INNOVATIVE TECHNOLOGY SOLUTIONS,GURGAON vs. ITO, WARD (TDS), GHAZIABAD

आदेश आदेश / ORDER आदेश आदेश

PER SUSHMA CHOWLA, VP This bunch of appeals filed by different assessee are against respective

orders of CIT(A) relating to different assessment years against respective

intimation issued under section 200A(3) of the Income-tax Act, 1961 (in short

‘the Act’).

together and are being disposed of by this consolidated order, for the sake of

convenience as the issue raised in all these appeals is similar.

CIT(A) has dismissed the appeals on the ground that the assessee has filed the

present appeals after a long delay; in one case in 1941, other appeals are with

similar delay. It may be pointed out that the appeals before the CIT(A) were

against the order passed under section 154 of the Act, which are all dated

09.04.2018, except for the appeals relating to Assessment Year 2015-16, which

are filed in time. The appeals were filed before the CIT(A) on 12.03.2019/

3 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

16.03.2019/18.03.2019/19.03.2019 respectively. The delay at best is for less

than an year as there is no merit in counting the delay from date of issue of

intimation under section 200A of the Act, which is not correct, as the appeal is

filed not against the original intimation issued, but against the order passed

under section 154 of the Act. We deem it fit to codone the said delay in filing

the appeal before the CIT(A). It may be further pointed out that the CIT(A) has

also decided the issue on merits; hence, we proceed to decide the issue on

merits.

under section 200A of the Act and / or order passed under section 154 of the

Act in charging late fees payable under section 234E of the Act. The first aspect

of the issue raised in the set of appeals is charging of fees payable under

section 234E of the Act prior to amendment to section 200A(1)(c) of the Act vide

Finance Act, 2015 w.e.f. 01.06.2015, while processing the TDS returns. The

assessee has also pointed that the Legislature had inserted clause (c) to section

200A(1) of the Act specifically w.e.f. 01.06.2015 and where there is nothing to

suggest that the said amendment was clarificatory or retrospective in nature,

hence in respect of TDS statements filed for the period prior to 01.06.2015, late

fees charged under section 234E of the Act could not be levied in the intimation

issued under section 200A of the Act. The second aspect of the issue raised is

against the order of the CIT(A) in holding that where the intimation has been

issued by the Assessing Officer before 01.06.2015 , no fee can be charged

under section 234E of the Act, but said fee can be charged vide rectification

order passed under section 154 of the Act issued after 01.06.2015.

4 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

the case of Dunlod Shikshan Sansthan vs UOI in [2015] 63 taxamann.com

243(Raj.) and Hon’ble Gujarat High Court in the case of Rajesh Kourani vs

Union of India [2017] 83 taxmann.com 137 (Guj.) upheld the order of the

Assessing Officer.

are against the late fees charged under section 234E of the Act for various

quarters relating to different assessment years for default in not filing TDS

returns in time. He stressed that no fee can be levied under section 234E of the

Act for the periods prior to 01.06.2015, when the intimation under section

200A of the Act was issued. The Ld. AR for the assessee stated that the issue

stands covered by various decisions of the Delhi Tribunal. He made reference

to the ratio laid down in the following decisions:-

I. Udit Jain vs ACIT ITA No.5380/Del/2017, order dated 29/11/2019. II. M/s Wits Interior Pvt. Ltd. vs ACIT ITA No.5321 to 5331/Del/2017, order dated 22/05/2018. III. M/s Samikaran Learning Private Ltd. vs TDS Officer ITA No.4050 to 4054/Del/2017, order dated 09/11/2017.

by the Ld. AR for the assessee. He fairly admitted that the Delhi Bench of the

Tribunal in Udit Jain vs ACIT (Supra) have recently decided the issue vide

order dated 29.11.2019, but he stressed that rule of consistency could not be

applied. In this regard, he placed reliance on the decision of the jurisdictional

