement. It means that any late fees should have been deposited just at the time of delivering TDS statement and not later than this.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan c. That once the TDS statement has been accepted without late fees, then such late fees cannot be recovered later on. In view of the above late fee cannot be recovered later on by way of any notice. d. Similar provisions exist for the interest under section 201(1A). Thus, recovery of interest under section 201(1A) after filing the TDS returns is bad as well.

4) That as per the provisions of sec 201(1) of the Act also a Deductor cannot be treated as an assessee in default and TDS return cannot be treated as defective due to non-payment of late fees U/s 234E. a. It is submitted that, the filer is treated as an assessee in default for non-payment of SA tax and interest along with return U/s 139(1). Moreover, the income tax return is also treated as defective U/s 139(9). On the contrary, section 201(1) only treats the assessee in default if the tax amount is unpaid. b. Sec 201(2) of the Act states that if a person has failed to deposit whole or a part of tax then it shall be a charge upon all the assets of that person. Thus, this sub-section also does not cover interest and late fee amount, for the purpose of such charge on assets. This implies that the intention of the law is not to cover/recover late fee if not deposited along with the TDS statement. Thus, late fees cannot be recovered if not deposited along with the statement of TDS being delivered.

5) That the Provisions of Sec. 204 of the Act have made the person responsible for Sec. 190 to Sec. 203AA and Sec 285, this phrase does not cover Sec. 234E, it means no one is responsible for default U/s 234E of the Act. It also clears that if late fees are due but not deposited along with the TDS statement none can be held responsible to deposit it later on.

6) The levy of late fees is illegal and wrong and not in accordance with law. Therefore, Interest u/s 220(2) on the above is also not in accordance with law.

7) The Ld. CIT (A) has passed the order without application of mind, this is evident from the fact that in this case from its amounts discussed and their bifurcation of the amounts is as per the financial year 2016-17 however, the same has been considered as Assessment Year 2016-17, which is a completely different tax period.

8) In view of the above submissions, the order of the CIT (A), NFAC upholding the demand based on the justification reports issued by CPC imposing, interest, additional interest and late fees U/s 234E has to be quashed.

9) The Appellant craves leave to add, amend, alter, vary and /or withdraw any or all the above grounds of Appeal.”

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

10. At the outset, Ld. Counsel for the assessee submitted that the above referred issue has been raised before ld.CIT(A) but it has not been dealt in the impugned order and this being a legal issue has been raised again before this Tribunal.

11. During the course of hearing, Ld. Counsel for the assessee referred to the following written submissions :

“Kindly refer subject issue. At the outset, the Appellants thank your honor for a kind and patient hearing held on 11.03.2025.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan 2.1 The Indian Constitution adheres to the principles of dividing government functions between the legislative, executive and judiciary branches. Accordingly, the legislative bodies are empowered to frame legislations/laws, the executive enforces them. The power and extent for enforcement of laws by executive is derived from the legislation itself.

2.2 It is also important to highlight that section 119 of the Income Tax Act, 1961, provides a discretionary power to the CBDT for issuing instructions/orders/directions to the officers. However, the power to formulate any scheme, rules or procedures has to be explicitly provided by the provisions of law.

2.3 In the context of the present dispute, the Income Tax Act, 1961,is the relevant legislation, of which,section 200A provides for the processing of statements of Tax Deducted at Source (TDS). Sub section (1) to the said section provides the manner in which a statement should be processed. Sub section (2) to the said section devolves the power to the Central Board of Direct Taxes (CBDT)to formulate a scheme for centralised processing of the statements only for the determination of tax payable/refund.

2.4 Thus, it is humbly submitted that the Centralised Processing Cell can only be empowered by the CBDT to the extent of determination of Tax and not for determination of interest, additional interest or late fees. Thus, even if CBDT has empowered the CPC to process the TDS returns in the manner as prescribed under sub-section (1) of section 200A vide the Notification No. 3/2013 dated 15.01.2013, the said power can only be utilised for determination of tax payable and not for interest, additional interest, or late fees.

2.5 In support of these submissions, the legal maxim of “Nemo dat quod non habet”also assumes importance. This Latin legal maxim means that "no one can give what they do not have". In other words, once can only give what one has. Therefore, in the instant case, when the CBDT is not empowered to make the scheme for determination of ‘interest’, ‘additional interest’ or ‘Late fees’, then CBDT cannot empower CPC by formulating the scheme to determine such ‘interest’, ‘additional interest’ or ‘Late fees’.

Interest and fees are not a part of ‘Tax’ 3.1 It is submitted that the term ‘Tax’ has been defined in the Income Tax Act, 1961 as “means income-tax chargeable under the provisions of this Act” and “includes the fringe benefit tax payable under section 115WA”. Thus, the definition of tax is very clear and unambiguous. This definition does not include any interest/penalty/fees to mean as tax. They are separate concepts under the law.

3.2 Reliance is placed on the decisions of: a. Harshad Shantilal Mehta – (1998) 231 ITR 871 (SC) – (2ndPara on Page 16); b. Oryx Finance and Investment Pvt Ltd – [Income Tax Appeal No. 1 of 2015 – Bom HC) – (Para 18, 19 and 21 on Pages 4 and 5); and Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan c. Dinesh T Tailor – [2010-TIOL-311-HC-MUM-IT] – (Para 11 and 12 on Page 21 and 22). These cases have been annexed in the compilation of cases already presented before the bench. The relevant page numbers and paragraph numbersare marked for ease of reference.

3.3 It is additionally submitted that the distinction between tax, interest and fees can also be made out from the fact that the charging section for tax, i.e. section 4 also mentions only income tax, TDS/TCS. For interest and late fees, there are separate charging sections namely 201(1A), 220(2) and 234E.

