EVERGREEN HARVEST AGRO PRODUCTS PVT LTD,CHENNAI vs. ITO,TDS WARD 1(2), CHENNAI

आयकर अपीलीय अिधकरण ‘ए’ �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI

माननीय -ी महावीर िसंह, उपा34 एवं माननीय -ी मनोज कुमार अ8वाल ,लेखा सद; के सम4। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आयकरअपीलसं./ITA Nos. 185 to 187/Chny/2022 (िनधाDरणवषD / Assessment Year: 2014-15) & आयकरअपीलसं./ITA Nos. 188 to 194/Chny/2022 (िनधाDरणवषD / Assessment Year: 2015-16) Evergreen Harvest Agro Products P. Ltd ITO बनाम/ 6/951, Venugopal Street, TDS Ward 1(2), Vs. Mogappair West, Chennai – 600 037. Chennai. �थायीलेखासं./जीआइआरसं./PAN/TANAACCE-5476-H / CHEE-05241-F (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri. Sriraj Gokavarapur (ACA) – Ld. AR ��थ�कीओरसे/Respondent by : Shri ARV Sreenivasan (Addl. CIT) –Ld. DR सुनवाईकीतारीख/ : 12-05-2022 Date of Hearing घोषणाकीतारीख / : 12-05-2022 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

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by relying upon the decision of Hon’ble Gujarat High Court in Rajesh Kourani V/s UOI (297 CTR 507) in preference to the decision of Hon’ble Karnataka High Court in Fatehraj Singhvi V/s UOI (73 Taxmann.com 252). 2. The registry has noted a delay of 303 days in the appeal, the condonation of which has been sought by the assessee on the ground that the impugned orders were passed during Lockdown period on account of Covid-19 Pandemic. The due date for filing the appeal is stated to be falling during the exclusion period commencing from 15.03.2020 to 28.02.2022. Though Ld. Sr. DR opposed condonation of delay, however, concurring with the submissions of Ld. AR, we condone the delay in all the appeals and admit the same for adjudication on merits. 3. It is undisputed fact that the assessee has filed the TDS returns with delay for various quarters which could be tabulated as under: - No. FY Form Qtr. Ackn. No. Due Date Actual Date of Days 234E of filing filing Delay Fees 1. 2013-14 24Q III 030049600449481 15.01.2014 08.07.2014 174 6180 2. 2013-14 24Q IV 030049600449470 15.05.2014 08.07.2014 54 10800 3. 2013-14 26Q IV 030049601117115 15.05.2014 12.03.2015 301 60200 4. 2014-15 24Q I 030049601497311 15.07.2014 29.08.2015 410 56907 5. 2014-15 24Q II 030049601497322 15.10.2014 29.08.2015 318 56907 6. 2014-15 24Q III 030049601497333 15.01.2015 29.08.2015 226 45200 7. 2014-15 24Q IV 030049601497344 15.05.2015 29.08.2015 106 21200 8. 2014-15 26Q II 030049601567834 15.10.2014 13.10.2015 363 4600 9. 2014-15 26Q III 030049601567882 15.01.2015 13.10.2015 271 6900 10. 2014-15 26Q IV 030049601567915 15.05.2015 13.10.2015 151 30200 Total 299094