5 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

High Court in the case of Krishak Bharati Cooperative Ld. Vs DCIT [2012] 23

taxmann.com 265 (Del.). He also placed reliance on written submission relating

to the provisions of section 234E of the Act and 200A of the Act and then took

us through para 10.1 onwards to propose that late fee which was payable

under section 234E of the Act was to be voluntarily paid by the assessee along

with TDS returns. He referred to the provision of section 200A of the Act and

pointed out that these were machinery provisions and even in the absence of

the provision of section 200A(1)(c) of the Act, which was inserted with effect

from 01.06.2015, the charging of late fee under section 234E of the Act was

automatic payment to be made by the assessee in default. He also pointed out

that the fee charged was not in the form of tax, penalty, etc, for which such

machinery provisions were required. On the other hand, the fee so charged was

compensatory in nature. The relevant paras 10.1 to 10.3 of the written

submissions filed by the DR for the Revenue reads as under:-

“10.1. The fee payable u/s 234E is a charging provision and the AO has no discretion at all whereas section 200A is a machinery provision enabling for processing of TDS statements, computation of adjustments, fees and generation of intimation etc. Hon’ble ITAT has not appreciated this obvious difference in its order dt. 29.11.2019, referred supra.

10.2. As apparent from the heading of the section 200A as well as the Memorandum to the Finance Bill, 2015 which elaborates the rationale for insertion of clause (c) in section 200A(1) in the statute (Para 7 of the written submission) it is absolutely clear that this is merely an enabling section to compute/process the TDS statement. Section 234 E is the charging section requiring voluntary payment of fee by the defaulting deductors as per its sub-section (3) as even in the absence of section 200A of the Act with introduction of section 234E, it was always open for the revenue to charge the fees in terms of section 234 E of the Act from the date of its introduction in the statute i.e. 01.07.2012. It may be noted that section 234E creates an automatic charge on the deductors who have defaulted on this count & who are required to pay the fee u/s 234E voluntarily before delivering such belated TDS/TCS returns

6 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

/statements in accordance with sub-section (3) of sec. 234E. By amendment [introduction of clause 200A(l)(c)] this adjustment was brought within the fold of section 200A of the IT Act so that the fee u/s 234E can be computed at the time of processing & issue of intimation in the event of non-payment of fee before delivering such belated TDS/TCS statements by the defaulting deductors. Any view that inhibits the levy of fees under section 234 E due to the absence of regulatory provision will tantamount to charging section yielding to machinery provision which should not be allowed. This has not been considered by Hon’ble ITAT. 10.3. Section 200A entails the procedure for procedure for processing of TDS returns. Amended section of 200A (1 )(c), with effect from 01/06/2015, enables computation of fees chargeable u/s 234E under the purview of 200A. Therefore, if any TDS return is processed after 01/06/2015, then fees chargeable u/s 234E is required to be computed as per section 200A(l)(c) by virtue of the fact that the charging section was already effective since 01/07/2012. Similar will be the scenario if TDS return with default of being delayed is submitted after 01/06/2015 and processing is done thereafter. Since the charging section was already effective on the date of occurrence of default (i.e. the due date filing of TDS return on which TDS return was not filed), any TDS return processed after introduction of clause 200A(1) (c ) ( i.e. giving effect to computation of fees u/s 234E of the Act) should include computation of fees under section 234E. This also needs consideration by Hon’ble ITAT.”

I. Rashmikant Kundalia (Bom.) (2015) 54 Taxman.com 200 (Bom).

II. Dunlod Shikshan Sansthan vs UOI in [2015] 63 taxamann.com 243(Raj.)

III. Rajesh Kourani vs Union of India [2017] 83 taxmann.com 137 (Guj.)

IV. Qatalys Software Technologies (P.) Ltd. vs UOI [2020] 115 taxmann.com 345 (Madras)

of Fateh Raj Singhvi & Ors. vs UOI [2016] 289 CTR 602(Kar.) in para 10.14

onwards and concluded para 10.15, which reads as under:-

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“10.15 On perusal of the decisions of various High courts wherein the constitutional validity of provisions of sec. 234E have been upheld, it may be seen that in several cases the period under consideration before Hon’ble High Courts were even the periods prior to 01.06.2015 i.e. the date when clause (c) was inserted to section 200A(1) by the Finance Act, 2015. Having considered the periods prior to 01.06.2015 & having upheld the validity of sec. 234E by Hon’ble High Courts, it can’t be said that the controversy, being raised now, has escaped the eyes of Hon’ble High Courts and therefore there can’t be any doubt that there is any iota of ambiguity with respect to the period of default for which the fee u/s 234E is chargeable. In view of the same and categorical findings of Hon’ble High Courts, the fee u/s 234E is undoubtedly leviable for the defaults of period in filing TDS/TCS statements/returns, even for the period prior to 01.06.2015 independent to the provisions of Sec.200A(l) of the Act. The same have not been considered by Hon’ble ITAT.”