3.4 It is also submitted that the legislation has clearly provided for the term ‘tax’ to include other things in the provisions through explanations wherever deemed necessary so to do. For instance, Explanation 3 has been inserted under clause (ii) to sub clause (a) to section 40 of the Act to include ‘surcharge’ or ‘cess’ in the term ‘tax’. The said explanation is reproduced for ease of reference:

“Explanation 3.—For the removal of doubts, it is hereby clarified that for the purposes of this sub-clause, the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax;”

In the instant case, there is no such explanation, thus on this count as well, the term ‘tax’ cannot be interpreted to include ‘interest’, ‘Additional interest’ or ‘late fees’.

Literal Interpretation 4.1 It is submitted that the rule of literal interpretation of statute takes precedence while interpreting any law. When the provisions of law are unambiguous, the law can only be interpreted by literal interpretations.

4.2 Reliance is placed on the case of Keshavji Ravji and Company and others – [2002-TIOL-129-SC-IT-LB]. We feel compelled to quote directly from the judgment itself, which states:

“…As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention go the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words used it is nowhere else…” …(Para 11 of Page 27 of the compilation) 4.3 In the instant case, the language of sub-section (2) to section 200A has very clearly stated that CBDT is empowered to frame the scheme for centralised processing of returns for determination of tax payable/refund. It does not talk about determination of ‘interest payable/fees payable’ or even an inclusive term such as ‘any other sum payable’. Such term however, is used in the same section under clause (d) of sub section (1) which starts with the term ‘sum payable’. Thus, the conscious use of the words ‘tax payable’ in sub section (2) to section 200A distinguishes and clearly restricts the power given to the CBDT to Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan formulate a scheme only for the determination of tax/refund and not interest/additional interest/late fees.

4.4 On this juncture, reliance is also placed on the landmark case of ‘Deoki Nandan Aggarwal’ reported at [(1991) 3 SCR 874-SC]wherein the Hon’ble Apex court has held that words can not be read into the statute when the language is clear and unambiguous. (Para 7.1 at Page 37 of the compilation).

4.5 It is also imperative here to look for the intention of the statute. The memo of Finance Bill, 2015 which most recently amended the sub section (1) of section 200A only intends to amend the manner in which the Late Fees is to be processed while processing the statement of TDS. In the said amendment there is no corresponding amendment to sub section (2) for the determination of the said late fees/interest by CPC.

No Vacuum 5. It is submitted that there is no vaccum for the determination of interest, additional interest and late fees under section 234E. The Income Tax Department has a TDS wing and the jurisdictional hierarchy right the level of Income Tax officer (TDS) is already in place. It is once again reiterated that the challenge by the Appellant is no towards levy, but towards the determination of interest, additional interest and late fees by the CPC. Thus, the determination of interest, additional interest and late fees under section 234E can be done by the jurisdictional TDS officers but not by CPC.

6. In view of the above, the Appellants pray and reiterate that the impugned order be set aside and demand be dropped.”

1. The only case of the assessee Appellant is that it’s challenge lies not to levy of interest or late fees, but to the power of the Centralised Processing Cell [CPC] determining the same.

1.1 To make out a case, the assessee Appellant speaks about the principles of dividing the government functions between the legislative, executive and judiciary branches and that the power for enforcement of laws by executive is derived from the legislation itself. The case of the assessee is that section 119 of the Income-tax Act, 1961 [herein after referred to as the Act] provides discretionary power to the Central Board of Direct Taxes [CBDT] for issuing instructions/orders/directions to the officers. However, the power to formulate any scheme, rules or procedures has to be explicitly provided by the provisions of law. It is in this context, that the assessee Appellant is trying to make out a case

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan that sub-section (2) to section 200A of the Act devolves the power to the CBDT to formulate a scheme for centralised processing of the statements only for the determination of tax payable/refund. That is, the CPC can only be empowered by the CBDT to the extent of determination of tax and not for determination of interest, additional interest or late fees and therefore even if, the CBDT has empowered the CPC to process the TDS returns and the manner as prescribed under sub-section (1) of section 200A of the Act vide notification No. 3/2013 dated 15/01/2013, the said power can only be utilised for determination of tax payable and not so for interest, additional interest or late fees. It is the case of the assessee that, in its view, conversely, as the CBDT is not empowered to make the scheme for determination of interest, additional interest or late fees, it cannot empower the CPC by formulating the scheme to determine such ‘interest’, ‘additional interest’ or ‘late fees’.

1.2 In short, the constitutional validity of the 200A(1)(c) of the Act is being challenged by the assessee Appellant by posing a constitutional challenge to the scheme as per section 200A(2) vis-à-vis the processing done by the CPC u/s 143(1)(a). In turn, the challenge lies to the constitutional validity of the levy of late fees u/s 234E r.w.s 200A(1)(c) by the CPC.

1.3 In short, the constitutional validity of the 200A(1)(c) of the Act is being challenged by the assessee Appellant by posing a constitutional challenge to the scheme as per section 200A(2) vis-à-vis the processing done by the CPC, TDS and would also impact the processing by the CPC u/s 143(1)(a). In turn, the challenge lies to the constitutional validity of the levy of late fees u/s 234E r.w.s 200A(1)(c) by the CPC.