ITA Nos.185 to194/Chny/2022 - 3 - quarters falling after the said date. To support the same, Ld. AR has relied on the recent decision of Hon’ble Kerala High Court in United Metals V/s ITO (137 Taxmann.com 115) besides various other similarly favorable decisions including the decision of Chennai Tribunal in M/s DRG Rexine Inc. V/s ACIT (ITA No.351/Chny/2021; dated 24.02.2022).The Ld. Sr. DR, on the other hand, relied on impugned orders which have followed the revenue favorable decision of Hon’ble Gujarat High Court in Rajesh Kourani V/s UOI (297 CTR 507). Our findings and Adjudication 5.1 Upon careful consideration, we find that the provisions of Section 234E, as inserted by Finance Act 2012 w.e.f. 01/07/2012, envisages levy of fees @Rs.200/- for every day of default on the part of the assessee to deliver the statement of TDS within the time prescribed u/s 200(3) or Section 206C(3). Section 200A deal with processing of statements of tax deducted at source. A clause (c) has been inserted into this Section by Finance Act, 2015 with effect from 01/06/2015 which provide that the fees, if any, shall be computed in accordance with the provisions of Section 234E. 5.2 The case of the assessee is that since the amendment to Section 200A by way of insertion of clause (c) is only with effect from 01/06/2015, no fees would be payable by the assessee for any period prior to 01/06/2015 as held by Hon’ble Karnataka High Court in Fatehraj Singhvi V/s Union of India (73 Taxmann.com 252 26/08/2016)which has subsequently been followed by same court while adjudicating Writ Petition No. 618/2015 filed by Shree Ayappa Educational Charitable Trust. The relevant observations of Hon’ble Karnataka, for ease of reference, could be extracted in the following manner: -

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(i) any arithmetical error in the statement; or (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." 13. When the returns for TDS filed by the respective appellant-petitioners were processed in purported exercise of the power under Section 200A, the amount of fee under Section 234E is computed and determined. The demand is made and the intimation given under Section 200A includes the computation and the determination of the fee payable by the appellant-petitioners. 14. We may now deal with the contentions raised by the learned counsel for the appellants. The first contention for assailing the legality and validity of the intimation under Section 200A was that, the provision of Section 200A(1)(c), (d) and (f) have come into force only with effect from 1.6.2015 and hence, there was no authority or competence or jurisdiction on the part of the concerned Officer or the Department to compute and determine the fee under Section 234E in respect of the assessment year of the earlier period and the return filed for the said respective assessment years namely all assessment years and the returns prior to 1.6.2015. It was

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submitted that, when no express authority was conferred by the statute under Section 200A prior to 1.6.2015 for computation of any fee under Section 234E nor the determination thereof, the demand or the intimation for the previous period or previous year prior to 1.6.2015 could not have been made. 15. Whereas, the learned counsel appearing for the respondent-Department made two fold submissions; 16. One was that, by virtue of Section 234E, the liability to pay fee had already accrued since there was failure to submit return either under Section 200(3) of the Act or under Section 206C (3) of the Act. Section 234E can be said as a charging Section generating the liability to pay the fee therefore, irrespective of a fact or the aspect that sub-sections (1c), (1d), 1(e) & (1f) were inserted by way of substitution in Section 200A, when the fee was payable the aforesaid insertion of the aforesaid clause and Section 200A (1) (c), (d), (e) and (f) would not result into nullifying the liability to pay fee under Section 234E of the Act. Hence, in his submission, it cannot be said that the demand or the intimation by way of computation of the fee under Section 234E is invalid or unwarranted or is without jurisdiction. 17. The examination of the aforesaid contentions show that, Section 234E has come into force on 1.7.2012. Therefore, one may at the first blush say that, since Section 234E is a charging section for fee, the liability was generated or had accrued, if there was failure to deliver or cause to be delivered the statement/s of TDS within the prescribed time. But, in our view, Section 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement. As observed by us hereinabove, when Section 234E was inserted in the Act simultaneously, Section 271H was also inserted in the Act providing for the penalty for failure of furnishing of statements etc. Therefore, if there was failure to submit the statement for TDS as per Section 234E, the fee payable is provided but the mechanism provided was that if there was failure to furnish statements within the prescribed date, the penalty under Section 271H (1) and (2) could be imposed. However, under sub-section (3) of Section 271H, the exception is provided that no penalty shall be levied for the failure referred to under clause (a) of sub-section (1) if the person proves that after paying TDS with the fee and interest the amount is credited and he had delivered or caused to deliver the statement within one year from the time prescribed for submission of the said statement. To put it in other words, for failure to submit the statements, the penalty provided under Section 271(1)(a) cannot be imposed if the deductor complies with the requirement of sub- section (3) of Section 271H. Hence, it can be said that the fee provided under Section 234E would take out from the rigors of penalty under Section 271H but of course subject to the outer limit of one year as prescribed under sub-section (3) of Section 271H. It can also be said that when the Parliament intended to insert the provisions of Section 234E providing for fee simultaneously the utility of such fee was for conferring the privilege to the defaulter-deductor to come out from the rigors of penal provision of Section 271H. Be it recorded that, prior to Section 271H of the Act inserted in the statute book, the enforceability of requirement to file return under Section 200(3) and Section 206C(3) was by virtue of Section 272A(2)(k) of the Act which provided for the penalty of Rs.100/- per day for each day of default in filing TDS statements. But, when Section 234E was inserted with effect from 1.7.2012 simultaneously, a second proviso was added under Section 272A(2) with effect from 1.7.2012 as under:

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"Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. 272A. (1)** ** ** (2) If any person fails— (a) to comply with a notice issued under sub-section (6) of section 94; or (b) to give the notice of discontinuance of his business or profession as required by sub-section (3) of section 176; or (c) to furnish in due time any of the returns, statements or particulars mentioned in section 133 or section 206 or section 206C or section 285B; or (d) to allow inspection of any register referred to in section 134 or of any entry in such register or to allow copies of such register or of any entry therein to be taken; or (e) to furnish the return of income which he is required to furnish under sub-section (4A) or sub-section (4C) of section 139 or to furnish it within the time allowed and in the manner required under those sub-sections; or (f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in section 197A; or (g) to furnish a certificate as required by section 203 or section 206C; or (h) to deduct and pay tax as required by sub-section (2) of section 226; (i) to furnish a statement as required by sub-section (2C) of section 192; (j) to deliver or cause to be delivered in due time a copy of the declaration referred to in sub-section (1A) of section 206C; (k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; (l) to deliver or cause to be delivered the statements within the time specified in sub- section (1) of section 206A; [(m) to deliver or cause to be delivered a statement within the time as may be prescribed under sub-section (2A) of section 200 or sub-section (3A) of section 206C,] he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues: Provided that the amount of penalty for failures in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns under sections 206 and 206C and 71[statements under sub-section (2A) or sub section (3) of section 200 or the proviso to sub-section (3) or under sub-section (3A) of section 206C] shall not exceed the amount of tax deductible or collectible, as the case may be: Provided further that no penalty shall be levied under this section for the failure referred to in clause (k), if such failure relates to a statement referred to in sub-

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section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. ** ** **" 18. The aforesaid shows that in the clause (k) if the said failure relates to a statement referred to in sub-section (3) of Section 200 or the sub-section (3) of Section 206C, no penalty shall be imposed for TDS after 01.07.2012. 19. Hence, it can be said that, the mechanism provided for enforceability of Section 200(3) or 206C (3) for filing of the statement by making it penal under Section 272A (2) (k) is done away in view of the insertion of Section 271H providing for penal provision for such failure to submit return. When the Parliament has simultaneously brought about Section 234E, Section 271H and the aforesaid proviso to Section 272A(2), it can be said that, the fee provided under Section 234E is contemplated to give a privilege to the defaulter to come out from the rigors of penalty provision under Section 271H (1) (a) if he pays the fee within one year and complies with the requirement of sub-section (3) of Section 271H. 20. In view of the aforesaid observations and discussion, two aspects may transpire one, for Section 234E providing for fee and given privilege to the defaulter if he pays the fee and hence, when a privilege is given for a particular purpose which in the present case is to come out from rigors of penal provision of Section 271H(1)(a), it cannot be said that the provisions of fee since creates a counter benefit or reciprocal benefit in favour of the defaulter in the rigors of the penal provision, the provisions of Section 234E would meet with the test of quid pro quo. 21. However, if Section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under Section 200A which has been brought about with effect from 1.6.2015 cannot be said as only by way of a regulatory mode or a regulatory mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a regulatory mechanism by insertion of any provision made in the statute book, may have a retroactive character but, whether such provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also be a aspect which may be required to be considered before such provisions is held to be retroactive in nature. Further, when any provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee independently simultaneously mode and the manner of its enforceability is also required to be considered and examined. Not only that, but, if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects will be required to be considered before one considers regulatory mechanism or provision for regulating the mode and the manner of recovery and its enforceability as retroactive. If at the time when the fee was provided under Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the