has been considered by the Karnataka High Court in Fateh Raj Singhvi & Ors.

vs UOI (supra) which has been taken note of by the Tribunal in the case of Udit

Jain vs ACIT (supra) and other appeals decided by benches of Delhi Tribunal.

which is arising in the present set of appeals is against the chargeability of late

filing fee in terms of section 234E of the Act. The issue which is raised by

different assessee before us is whether where the return for the TDS deduction

was filed under respective sections of the Act, for the period prior to

01.06.2015 though belatedly, but no late filing fee can be charged under

section 234E of the Act. The machinery provisions of charging the said fee as

per clause (c) of Section 200A(1) of the Act was inserted by legislature with

effect from 01.06.2015. We find that the said issue has been decided by the

8 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

Hon’ble Karnataka High Court in the case of Fateh Raj Singhvi & Ors. vs UOI

(supra) and it is held that section 200A of the Act inserted with effect from

01.06.2015 had prospective effect and was not applicable for different quarters

of assessment years prior to 01.06.2015. The Delhi Bench of the Tribunal

while deciding the appeals in the case of Udit Jain vs ACIT (supra) had taken

note of the issue being decided by the Pune Bench of the Tribunal in

Maharashtra Cricket Association, Pune vs DCIT [2016] 74 taxmann.com

6(Pune Trib.), in the case of Medical Superintendent Rural Hospital, DOBI BK

vs DCIT [2018] 100 taxmann.com 78 (Pune-Trib.) and decision of the Delhi

Bench of Tribunal in Meghna Gupta vs ACIT[2018] 99 taxmann.com 334 (Delhi

Trib.). Further, the Delhi Bench of the Tribunal have consistently taken similar

view in the case of M/s Samikaran Learning Private Ltd. vs TDS Officer

(Supra). The relevant finding of the Tribunal in the case of Udit Jain vs ACIT

(Supra), wherein reference is made to the decision of the Karnataka High Court

in Fateh Raj Singhvi & Ors. vs UOI (supra) and also the decision of the Hon’ble

Gujarat High Court in the case of Rajesh Kourani vs UOI (Supra) is as under:-

“9. We have heard the rival contentions and perused the record. The issue which needs to be adjudicated in these appeals is the charging of late filing fee u/s 234E of the Act while issuing the intimation u/s 200A of the Act. The case of the assessee before us is that where the legislature has inserted clause (c) to section 200A(1) of the Act w.e.f 01.06.2015, then in respect of the TDS statements which were filed under the respective sections of the Act, for the period prior to 01.06.2015, no late filing fee could be charged u/s 234E of the Act, in the intimation issued u/s 200A of the Act. We find that the said issue has been adjudicated by the Hon’ble Karnataka High Court in Fatehraj Singhvi & Others vs Union of India (supra), which proposition has been applied by the Pune Bench of the Tribunal in Medical Superintendent Rural Hospital, DOBI BK vs DCIT (supra). The Tribunal had also taken note of the decision of Hon’ble Gujarat High Court in Rajesh Kourani vs Union of India (supra) and applying the proposition that where there was difference of opinion

9 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

between Hon’ble High Courts on a particular issue and in the absence of any decision rendered by the Jurisdictional High Court, then the decision in favour of the assessee needs to be followed as held by Hon’ble Supreme Court in Vegetables Products Ltd. [1973] 88 ITR 192(SC). The relevant findings of the Tribunal are as under:- 11. “We have heard the rival contentions and perused the record. The issue arising in the present bunch of appeals is against levy of late filing fees under section 234E of the Act while issuing intimation under section 200A of the Act, in the first bunch of appeals. The second bunch of appeals in the case of Junagade Healthcare Pvt. Ltd. is against order of Assessing Officer passed under section 154 of the Act rejecting rectification application moved by assessee against intimation issued levying late filing fees charged under section 234E of the Act. The case of assessee before us is that the issue is squarely covered by various orders of Tribunal, wherein the issue has been decided in respect of levy of late filing fees under section 234E of the Act, in the absence of empowerment by the Act upon Assessing Officer to levy such fees while issuing intimation under section 200A of the Act. The Tribunal vide order dated 21.09.2016 with lead order in ITA Nos.560/PN/2016 & 561/PN/2016, 1018/PN/2016 to 1023/PN/2016 in Maharashtra Cricket Association Vs. DCIT (CPC)-TDS, Ghaziabad, relating to assessment years 2013-14 and 2014-15 for the respective quarters deliberated upon the issue and held as under:- “34. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law.” 12. The said proposition has been applied in the next bunch of appeals with lead order in Vidya Vardhani Education and Research Foundation in ITA Nos.1887 to 1893/PUN/2016 and others relating to assessment years 2013-14 and 2014-15 vide order dated 13.01.2017 and also in Swami Vivekanand Vidyalaya Vs. DCIT(CPC)-TDS (supra) and Medical Superintendant Rural Hospital Vs. ACIT (CPC)-TDS in ITA Nos.2072 & 2073/PUN/2017, order dated 21.12.2017, which has been relied upon by the learned Authorized Representative for the assessee.