1.4 That, Interest and fees are not a part of 'Tax'. It is submitted by the assessee Appellant, that the term 'Tax' has been defined in the Income Tax Act, 1961 as "means income-tax chargeable under the provisions of this Act" and "includes the fringe benefit tax payable under section 115WA". Thus, the definition of tax is very clear and unambiguous. That, this definition does not include any interest/penalty/fees to mean as tax. That, these are separate concepts under the law. To buttress its case, the assessee Appellant has relied upon the following case laws : a. Harshad Shantilal Mehta — (1998) 231 ITR 871 (SC) — (2nd Para on Page16); b. Oryx Finance and Investment Pvt Ltd — [Income Tax Appeal No. 1 of 2015 Bom HC) — (Para 78, 19 and 21 on Pages 4 and 5); and c. Dinesh T Tailor — [2010-TIOL-311-HC-MUM-IT] — (Para 11 and 12 on Page 21 and 22).

1.5 The assessee Appellant, additionally submitted that the distinction between tax, interest and fees canalso be made out from the fact that the charging section for tax, i.e. section 4 also mentions only income tax, TDS/TCS. For interest and late fees, there are separate charging sections namely 201(1A), 220(2) and 234E.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan It has been also submitted by the assessee Appellant, that the legislation has clearly provided for the term 'tax' to include other things in the provisions through explanations wherever deemed necessary so to do. For instance, Explanation 3 has been inserted under clause (ii) to sub clause (a) to section 40 of the Act to include 'surcharge' or 'cess' in the term 'tax'. The said explanation was reproduced for reference: "Explanation 3—For the removal of doubts, it is hereby clarified that for the purposes of this sub-clause, the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax;". 1.6 It is the case of the assessee, that, in the instant case, there was no such explanation and thus on this count as well, the term 'tax' cannot be interpreted to include 'interest', 'Additional interest' or 'late fees'. Further, the assessee Appellant has referred to the memorandum of Finance Bill, 2015 which amended sub-section (1) of section 200A of the Act to state that it only intended to amend the manner in which the late fees were to be processed while processing the statement of TDS and that the said amendment there was no corresponding amendment to sub-section (2) for the determination of the said late fees/interest by the CPC. 1.7 Finally, in view of the above submission, it is the case of the assessee Appellant that the determination of interest, additional interest and late fees u/s 234E can be done only by the jurisdictional TDS officers and not the CPC.

To sum up, it is the case of the assessee Appellant that :

(i) There is no constitutional validity to the determination of interest, additional interest and late fees u/s 234E by the CPC.

(ii) That, the late fees u/s 234E is not the same thing as ‘tax’ and cannot be included therein and accordingly the computation mechanism as envisaged u/s 200A fails with respect to the computation of the same by the CPC.

2. The Case of the Revenue :

The constitutional validity of section 234E of the Act has already been upheld by various High Courts and has been followed by the Hon’ble Pune Bench of the ITAT in several cases. The Hon’ble Pune Bench of the ITAT in a plethora of cases has also dealt with the levy of late u/s 234E of the Act while processing by the CPC. In this connection it is to mention that, what the Hon’ble Pune bench of the ITAT has lately followed in several cases is that clause (c) of sub-section (1) of section 200A was introduced with effect from 01/06/2015 and hence any TDS statement that came to be filed on or after 01/06/2015 then the assessee was liable to pay the late fee u/s 234E r.w.s 200A(1)(c) when the Return of Income processed by the CPC. The Hon’ble Pune ITAT has held as under:

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan It shall serve to state that, a person liable to deduct any sum under the provisions of chapter XVII of the Act, is under obligation to deliver or furnish a statement u/s 200(3) of the Act within the due date prescribed therein and in the event of default, is exposed to section 234E of the Act. Although the levy of fees u/s 234E of the Act for delay in furnishing statement has been brought into statute w.e.f. 1st July, 2012, the enabling provision of section 200A(1)(c) authorising such levy came into force w.e.f. 1st June, 2015 by Finance Act, 2015, consequently the fees levied for any default prior thereto being sine auctoritate hence unsustainable in the eyes of law. For the sake brevity the applicability of provisions can be adumbrated as;

Provision Enabling for Date of Processing of Assessment Charring of Statement Effective Levy Statement u/s Year Fees furnished runs from (Delay) 200A(1)(c) u/s 234E u/s 200(3) By 31st May, - Any AY, upto 2015 Not Present Not Provided After 1st June, 2012-13 1st June, 2015 2015 By 31st May, - 2013-14 to 2015 Enacted Not Provided After 1st June, 2015-16 1st June, 2015 2015 By 31st May, - 2015 From 2016-17 Present Provided After 1st June, 1st June, 2015 2015 The Hon’ble Pune ITAT has considered the date of submission of TDS statements as the pivot/basis while considering the levy of fees u/s 234E r.w.s 200A(1)(c) based on the decision of the Hon’ble Karnataka High Court in Fatheraj Singhvi & Ors Vs UOI” reported in 289 CTR 602. 2.1 It is to be stated and submitted that the Hon’ble Pune ITAT while considering the levy of fees u/s 234E of the Act has considered the entire gamut of the provisions of section 200A and its sub-sections while giving a finding on the said levy. It is not the case of the assessee that the Hon’ble Pune ITAT has not done so. It needs to be mentioned that the decision in the case of Rajesh Kourani vs UoI[2017] 83 taxmann.com 137 (Gujarat), it was held by the Hon’ble Gujarat High Court that : “Section 234E is a charging provision creating a charge for levying fee for certain defaults in filing statements, and fee prescribed under section 234E could be levied even without a regulatory provision being found in section 200A for computation of fee”. 2.2 In Rajesh Kourani vs UoI (supra), the Hon’ble High Court has held that section 200A is not a charging section but a machinery section. The catch-note of the said decision is reproduced for reference herein under :