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learned counsel for respondent-Revenue that insertion of clause (c) to (f) under Section 200A(1) should be treated as retroactive in character and not prospective. 22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest. 23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid. 24. If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent- authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent. 25. As such, as recorded earlier, it is on account of the intimation received under Section 200A for making computation and demand of fees under Section 234E, the same has necessitated the appellant to challenge the constitutional validity of Section 234E. 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, we find that 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, we may also record that 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

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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. 26. Under these circumstances, we find that no further discussion would be required for examining the constitutional validity of Section 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. 27. 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. 28. The appeals are partly allowed to the aforesaid extent. 5.3 On the other hand, the case of the revenue would derive strength from the contrary decision of Hon’ble Gujarat High Court rendered in Rajesh Kourani V/s Union of India (297 CTR 502 20/06/2017) wherein the Hon’ble court has declined to concur with the aforesaid adjudication of Hon’ble Karnataka High Court, by observing as under: - 2. Brief facts are as under. 3. The petitioner is a proprietor of one M/s SaiBaba Textiles which is engaged in the manufacture and trading of ladies garments. In course of the business, the petitioner would make payments to individuals and agencies, many of which would require deducting tax at source. The provisions under the Act would further require the petitioner to file periodic statements of such tax deducted at source and depositing the tax in the Government within the time prescribed. With effect from 01.07.2012, section 234E was introduced in the Act for levying fee for default in furnishing the statement of tax deducted or collected at source. As per rule 31A of the Rules, the person responsible for deduction of tax in terms of sub-section (3) of section 200 would have to file quarterly statements in prescribed form. Sub-rule (2) of rule 31A prescribed dates by which such statements would have to be filed. 4. Section 200A of the Act pertains to processing of statements of tax deducted at source. This provision provides for processing the statement filed by person deducting the tax. Prior to 01.06.2015, this provision did not contain any reference to the adjustment of fee to be computed in accordance with the provisions of section 234E of the Act. This provision was made only with effect from 01.06.2015.

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absence of amendment in section 200A, the Assessing Officer was always authorized to levy fee in terms of section 200E of the Act. At best, the amendment in the said provision should be seen as clarificatory or providing a mechanism which till then was missing. Counsel referred to the decision of Rajasthan High Court in case of DundlodShikshanSansthan v. Union of India [2015] 63 taxmann.com 243/235 Taxman 446 (Raj.), where, in the context of challenge to the vires to the section 234E of the Act, incidentally this issue also came up for consideration. 10. In order to appreciate the rival contentions, we may take a closer look at the statutory provisions applicable. Section 200 of the Act pertains to duty of the person deducting tax and imposes a duty on a person deducting tax in accordance with the foregoing provisions of chapter-XVII to pay such sum to the credit of the Central Government within the time prescribed. Sub-section (3) of section 200 requires such a person to prepare such statements for the prescribed periods and to file the same within the prescribed time. Section 200C of the Act makes similar provision for the person responsible for the collection of tax at source to deposit the same with the Government revenue and to file a statement within the prescribed time. 11. Section 200A of the Act pertains to processing of statements of tax deducted at source. We would notice the provisions of this section prior to 01.06.2015 and the changes made therein by virtue of Finance Act, 2015, with effect from 01.06.2015. Further, we would take note of provisions of section 234E of the Act. For the time being, we may notice that section 200A provides for a mechanism for processing a statement filed under section 200 of the Act and enables the Assessing Officer to make some adjustments and to intimate the final outcome to the assessee. 12. Section 234E which pertains to fee for default in furnishing the statements was introduced for the first time by the Finance Act, 2012, with effect from 01.07.2015. Section 234E reads as under: "Fee for default in furnishing statements. 234E.(1) Without prejudice to the provisions of the Act, where 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, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) 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. (3) The amount of fee referred to in sub-section (1) shall be paid 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. (4) The provisions of this section shall apply to a statement referred to in sub- section(3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012." 13. With effect from 01.07.2012, the legislature also introduced section 271H of the Act providing penalty for failure to furnish statements required to be filed under sub- section (3) of section 200 or under proviso to sub-section (3) of section 206C of the