10 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

11 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

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.” 14. The Hon’ble High Court thus held that where the impugned notices given by Revenue Department under section 200A of the Act were for the period prior to 01.06.2015, then same were illegal and invalid. Vide para 27, it was further held that the impugned notices under section 200A of the Act were for computation and intimation for payment of fees under section 234E of the Act as they relate for the period of tax deducted at source prior to 01.06.2015 were being set aside. 15. In other words, the Hon’ble High Court of Karnataka explained the position of charging of late filing fees under section 234E of the Act and the mechanism provided for computation of fees and failure for payment of fees under section 200A of the Act which was brought on Statute w.e.f. 01.06.2015. The said amendment was held to be prospective in nature and hence, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 were not maintainable and were set aside by the Hon’ble High Court. In view of said proposition being laid down by the Hon’ble High Court of Karnataka (supra), there is no merit in observations of CIT(A) that in the present case, where the returns of TDS were filed for each of the quarters after 1st day of June, 2015 and even the order charging late filing fees was passed after June, 2015, then the same are maintainable, since the amendment had come into effect. The CIT(A) has overlooked the fact that notices under section 200A of the Act were issued for computing and charging late filing fees under section 234E of the Act for the period of tax deducted prior to 1st day of June, 2015. The same cannot be charged by issue of notices after 1st day of June, 2015 even where the returns were filed belatedly by the deductor after 1st June, 2015, where it clearly related to the period prior to 01.06.2015. 16. We hold that the issue raised in the present bunch of appeals is identical to the issue raised before the Tribunal in different bunches of appeals and since the amendment to section 200A of the Act was prospective in nature, the Assessing Officer while processing TDS returns / statements for the period prior to 01.06.2015 was not empowered to charge late filing fees under section 234E of the Act, even in cases where such TDS returns were filed belatedly after June, 2015 and even in cases where the Assessing Officer processed the said TDS returns after June,

12 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

2015. Accordingly, we hold that intimation issued by Assessing Officer under section 200A of the Act in all the appeals does not stand and the demand raised by charging late filing fees under section 234E of the Act is not valid and the same is deleted. 17. Before parting, we may also refer to the order of CIT(A) in relying on the decision of Hon’ble High Court of Gujarat in Rajesh Kourani Vs. Union of India (supra). On the other hand, the learned Authorized Representative for the assessee has pointed out that the issue is settled in favour of assessee by the Hon’ble High Court of Karnataka in the case of Fatheraj Singhvi Vs. Union of India (supra). Since we have already relied on the said ratio laid down by the Hon’ble High Court of Karnataka, the CIT(A) has mis-referred to both decisions of Hon’ble High Court of Karnataka and Hon’ble High Court of Gujarat; but the CIT(A) has failed to take into consideration the settled law that where there is difference of opinion between different High Courts on an issue, then the one in favour of assessee needs to be followed as held by the Hon'ble Supreme Court in CIT Vs. M/s. Vegetable Products Ltd. (supra), in the absence of any decision rendered by the jurisdictional High Court. The Hon’ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (2015) 54 taxmann.com 200 (Bom) had decided the constitutional validity of provisions of section 234E of the Act and had held them to be ultra vires but had not decided the second issue of amendment brought to section 200A of the Act w.e.f. 01.06.2015. In view thereof, respectfully following the ratio laid down by the Hon’ble High Court of Karnataka and Pune Bench of Tribunal in series of cases, we delete the late filing fees charged under section 234E of the Act for the TDS returns for the period prior to 01.06.2015. 18. Further before parting, we may also refer to the order of CIT(A) in the case of Junagade Healthcare Pvt. Ltd., where the CIT(A) had dismissed appeals of assessee being delayed for period of December, 2013 and July, 2014. The CIT(A) while computing delay had taken the date of intimation under section 200A of the Act as the basis, whereas the assessee had filed appeals before CIT(A) against the order passed under section 154 of the Act. The CIT(A) had noted that rectification application was filed in February, 2018 which was rejected by CPC on the same day. The CIT(A) was of the view that there was no merit in condonation of delay, wherein appeals were filed beyond the period prescribed. The assessee had filed appeals against the order passed under section 154 of the Act, hence the time period of appeals filed by assessee before the CIT(A) have to be computed from the date of order passed under section 154 of the Act and not from the date of issue of intimation. Thus, there is no merit in the order of CIT(A) in dismissing the appeals of assessee on this issue. 19. We find similar issue has been decided by us in the case of Medical Superintendent Rural Hospital Vs. ACIT(CPC)-TDS (supra) and vide para 15, order dated 21.12.2017 it was held as under:-