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan Section 234E, read with section 200A, of the Income-tax Act, 1961 - Deduction of tax at source - Fees for default in furnishing statements (Scope of provision) - Whether section 200A is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, arithmetical or prima facie in nature and does not create any charge in any manner - Held, yes - Whether with effect from 1-6-2015, this provision specifically provides for computing fee payable under section 234E - Held, yes - Whether however, section 234E is a charging provision creating a charge for levying fee for certain defaults in filing statements and fee prescribed under section 234E could be levied even without a regulatory provision being found in section 200A for computation of fee - Held, yes [Para 20][In favour of revenue] Section 234E, read with section 200A of the Income-tax Act, 1961 and rule31Aof the Income-Tax Rules, 1962 - Deduction of tax at source - Fees for default in furnishing statements (Time to file return of TDS) - Whether in view of fact that multiple agencies are involved in every transaction in Government offices, longer period for Government to file a return of deduction of tax at source is neither unreasonable nor discriminatory - Held, yes [Para 15][In favour of revenue].

The Hon’ble Gujarat High Court has already held that section 234E is a charging provision and therefore the fee prescribed u/s 234E could be levied even without section 200A.

2.3 It is to be mentioned that the CPC, Ghaziabad is the CPC which processes the TDS statements and is known as CPC (TDS). It is this CPC that processes the statements of TDS/TCS and computes the liability thereto. The FM dedicated the Centralized Processing Cell for Tax Deducted at Source, CPC (TDS) to the nation on 24-02-2013. The said CPC (TDS) is situated at Aayakar Bhawan, Sector-3, Vaishali, Ghaziabad (UP) and provides the tax deductors, taxpayers and the Assessing Officers, a wide range of online services related to TDS through a functionality designated TDS Reconciliation, Analysis and Correction Enabling System (TRACES). TRACES through its portal (https://www.tdscpc.gov.in) provides a bouquet of services like viewing and downloading of Form 26AS by taxpayers, downloading of Consolidated Files for filing of correction statements. The facility of downloading of TDS Certificates in Form 16 and 16A by tax deductors is a measure of convenience for the deductees. This facilitates proper reconciliation between credit of taxes paid by deductors and claimed by deductees. E-Tutorials for tax deductors are immensely useful for educating tax deductors for enhancing compliance. Further, TRACES also enables multiple modes of communication to reach out to the deductors and deductees for immediate correction, reconciliation and matching of TDS payments. Banks, being the most important Tax Deductors now have the facility to file correction statements online to minimize the difficulties faced by Tax Deductees in claiming credit of Tax Deducted at source. This facility to a large extent, ameliorates the problem faced by Tax Payers of mismatch in credit of Tax deducted and claimed in the Return of Income. A toll free Call Centre (Toll Free No.1800 103 0344) is also functional for the convenience of deductors/ deductees. Instant communication by way of E-mail

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan (contactus@tdscpc.gov.in) and SMS alerts are other unique features of the CPC(TDS).

In this background, it is the AC/DC, CPC(TDS) who processes statements and issues the intimations accordingly. Perhaps, the entire understanding of the assessee Appellant is that, it is the CPC which processes the ROI is the CPC which processes the TDS statements, which is not the case in reality. As can be seen, the CPC, TDS facilitates the amelioration of the difficulties of the taxpayers in line with the legislative intention in bringing section 234E onto the statute. The interpretation proposed by the assessee Appellant runs contrary to this legislative intention and therefore cannot survive.

2.4 In Gajanan Constructions vs DCIT (2016) 73 taxmann.com 380 (Pune –Trib), the Hon’ble ITAT has held that power to charge/collect fees under section 234E was vested with revenue only on substitution of clause (c) to section 200A vide Finance Act, 2015 with effect from 1-6- 2015, hence prior to 1-6-2015 no fee could have been levied under section 234E while issuing intimation under section 200A.

Several other decisions of the Pune ITAT have held accordingly and while doing so have dealt with section 200A(1)(c) r.w.s 200A(2).Therefore, it would be improper to hold otherwise when the earlier orders of the Pune ITAT still hold the field and have not been struck down by the jurisdictional High Court.

2.5 The CBDT Notification dated 15/01/2013 which notified the scheme in exercise of the powers conferred by sub-section (2) of section 200A of the Act, named the scheme as the Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013. The “Assessing Officer” vide clause 2(b) of the said scheme, means the Assessing Officer who is ordered or directed under section 120 of the Act to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under Chapter XVII of the Act. The “Cell” means the Centralised Processing Cell having jurisdiction over such statements of tax deducted at source as may be specified by the Board. This in fact was the CPC (TDS), Ghaziabad. The impugned base order is of the DCIT, CPC (TDS), Ghaziabad which raised the demand with respect of the late fees as envisaged in section 234E. The assessee has no grievance to the determination of the late fee u/s 234E by the jurisdictional TDS officers but is aggrieved that the same is done by the DCIT, CPC(TDS). The assessee Appellant has lost sight that the said CBDT Notification No. 3/2013 dated 15/01/2013 and the provisions of section 200A still hold the field in the light of the judicial pronouncements of the various high courts including the jurisdictional High Court and also that of the Pune ITAT. In the light of these facts and circumstances and in law, there is absolutely no infirmity in the orders of the CIT (A), which have now come to be challenged before the Hon’ble ITAT.