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Act. As per sub-section (2) of section 271H in case of default to file the statements, the assessee may be liable to penalty of not less than rupees ten thousand but not more than rupees one lakh. Under sub-section (3) of section 271H however, such penalty would be avoided if the assessee proves that he had paid the tax deducted or collected alongwith interest and he had filed the necessary statement within one year from the time prescribed for filing such statements. We may also record that clause (k) of sub-section (2) of section 272A provides for penalty for failure to deliver the statement within the time specified in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C at a rate of rupees one hundred for every date during which the failure continues. However, with effect from 01.07.2012, a proviso was added limiting the effect of this provision upto 01.07.2012. In other words, after 01.07.2012, the penalty provision of section 271H would apply in such cases of defaults. 14. Section 200A(1) of the Act prior to 01.06.2015 provided as under: Section 200A(1) "Processing of statements of tax deducted at source. 200A. (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:— (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the statement; or (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 sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) 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 (c); and (e) amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor: (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.

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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." With effect from 01.06.2015, sub-section (1) of section 200A was amended. In the amended form, the same provision reads as under: Section 200A(1) "Processing of statements of tax deducted at source. 200A. (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:— (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the statement; or (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.

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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." 15. In view of such statutory provisions, we may consider the petitioner's two challenges. Coming to the question of discriminatory nature of rule 31A of the Rules, it can be seen that sub-rule (1) of rule 31A of the Rules provides for filing of the statements in prescribed forms as required under sub-section (3) of section 200. Sub-rule (2) of rule 31A lays down the time limit for filing such quarterly statements and provides as under: "(2) Statements referred to in sub-rule (1) for the quarter of the financial year ending with the date specified in column (2) of the Table below shall be furnished by- (i) the due date specified in the corresponding entry in column (3) of the said Table, if the deductor is an office of Government; and (ii) the due date specified in the corresponding entry in column (4) of the said Table, if the deductor is a person other than the person referred to in clause (i) TABLE Sl. Date of ending of Due date Due date No. quarter of financial year (1) (2) (3) (4) 1 30th June 31st July of the financial year 15th July of the financial year 2 30th September 31st October of the financial 15th October of the financial year year 3 31st December 31st January of the financial 15th January of the financial year year 4 31st March 15th May of the financial year 15th May of the financial year immediately following the immediately following the financial year in which the financial year in which the deduction is made. deduction is made." This rule thus, while laying down the last date by which such statements should be filed, draws two categories; in case of deductor is an office of government and in case of a deductor is a person other than the office of the government. Consistently, the office of the government is granted 15 days extra time as compared to the other

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deductors. For example, the statement for the date of the quarter ending on 30th June, an ordinary deductor would have to file a statement latest by 15th July of the same year, whereas for the Government office, the last date for filing such statement would be 31st July of the said year. This 15 days extra time is a consistent feature in all four quarters. The short question is, did the legislature discriminate in doing so? It is well settled that Article 14 does not prohibit reasonable classification but frowns upon class legislation. In the affidavit in reply filed, the respondents have pointed out that multiple agencies are involved in every transaction in the Government offices and the same therefore cannot be compared with the private individuals or business houses. We do not found that the extra time of 15 days for the Government to file a return of deduction of tax at source is in any manner either unreasonable or discriminatory. If the legislature found it appropriate to grant slightly longer period to the government agencies looking to the complex nature of transactions involved, the volume and turnover of such transactions and filtering necessary statements required at many stages, in our opinion, the same was perfectly legitimate. Looking to the differences between the Government agencies and private assessees in the context of providing the last date for filing the statements, do not form a homogeneous class which cannot be further bifurcated. 16. We now come to 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 a single provision in section 272A 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 to the maximum amount of tax deductible or collectible as the case may be. Section 271H 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 lakh. No penalty would be imposed if the tax is deposited with fee and interest and the statement is filed within one year of the due date. With addition to these two provisions prescribing fee and penalty respectively, clause (k) of sub-section (2) of section 272A 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 a 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 so 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