13 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

“15. Further, before parting, we may also refer to the order of the CIT(A) in these two appeals. The CIT(A) had dismissed the appeals of the assessee being delayed for a period of two and half years. The CIT(A) had taken the date of intimation under section 200A(3) dated 07-08-2014 and computed the delay in filing the appeal late before him. However, the assessee had filed the appeal before the CIT(A) against the order passed under section 154 of the Act. The said application for rectification under section 154 was filed on 08- 06-2017/09- 03-2017 in the respective years. The said application was decided by the Assessing Officer on 09-06-2017. The assessee filed an appeal against the dismissal of the rectification application filed under section 154 of the Act. The said fact is clear from the perusal of Form No.35 with special reference to Column 2(a) and 2(b). In the entirety of the above said facts and circumstances, we find no merit in the order of CIT(A) in the case of Medical Superintendent Rural Hospital, Surgana in dismissing the appeal in- limine being filed beyond the period of limitation. We have already decided the issue on merits in favour of assessee.” 20. We have already decided the issue on merits in favour of assessee. Accordingly, the grounds of appeal raised by assessee in all appeals are allowed.” 12. Reference is also made to the decision of the Delhi Bench of the Tribunal

in Meghna Gupta vs ACIT (Supra), the same reads as under:-

“6. “We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as material referred to before us. At the outset, from the perusal of the rectification order u/s 200A generated by TDS (CPC), it is noticed that the TDS in 26QB mentions date of filing of 'challan cum statement' as 5.4.2014, wherein late filing of 'challan cum statement' u/s 234E has been levied. The assessee had purchased the property on 6.12.2013 i.e., relevant to the assessment year 2014-15. Since assessee had purchased the property from eight sellers and the payment to each of the seller has been made separately for an amount of Rs. 41,87,500/- aggregating to Rs. 3,35,00,000/-, the assessee' contention has been that it was not required to deduct TDS, because the payments made to each seller was less than the prescribed limit of Rs.50 lacs and therefore, provision of section 194IA was not applicable. The demand has been raised by the department u/s 200 in terms of failure to comply with Section 200A, which deals with the processing of statement of tax deducted at source u/s 200. First of all, sub section 3 of section 200 provides that the person deducting any sum in accordance with provision of chapter XVII shall after paying the tax deducted to the credit of the

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Central Government within the prescribed time, prepare such statement for such period as may be prescribed. Provision of section 200A provides that where the statement of tax deduction at source has been made by the person deducting any sum u/s 200, then such statement shall be processed in the manner given therein. Clause (c) of section 200A has been substituted by the Finance Act 2015 w.e.f. 1.6.2015 which reads as under:-

"(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;"