2.6 The Hon’ble Bombay High Court i.e. the jurisdictional High Court, while dealing with the constitutional validity of section 234E of the Act in RashmikantKundalia vs UoI[2015] 54 taxmann.com 200 (Bombay)has dealt with the various aspects surrounding the levy of the said fee and Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan the processing of the TDS statements submitted by the tax deductor. The relevant paras are reproduced herein under and they throw light as to how the jurisdictional High Court looks at the gamut of sections connected to the levy of the said fee u/s 234E and how the court needs to look at economic and regulatory legislations. The said paras need to be considered carefully and their proper appreciation while dealing with the proposition of the assessee Appellant would clearly expose the fallacy lying therein.

Relevant paras :

Section 200 deals with the duty of a person deducting tax. On a perusal of section 200, it is clear that subsection (3) thereof, inter alia stipulates that any person responsible for deducting any sum by way of tax, on or after 1-4-2005 in accordance with the foregoing provisions of Chapter XVII or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax so deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income taxauthority or the person authorised by such authority, such statements, in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. The proviso (which was inserted with effect from 1-10-2014) further stipulates that a person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement. [Para 10] On a perusal of sub-section (1) of section 234E, it is clear that a fee is sought to be levied inter alia on a person who fails to deliver or cause to be delivered the TDS return/statements within the prescribed time in sub-section (3) of section 200. The fee prescribed is Rs.200 for every day during which the failure continues. Sub-section (2) further stipulates that 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. [Para 12] It is not in dispute that as per the existing provisions, a person responsible for deduction of tax (the deductor) is required to furnish periodical quarterly statements containing the details of deduction of tax made during the quarter, by the prescribed due date. Undoubtedly, delay in furnishing of TDS return/statements has a cascading effect. Under the Income-tax Act, there is an obligation on the Income Tax Department to process the income tax returns within the specified period from the date of filing. The department cannot accurately process the return on whose behalf tax has been deducted (the deductee) until information of such deductions is furnished by the deductor within the prescribed time. The timely processing of returns is the bedrock of an efficient tax administration system. If the income tax returns, especially having refund claims, are not processed in a timely manner, then (i) a delay occurs in the granting of credit of TDS to the person on whose behalf tax is deducted (the deductee) and, consequently, leads to delay in issuing refunds to the deductee, or raising of infructuous demands against the deductee; (ii) the confidence of a general taxpayer on the tax administration is eroded; (iii) the late payment of refund affects the Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan Government financially as the Government has to pay interest for delay in granting the refunds; and (iv) the delay in receipt of refunds results into a cash flow crunch, especially for business entities.[Para 13] The Legislature took note of the fact that a substantial number of deductors were not furnishing their TDS return/statements within the prescribed time frame which was absolutely essential. This led to an additional work burden upon the department due to the fault of the deductor by not furnishing the information in time and which he was statutorily bound to furnish. It is in this light, and to compensate for the additional work burden forced upon the department, that a fee was sought to be levied under section 234E. Looking at this from this perspective, section 234E is not punitive in nature but a fee which is a fixed charge for the extra service which the department has to provide due to the late filing of the TDS statements.[Para 14] Due to late submission of TDS statements the department is burdened with extra work which is otherwise not required if the TDS statements were furnished within the prescribed time. This fee is for the payment of the additional burden forced upon the department. A person deducting the tax (the deductor), is allowed to file his TDS statement beyond the prescribed time provided he pays the fee as prescribed under section 234E. In other words, the late filing of the TDS return/statements is regularised upon payment of the fee as set out in section 234E. This is nothing but a privilege and a special service to the deductor allowing him to file the TDS return/statements beyond the time prescribed by the Act and/or the rules. Therefore, the argument of the petitioners that the fee that is sought to be collected under section 234E is really nothing but a collection in the guise of a tax was not agreeable. [Para 15] Therefore, the fee sought to be levied under section 234E is not in the guise of a tax that is sought to be levied on the deductor. The provisions of section 234E are also not found to be onerous on the ground that the section does not empower the Assessing Officer to condone the delay in late filing of the TDS return/statements, or that no appeal is provided for from an arbitrary order passed under section 234E. It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even insuch a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this court in its extraordinary equitable jurisdiction under article 226 / 227 of the Constitution, as the case may be. Therefore, it cannot be said that simply because no remedy of appeal is provided for, the provisions of section 234E are onerous. Similarly, on the same parity of reasoning, it was found that the argument regarding condonation of delay was also wholly without any merit. [Para 18] It is now well settled that even though this Court exercising jurisdiction under article 226 of the Constitution has the power to declare a statute (or any provision thereof) as unconstitutional, it should exercise great restraint before exercising such a power. Really speaking, there is only one ground for declaring an act of the legislature as invalid, and that is if it clearly violates some provision of the Constitution of India in so evident a manner so as to leave no manner of doubt. Before declaring a statute to be unconstitutional, the court must be absolutely sure that Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan there can be no manner of doubt that it violates the provisions of the Constitution of India. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. The court must therefore make every effort to uphold the constitutional validity of a statute, even if it requires giving the statutory provision a strained meaning, or a narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional. [Para 19] It is equally well settled that a statute relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion etc. As regards economic and other regulatory legislation it is imperative that the court exercises judicial restraint and grants greater latitude to the legislature whilst judging the constitutional validity of such a statute. This is for the simple reason that the court does not consists of economic and administrative experts and has no expertise in these matters. [Para 20] These well settled principles have been very succinctly set out in the judgment of the Supreme Court in the case of Government of Andhra Pradesh v. Smt. P. Laxmi Devi [2008] 4 SCC 720. Therefore, even looking at it from the perspective as set out in the aforesaid judgment, it is clear that section 234E does not violate any provision of the Constitution and is therefore intra vires, Constitution of India. [Paras 21 & 22].