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clause-c permits the authority to compute the fee, if any, payable by the assessee under section 234E of the Act and by virtue of clause-d, adjust the said sum against the amount paid under the various provisions of the Act. 19. In plain terms, section 200A of the Act is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, as noted earlier, arithmetical or prima-facie 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 a charging provision creating a charge for levying fee for certain defaults in filing the statements. Under no circumstances a machinery provision can override or overrule a charging provision. We are unable to see that section 200A of the Act creates any charge in any manner. It only provides a mechanism for processing 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 the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements. 20. Even in absence of section 200A of the Act with introduction of section 234E, it was always open for the Revenue to demand and collect the fee for late filing of the statements. Section 200A would merely regulate the manner in which the computation of such fee would be made and demand raised. In other words, we cannot subscribe to the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied. Any such view would amount to a charging section yielding to 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 200A 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 to 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 to 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 to 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 to concur. Section 200A is not a source 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

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additional condition being that the statement is filed latest within one year from the due date. 21. Counsel for the petitioner however, referred to the decision of Supreme Court in case of CIT v. B.C. Srinivasa Setty[1981] 128 ITR 294/5 Taxman 1 (SC), to contend that when a machinery provision is not provided, the levy itself would fail. The decision of Supreme Court in case of B C Srinivasa Setty(supra) was rendered in entirely different background. Issue involved was of charging capital gain on transfer of a capital asset. In case on hand, the asset was in the nature of goodwill. The Supreme Court referring to various provisions concerning charging and computing capital gain observed that none of these provisions suggest that they include an asset in the acquisition of which no cost can be conceived. In such a case, the asset is sold and the consideration is brought to tax, what is charged is a capital value of the asset and not any profit or gain. This decision therefore would not apply in the present case. 22. In the result, petition fails and is dismissed.

5.4 We find that a view favorable to the assessee has been taken by Hon’ble High Court of Kerala in recent decision titled as United Metals V/s ITO (137 Taxmann.com 115) following its earlier decision in Sarala Memorial Hospital V/s UOI (WP (c) No.37775 of 2018 dated 18.12.2018) which is stated to have attained finality. Similar view favorable to assessee has been taken by Chennai Tribunal in its recent decision titled as M/s DRG Rexine Inc. V/s ACIT (ITA No.351/Chny/2021; dated 24.02.2022)following the case law of Fatehraj Singhvi V/s UOI (supra).Admittedly, there is no decision by Hon’ble High Court of Madras. In such a case, an analogy could be drawn from the decision of Hon’ble Supreme Court in CIT V/s Vegetable products Ltd. (1972; 88 ITR 192) for the conclusion that in case of two reasonable constructions of taxing statutes, the one that favors the assessee must be adopted. Respectfully following the same, we would hold that a view favorable to the assessee was to be adopted and therefore, the levy of fees u/s 234E for any period prior to 01/06/2015 would not be sustainable in the eyes of law. We order so. In the result,

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the fees levied by TDS officer u/s 234E for Financial Years 2013-14 & 2014-15 could not be sustained. By deleting the same, we allow all the appeals of the assessee. The concerned authorities are directed to re- compute the demand payable by the assessee. 6. All the appeals stand allowed in terms of our above order. Order pronounced on 12th May. 2022.

Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा34 /VICE PRESIDENT लेखा सद; /ACCOUNTANT MEMBER चे*ई/ Chennai; िदनांक/ Dated : 12.05.2022 JPV JPV JPV JPV आदेशकीXितिलिपअ8ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant2. ��यथ�/Respondent 3. आयकरआयु� (अपील)/CIT(A) 4. आयकरआयु�/CIT 5. िवभागीय�ितिनिध/DR6. गाड�फाईल/GF