6.1. Fee for default u/s 234E provides that, when a person fails to deliver or cause to be delivered a statement within the time prescribed u/s 200(3), then that person shall be liable to pay fee in the manner provided therein. Thus, fee u/s 234E is leviable if the statement is not filed as prescribed u/s 200(3) which in turn provides that the statement to be filed after the payment of tax to the prescribed authority. The relevant rule 31A(4A) provides that for filing of the 'challan cum statement' within seven days from the date of deduction. Now here in this case the demand has been raised purely on the ground that statement has not been furnished for the tax deduction at source. As stated above, the assessee has duly deposited the tax not at the time of purchase albeit on 5.4.2014 and on the same date, statement has also been filed. The relevant provision of section 200(3) read with rule 31A (4A) only refers to filing of 'challan cum statement' after the tax has been paid. The word "challan" in the said rule indicates that the tax must stand paid and that is how form 26QB is generated. Thus, here in this case, it cannot be held that there is any violation of section 200(3). In any case, the levy of fee u/s 200A in accordance with the provision of section 234E has come into the statute w.e.f. 1.6.2015. Since the challan and statement has been filed much prior to this date, therefore, no such tax can be levied u/s 200A. This has been clarified and held by Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & Ors vs. Union of India reported in (2016) 289 CTR 0602, wherein the lordship had made following observations :-

"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."

the case of Maharashtra Cricket Association vs DCIT (Supra), wherein reference

was made to the reliance placed by the Revenue on the decision of the Hon’ble

Bombay High Court in the case of Rashmikant Kundalai vs Union of India

(Supra) and it was observed as under:-

“27. While deciding the present bunch of appeals, the Revenue had placed reliance on the ratio laid down by the Hon’ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) wherein, the constitutional validity of section 234E of the Act was challenged. The Hon’ble High Court noted the fact that where the deductor was required to furnish periodical quarterly statements containing the details of deduction of tax made during the quarter, by the prescribed due date and the delay in furnishing such TDS returns would have cascading effect. It was further observed by the Hon’ble High Court that under the Income-tax Act, where there is an obligation on the Income-tax Department to process the income-tax returns within specified period from the date of filing, the returns could not be accurately processed of such person on whose behalf tax has been deducted i.e. deductee, until information of such deductions is furnished by the deductor within the prescribed time. Since the substantial number of deductors were not filing their TDS returns / statements within prescribed time frame, then it lead to an additional work burden upon the Department due to the fault of the deductor and in this light and to compensate for additional work burden forced upon the Department, fees was sought to be levied under section 234E of the Act. The Hon’ble High Court held that looking at this from this perspective, section 234E of the Act was not punitive in nature but a fee which was a fixed charge for the extra service which

16 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

the Department had to provide due to the late filing of TDS statements. It was further held by the Hon’ble High Court that late filing of TDS returns / statements was regularized by payment of fees as set out in section 234E of the Act. Therefore, the findings of Hon’ble High Court were thus, that the fees sought to be levied under section 234E of the Act was not in the guise of tax sought to be levied on the deductor. The provisions of section 234E of the Act were held to be not onerous on the ground that section does not empower the Assessing Officer to condone the delay in late filing the income tax returns or that no appeal is provided from arbitrary order passed under section 234E of the Act. The Hon’ble High Court held that the right to appeal was not a matter of right but was creature of statute and if the Legislature deems fit not to provide remedy of appeal, so be it. The Hon’ble High Court further held that a person can always approach the court in extraordinary equitable jurisdiction under Article 226/227 of the Constitution as the case may be. The Hon’ble High Court therefore, observed that simply because no remedy of appeal was provided for the provisions of section 234E of the Act, the same cannot be said to be onerous and section 234E of the Act was held to be constitutionally valid. The constitutional validity of provisions of section 234E of the Act has also been upheld by the Hon’ble Rajasthan High Court in M/s. Dundlod Shikshan Sansthan & Anr. Vs. Union of India and Ors (supra).” 14. The Tribunal further observed as under:-

“28. In view of the above said ratio laid down by the Hon’ble Bombay High Court, the case of the learned CIT-DR before us was that there is no merit in the present set of appeals filed by the assessee as the Hon’ble High court has laid down that no appeal is provided from an order passed under section 234E of the Act and the same merits to be dismissed at the outset. In this regard, he has raised two issues that (a) the appeal filed by the assessee is not maintainable and also (b) there is no merit in the claim of the assessee that the Assessing Officer is not empowered to charge fees under section 234E of the Act before insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. The learned Authorized Representative for the assessee on the other hand, drew our attention to the Memorandum to the Finance Bill, 2015 while introducing the said clause (c) to section 200A(1) of the Act. The Finance Bill took note of the provisions of Chapter XVIIB, under which the person deducting tax i.e. deductor was required to file quarterly tax deduction at source statement containing the details of deduction of tax made during the quarter by the prescribed due dates. Similar responsibility is on a person required to collect tax of certain specified receipts under section 206C of the Act. In order to provide effective deterrence against the delay in furnishing TDS / TCS statements, the Finance Act, 2012 inserted section 234E of the Act to provide for levy of fees on late furnishing of TDS / TCS statements. The Memo further took note of the fact that the Finance (No.2) Act, 2009 inserted section 200A in the Act, which provided for furnishing of TDS statements for determining the amount payable or refundable to the deductor. It further took note that however, as section 234E of the Act