2.7 Looking at the issue from another angle, the Supreme Court in CIT vs Bhikaji Dadabhai & Co in 42 ITR 123 (SC) has held that the Supreme Court has regarded penalty as an additional tax imposed upon a person in view of his dishonest or his contumacious conduct (para 9 thereto). In this view of the matter, the levy of fee u/s 234E of the Act which was brought on to the statute to be a deterrent for filing the TDS statements in time can therefore also be considered to be penal in nature and therefore an additional tax. Accordingly, when one equates the fee u/s 234E as an additional tax, there is no infirmity in the CPC processing the TDS statements and computing the late fee/additional tax.

2.8 In Conceria International (P.) Ltd. Vs ITO [2023] 157 taxmann.com 335 / 464 ITR 92 (Madras), the Hon’ble Madras High Court has held that the challenge to order imposing levy of late fee prior to 1-6-2015 was to be rejected as section 234E which provides for late fee is substantive provision and levy is not dependent on section 200A(1)(c) which only prescribes a recovery mechanism.

The Hon’ble Madras High Court has held that, a reading of section 234E would show that liability to pay, by way of fee gets attracted under sub-section (1) to section 234E once 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 and the liability shall continue for every day during which the failure continues. Sub-section (3) to section 234E of the Act provides that the fee referred to in sub-section (1) to section 234E shall be paid

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan 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. In other words, sub-section (3) provides for self- assessment/payment of fee payable under sub-section (1) to section 234E. Importantly, sub-section (4) to section 234E provides that the above provisions would apply to statement referred to in sub-section (3) to section 200 which is to delivered or cause to delivered on or after 1- 7-2012. [Para 7.1] That, with the above overview of section 234 E and on considering both the above views, it appears that the opinion expressed by the Gujarat High Court in Rajesh Kourani v. UOI [2017] 297 CTR 502 that section 234E by itself creates a liability and the liability to pay the late fee is not dependent on section 200A(1)(c) which only prescribes the recovery mechanism reflects the true intent and purpose of section 234E. Section 234E which provides for late fee is the substantive provision and the levy is not dependent on section 200A(1)(c) which only prescribes a recovery mechanism. A reading of section 234E would make it clear that it gets attracted, the moment there is a failure on the part of a person to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to subsection (3) of section 206C. The person committing the above breach/infraction renders himself liable to pay by way of fee a sum of Rs. 200 everyday during which the failure continues. Sub-section (3) in fact provides for a self-assessment/payment of the fee while delivering or causing to deliver a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. Subsection (4) to section 234E also makes it clear that the above provision would be effective from 1-7-2012. Therefore, the submission that section 234E would not be operable/effective unless and until section 200A(1)(c) was introduced overlooks the fact that section 234E(1) is the substantive provision and section 234E(3) provides for a self - declaration/payment for the delay in complying with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. [Para 7.2] In the light of the above discussion, the Hon’ble Madras High Court rejected the challenge to the order imposing the levy of late fee prior to 1-6-2015.

2.9 Also, let us look at the issue from the angle of the workability of the statute and thereby fulfilling the legislative intention behind it’s inception. Now, (i) Section 200A(1) provides the actions which can be done while processing the TDS statements. (ii) Section 200A(1)(b) provides for computation of interest, if any. (iii) Section 200A(1)(c) specifically provides that fee u/s 234E can be levied while processing the TDS statement. (iv) Further, 200A(1)(d) provides that sum payable by the deductor or refundable to the deductor shall be determined after considering the amount computed as interest and fee u/s 234E.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

(v) Section 200A(2) provides that the Government can make a scheme to centrally process the TDS statements as provided in section 200A(1). Thus, the function of CPC is to process the TDS statements as provided u/s 200A(1) of the Act and while doing so, it is authorised to undertake all actions as mentioned in 200A(1) and determine the sum payable by the deductor or sum refundable to the deductor. Obviously, unless, the CPC compute the interest or fee payable by the deductor, it shall not be in position to correctly determine the amount payable/refundable by/to the deductor. "Ex Visceribus Actus" (From the Body of the Act): This principle suggests that the true meaning of a statute should be derived from its overall context and purpose, rather than relying solely on isolated phrases or words. The interpretation proposed by the assessee appellant shall make the whole scheme unworkable, thereby going against the legislative intention for its inception and accordingly requires to be rejected.

3. In view of the above, in whichever way one looks at it, the proposition put forth by the assessee Appellant requires to be rejected and the order of the DCIT, CPC (TDS) and the CIT (A) requires to be upheld. It is prayed accordingly.”

“Processing of statements of tax deducted at source (and other statements).

200A. (1) Where a statement of tax deduction at source 246 for 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 Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

(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.]”

“S.O. 169 (E).— In exercise of the powers conferred by sub-section (2) of section 200A of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following scheme for centralised processing of statements of tax deducted at source, namely:— 1. Short title and commencement.— (1) This scheme may be called the Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013. (2) It shall come into force on the date of its publication in the Official Gazette.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

(e) “Cell” means the Centralised Processing Cell having jurisdiction over such statements of tax deducted at source as may be specified by the Board;

(f) “Commissioner” means the Commissioner of Income-tax in charge of the Centralised Processing Cell;

(g) “correction statement of tax deducted at source” means the statement furnished for rectifying any mistake or to add, delete or update the information furnished in the statement of tax deducted at source furnished under sub-section (3) of section 200 of the Act;

(h) “deductor” means a person deducting tax in accordance with the provisions of Chapter XVII of the Act;

(i) “Director General” means the Director General of Income-tax (Systems) appointed as such under sub-section(1) of section117 of the Act;

(j) “portal” means the web portal of the authorised agency or the web portal of the Cell, as the case may be;

(k) “statement of tax deducted at source” means statement of tax deducted at source furnished under sub-section (3) of section 200 of the Act.

(2) The words and expressions used herein but not defined and defined in the Act shall have the meaning respectively assigned to them in the Act.

3. Centralised Processing Cell.— The Board may set up as many Centralised Processing Cells as it may deem necessary and specify their respective jurisdictions.

4. Furnishing of correction statement of tax deducted at source.— (1) A deductor shall furnish the correction statement of tax deducted at source in the form specified by the Director General—

(a) at the authorised agency through electronic mode; or (b) online through the portal.

(2) The correction statement referred to in sub-paragraph (1) shall be furnished under digital signature or verified through a process in accordance with the procedure, formats, and standards specified by the Director General.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan contained in the correction statement of tax deducted at source, if any, furnished by the deductor before the date of processing.

(2) The Commissioner may—

(a) adopt appropriate procedure for processing of the statement of tax deducted at source; or (b) decide the order of priority for processing of the statement of tax deducted at source based on administrative requirements.

6. Rectification of mistake.— (1) An Income-tax authority of the Cell may, with a view to rectifying any mistake apparent from the record under section 154 of the Act, on its own motion or on receiving an application from the deductor, amend any order or intimation passed or sent by it under the Act.

(2) An application for rectification shall be furnished in the form and manner specified by the Director General.

(3) Where a rectification has the effect of reducing the refund or increasing the liability of the deductor, an intimation to this effect shall be sent to the deductor electronically by the Cell and the reply of the deductor shall be furnished in the form and manner specified by the Director General.

(4) Where an amendment has the effect of reducing a refund already made or increasing the liability of the deductor, the order under section 154 of the Act passed by an Income-tax authority of the Cell shall be deemed to be a notice of demand under section 156 of the Act.

(2) The Assessing Officer who has jurisdiction over the deductor shall submit the remand report and any other report to be furnished before the Commissioner of Income-tax (Appeals) and an order, if any, giving effect to appellate order shall be passed by such Assessing Officer. 9. No personal appearance at the Cell.— (1) No person shall be required to appear personally or through authorised representative before the authorities at the Cell in connection with any proceedings.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan (2) The Cell may call for such clarification, evidence or document as may be required for the purposes of the processing of statement of tax deducted at source or for the purposes of the rectification of any order or intimation passed or sent by the Cell under the provisions of the Act.

(3) The deductor shall furnish the reply to any communication under sub-paragraph (2) in such format as may be specified by the Director General.

(a) by electronic mail; or (b) by placing such copy in the registered electronic account of the deductor on the portal of the Cell; or (c) by any mode mentioned in sub-section (1) of section 282 of the Act.

(2) The date of posting of any communication under sub-paragraph (1) in the electronic mail or electronic account of the deductor in the portal of the Cell shall be deemed to be the date of service of such communication.

(3) The intimation, orders and notices shall be computer generated and need not carry physical signature of the person issuing it.

(a) form of correction statement of tax deducted at source;

(b) the manner of verification of correction statement of tax deducted at source; (c) receipt of correction statement of tax deducted at source; (d) form of rectification application; (e) the manner of verification of rectification application; (f) receipt and processing of rectification applications in the Cell;

(g) the mode and format of the acknowledgment to be issued by the Cell for the receipt of any document;

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

(h) the mode of authentication of any document or information submitted to the Cell, including authentication by digital signature or electronic signature; (i) validation of any software used for electronic filing of correction statement of tax deducted at source or rectification application; (j) provision of web portal facility including login facility, tracking status of correction statement of tax deducted at source or statement of tax deducted at source, display of relevant details of tax deduction or refunds to the taxpayer or deductor, as the case may be, and facility of download of relevant information; (k) call centre to answer queries and provide taxpayer services, including outbound calls to a deductor requesting for clarification to facilitate the processing of the statement of tax deducted at source filed; (l) provision of grievance redressal mechanism in the Cell; (m)managing tax administration functions such as receipt, scanning, data entry, processing, storage and retrieval of statement of tax deducted at source and documents in a centralised manner or receipt of paper documents through authorised intermediaries.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan “8. Processing of Returns. (i) The Centre shall process a valid return of income in the following manner, namely:- (a) the sum payable to, or the amount of refund due to, the person shall be determined after credit of such Tax collected at Source (TCS), Tax Deducted at Source (TDS) and tax payment claims which can be automatically validated with reference to data uploaded through TDS and TCS statements by the deductors or the collectors, as the case may be, and tax payment challans reported through authorised banks in accordance with the procedures adopted by the Centre in this regard. (b) an intimation shall be generated electronically and sent to the person by e-mail specifying the sum determined to be payable by, or the amount of the refund due to, the person; and (c) any intimation to the person to pay any sum determined to be payable shall be deemed to be a notice of demand as per the provisions of section 156 of the Act and all other provisions of the Act shall be applicable accordingly. (ii) The Commissioner may, – (a) adopt appropriate procedure for processing of returns; or (b) decide the order of priority for processing of returns of income based on administrative requirements. (iii) Wherever a return cannot be processed in the Centre for any reasons, the Commissioner shall arrange to transmit such return to the Assessing Officer having jurisdiction for processing.”