17 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. It was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. The Memo explaining the Finance Bill, 2015 very categorically held that currently there does not exist any provision in the Act to enable the processing of TCS returns and hence, a proposal was made to insert a provision in this regard and also the post provision shall incorporate the mechanism for computation of fees payable under section 234E of the Act. The Finance Bill further refers to the existing provisions of the Act i.e. after processing of TDS statement, intimation is generated specifying the amount payable or refundable. This intimation generated after processing of TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. The Finance Bill further provided that intimation generated after the proposed processing of TCS statement shall be at par with the intimation generated after processing of TDS statement and also provided that failure to pay tax specified in the intimation shall attract levy of interest as per provisions of section 220(2) of the Act. Further, amendments were also made in respect of the scheme of payment of TDS / TCS by the Government, deductor / collector which are not relevant for deciding the issue in the present appeal and hence, the same are not being referred to. The Finance Bill further provided that the amendment would take effect from 01.06.2015. 29. The perusal of Memo explaining the provision relating to insertion of clause (c) to section 200A of the Act clarifies the intention of Legislature in inserting the said provision. The provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the provision was made for levy of fees for late furnishing TDS / TCS statements. Before insertion of section 234E of the Act, the Finance (No.2) Act, 2009 had inserted section 200A in the Act, under the said section, mechanism was provided for processing of TDS statements for determining the amount payable or refundable to the deductor, under which the provision was also made for charging of interest. However, since the provisions of section 234E of the Act were not on statute when the Finance (No.2) Act, 2009 was passed, no provision was made for determining the fees payable under section 234E of the Act at the time of processing the TDS statements. So, when section 234E of the Act was introduced, it provided that the person was responsible for furnishing the TDS returns / statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge / levy the fee under section 234E of the Act while processing the TDS returns / statements filed by a person did not exist when section 234E of the Act was inserted by the Finance Act, 2012. The

18 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

power to charge fees under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, then in such cases, the Assessing Officer is not empowered to charge fees under section 234E of the Act while processing the TDS returns filed by the deductor. 30. The Hon’ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) has upheld the constitutional validity of said section introduced by the Finance Act, 2015 w.e.f. 01.06.2015 but was not abreast of the applicability of the said section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. In such scenario, we find no merit in the plea of learned CIT-DR that the Hon’ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) has laid down the proposition that fees under section 234E of the Act is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A of the Act prior to 01.06.2015.”

Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section

200A(1) of the Act is clarificatory or is prospective in nature and is not

applicable to the pending assessments. Undoubtedly, the provisions of section

234E of the Act were inserted by the Finance Act, 2012, under which the

liability was imposed upon the deductor in such cases where TDS statements /

returns were filed belatedly to pay the fees as per said section. However, in

cases, where the assessee has failed to deposit the said fees, then in order to

enable the Assessing Officer to collect the said fees chargeable under section

234E of the Act, it is incumbent upon the Legislature to provide mechanism for

the Assessing Officer to charge and collect such fees. In the absence of

enabling provisions, the Assessing Officer while processing the TDS

statements, even if the said statements are belated, is not empowered to charge

19 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

the fees under section 234E of the Act. The amendment was brought in by the

Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment where

empowerment is given to the Assessing Officer to levy or charge the fees cannot

be said to be clarificatory in nature and hence, applicable for pending

assessments.

367 ITR 466 (SC) has explained the general principle concerning retrospectivity

and have held that “of the various rules guiding how a legislation has to be

interpreted, one established rule is that unless contrary intention appears, a

legislation is presumed not to be intended to have a retrospective operation.