“It is now well settled that even though this Court exercising jurisdiction under article 226 of the Constitution has the power to declare a statute (or any provision thereof) as unconstitutional, it should exercise great restraint before exercising such a power. Really speaking, there is only one ground for declaring an act of the legislature as invalid, and that is if it clearly violates some provision of the Constitution of India in so evident a manner so as to leave no manner of doubt. Before declaring a statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates the provisions of the Constitution of India. If two views

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. The court must therefore make every effort to uphold the constitutional validity of a statute, even if it requires giving the statutory provision a strained meaning, or a narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional. [Para 19] It is equally well settled that a statute relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion etc. As regards economic and other regulatory legislation it is imperative that the court exercises judicial restraint and grants greater latitude to the legislature whilst judging the constitutional validity of such a statute. This is for the simple reason that the court does not consists of economic and administrative experts and has no expertise in these matters. [Para 20]”

“The Ld. CIT (Appeals), NFAC has confirmed interest on late payment under section 201(1A), 220(2), additional late payment interest and penal late filing levy u/s 234E. It is submitted that the interest u/s 201(1A), 220(2), Additional Late Payment Interest and late fees levied u/s 234E are illegal and need to be deleted on the below mentioned grounds, without prejudice to one another: 1) That the instant demand is out of the purview of sec.200A and made without jurisdiction: a. Provisions of section 200A(1) provide for the manner of processing of TDS statement and section 200A(2) of the Act provides delegation of powers to CBDT for formulating a scheme. CBDT vide Notification No.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan 3/2013 dt. 15.01.2013 set up Centralised Processing Cell/s (CPC) for such centralised processing as provided under section 200A(1). However, section 200A(2) only provides for the scheme to be formulated for centralized processing of returns limited to the determination of the tax payable or refund due. The said delegation of power under the scheme is not for determining late fees, or interest on TDS. The present demand is based on Justification reports issued by such TDS-CPC. b. There is a clear distinction between the terms 'tax' and 'Interest'/'penalty' or 'late fees'. Tax can not be interpreted to mean and include interest and/or penalty. Thus, the literal reading of S. 200A(2) gives out that the said scheme empowering the centralized processing cell for processing of TDS Returns is only for the purpose of determining the amount of tax or refund thereof. c. Hence, it is a settled position in law that, in the absence of the enabling mechanism, the levy fails. See: 1. Fatehraj Singhvi vs Union of India reported in 73 taxmann.com 252 2. Vivek J Thar Vs ITO (ITAT Mumbai) Appeal Number:

3. Sun Dye Chem v. The Assistant Commissioner (ST), Tirupur 2020-TIOL-1858-HC-MAD d. Thus, such late fees, interest and additional interest for TDS quarterly statement cannot be determined by TDS-CPC by way of processing under section 200A(2). Therefore, demand notice based on such justification report cannot be issued except for tax/refund, but if issued, then it is issued without jurisdiction. Hence liable to be quashed and set aside. 2) The Ld. CIT (A) has erred in passing the order dated 20.06.2024 in as much as the Ld. CIT (A) has discussed the ground taken up about section 200A(2) in his order as one taken up for section 234E. Thus, the order is a non-speaking order and needs to be quashed. 3) That demand of late fees/additional cannot be made under section 156 after the said TDS statement has been delivered. a. As per the provisions of Sec. 234E of the Act, if a person fails to deliver or cause to be delivered a statement within the prescribed time period then he shall be liable to pay Late fees @ Rs.200/- per day before filing the TDS statement. b. Further, sub-section (3) of section 234E of the Act states that it shall be paid before delivering a TDS statement. It means that any late fees should have been deposited just at the time of delivering TDS statement and not later than this. c. That once the TDS statement has been accepted without late fees, then such late fees cannot be recovered later on. In view of the above late fee cannot be recovered later on by way of any notice.

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan d. Similar provisions exist for the interest under section 201(1A). Thus, recovery of interest under section 201(1A) after filing the TDS returns is bad as well. 4) That as per the provisions of sec 201(1) of the Act also a Deductor cannot be treated as an assessee in default and TDS return cannot be treated as defective due to non-payment of late fees U/s 234E. a. It is submitted that, the filer is treated as an assessee in default for non-payment of SA tax and interest along with return U/s 139(1). Moreover, the income tax return is also treated as defective U/s 139(9). On the contrary, section 201(1) only treats the assessee in default if the tax amount is unpaid. b. Sec 201(2) of the Act states that if a person has failed to deposit whole or a part of tax then it shall be a charge upon all the assets of that person. Thus, this sub-section also does not cover interest and late fee amount, for the purpose of such charge on assets. This implies that the Intention of the law is not to cover/recover late fee if not deposited along with the TDS statement. Thus, late fees cannot be recovered if not deposited along with the statement of TDS being delivered. 5) That the Provisions of Sec.204 of the Act have made the person responsible for Sec. 190 to Sec. 203AA and Sec.285, this phrase does not cover Sec.234E, it means no one is responsible for default U/s 234E of the Act. It also clears that if late fees are due but not deposited along with the TDS statement none can be held responsible to deposit it later on. 6) The levy of late fees is illegal and wrong and not in accordance with law. Therefore, Interest u/s 220(2) on the above is also not in accordance with law. 7) The Ld. CIT (A) has passed the order without application of mind, this is evident from the fact that in this case from its amounts discussed and their bifurcation of the amounts is as per the financial year 2019-20 however, the same has been considered as Assessment Year 2019-20, which is a completely different tax period. 8) In view of the above submissions, the order of the CIT (A), NFAC upholding the demand based on the justification reports issued by CPC imposing, interest, additional interest and late fees U/s 234E has to be quashed. 9) The Appellant craves leave to add, amend, alter, vary and /or withdraw any or all the above grounds of Appeal.”

Chate Tutorials Pvt. Ltd.and Shree Bhaskaracharya Pratishthan

Order pronounced on this 25th day of June, 2025.