Idea behind the rule is that current law should govern current activities”. The

Memo explaining the Finance Bill, 2015 very clearly also recognizes that and

refers to the current provisions of sub-section (3) to section 200 of the Act,

under which the deductor is to furnish TDS statements. However, as section

234E of the Act was inserted after insertion of section 200A in the Act, the

existing provisions of section 200A of the Act did not provide for determination

of fees payable under section 234E of the Act at the time of processing of TDS

statements. In this regard, it was thus, proposed to amend the provisions of

section 200A of the Act so as to enable the computation of fees payable under

section 234E of the Act at the time of processing of TDS statements under

section 200A of the Act. In other words, the Assessing Officer is empowered to

charge fees payable under section 234E of the Act in the intimation issued

after insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015. The

Legislature itself recognized that under the existing provisions of section 200A

20 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

of the Act i.e. prior to 01.06.2015, the Assessing Officer at the time of

processing the TDS statements did not have power to charge fees under section

234E of the Act and in order to cover up that, the amendment was made by

way of insertion of clause (c) to section 200A of the Act. In such scenario, it

cannot be said that insertion made by section 200A(1)(c) of the Act is

retrospective in nature, where the Legislature was aware that the fees could be

charged under section 234E of the Act as per Finance Act, 2012 and also the

provisions of section 200A of the Act were inserted by Finance (No.2) Act, 2009,

under which the machinery was provided for the Assessing Officer to process

the TDS statements filed by the assessee. The insertion categorically being

made w.e.f. 01.06.2015 lays down that the said amendment is prospective in

nature and cannot be applied to processing of TDS returns / statements prior

to 01.06.2015.

Court in Writ Appeal Nos.2663-2674/2015(T-IT) & Ors in Sri Fatheraj Singhvi

& Ors Vs. Union of India & Ors, wherein the Hon’ble Court had quashed the

intimation issued under section 200A of the Act levying the fees for delayed

filing of the TDS statements under section 234E of the Act. The Hon’ble High

Court notes that the Finance Act, 2015 had made amendments to section 200A

of the Act enabling the Assessing Officer to make adjustments while levying

fees under section 234E of the Act was applicable w.e.f. 01.06.2015 and has

held that it has prospective effect. Accordingly, the Ho n’ble High Court held

that “intimation raising demand prior to 01.06.2015 under section 200A of the

Act levying section 234E of the Act late fees is not valid”. However, the Hon’ble

21 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

High Court kept open the issue on constitutional validity of section 234E of the

Act. We have already referred to the decision of Hon’ble Bombay High Court in

Rashmikant Kundalia Vs. Union of India (supra) in this regard, wherein the

constitutional validity of section 234E of the Act has been upheld.”

Assessing Officer to charge late fees while processing the TDS returns w.e.f.

01.06.2015, such provision cannot have retrospective effect as it would be

detrimental to the case of tax payer. The provision under which a new enabling

power is being given to charge fees under section 234E of the Act while

processing TDS returns / statements and such power is to be applied

prospectively. In any case, the Parliament itself has recognized its operation to

be prospective in nature while introducing clause (c) to section 200A(1) of the

Act and hence, cannot be applied retrospectively.

procedural in nature and in view thereof, the Assessing Officer while processing

the TDS statements / returns in the present set of appeals for the period prior

to 01.06.2015, was not empowered to charge fees under section 234E of the

Act. Hence, the intimation issued by the Assessing Officer under section 200A

of the Act in all these appeals does not stand and the demand raised by way of

charging the fees under section 234E of the Act is not valid and the same is

deleted. The intimation issued by the Assessing Officer was beyond the scope of

adjustment provided under section 200A of the Act and such adjustment could

not stand in the eye of law.

22 ITA Nos.7468 & Others/Del/2019 Assessment Years: 2013-14 to 2015-16

Order pronounced in the open court on 31st August, 2020.

Sd/- Sd/- (DR. B.R.R. KUMAR) (SUSHMA CHOWLA) लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER उपा�य� लेखा सद�य लेखा सद�य उपा�य� उपा�य� / VICE PRESIDENT उपा�य�

�द�ली �द�ली �द�ली / �दनांक Dated : 31st August, 2020 �द�ली Shekhar, Sr.P.S. आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�(अपील) / The CIT(A) 3. मु�य आयकर आयु� / The Pr. CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, द!ली / DR, ITAT, Delhi 5. गाड# फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार

स�यािपत �ित //True Copy// सहायक सहायक रिज��ार रिज��ार, आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण ,�द�ली �द�ली सहायक सहायक रिज��ार रिज��ार आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण �द�ली �द�ली Assistant Registrar, ITAT, Delhi