CANTT BOARD,AJMER vs. INCOME TAX OFFICER (TDS), AJMER, AJMER

per Section 249(2) of the Income Tax Act, 1961 (in short the Act), the

appeal has to be presented within 30 days from the date of service of

notice of demand. The appellant has not filed the appeals within the

specified period and there was an inordinate delay in filing the appeal. The

assessee claims that it has never received the notice but the ld. CIT(A) held

that no documentary evidence was submitted to substantiate this argument

and he did not accept the submissions of the assessee in this regard and

the appeals were dismissed as not admitted. In the written submissions

filed by the assessee, it was submitted that as per scheme of Centralized

Processing of Statement of TDS Scheme 2013, clause 10 defined the

service of notice or communication, which is as under:-

“(1) The service of a notice or order or intimation or any other communication by the Cell may be made by delivering or transmitting a copy thereof to the deductor,

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(a) by electronic mail; or

(b) by placing such copy in the registered electronic account of the deductor on the portal of the Cell; or

(c) by any mode mentioned in sub-section (1) of section 282 of the Act.

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

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

Section 282(2) specifies the service of notice generally- The board may make rule (See Rule 127) providing for the addresses (including the address for electronic mail or message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein. [Here electronic mail, message means and as assigned to them in explanation to section 66A of Information Technology Act, 2000 (21 of 2000).

Here it is important that Rule 127 “Service of notice summons, requisition, order and communication” has since been inserted by income tax (eighteen Amendment) Rules 2015 w.e.f. 02/12/2015 than A.O. before any legal binding can enforce processing note electronically and thus rather there was no service/no valid service of notice/communication prior to 02/12/2015) and thus it is requested to delete the demand.”

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ld. CIT(A) was not justified in dismissing the appeals for the reason that the

assessee did not have sufficient cause for not presenting then appeals

within the prescribed time U/s 249(2) of the Act. The Hon'ble Supreme

Court in the case of Collector Land & Acquisition vs. Mst Katiji & Others

(1987) 167 ITR 471 (SC) held as under:

‘’The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression " sufficient cause " in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice--that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. "Every day's delay must be explained" does not imply a pedantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an evenhanded manner. There is no warrant for according a step- motherly treatment when the State is the applicant praying for condonation of delay. "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non- deliberate delay." The fee for default in furnishing statement U/s 234E of the Act can be

levied for a person who violates the provisions of Section 200(3) of the Act.

The provisions of Section 200(3) of the Act is as under:-

(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A)

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of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority6 or the person authorised by such authority such statement in such form7 and verified in such manner and setting forth such particulars and within such time as may be prescribed:

It is also levied for violation of Section 206C (3) of the Act, which is as

under:-

(3) Any person collecting any amount under sub-section (1) or sub-section (1C) 29[***] shall pay within the prescribed30 time the amount so collected to the credit of the Central Government or as the Board directs : Provided that the person collecting tax on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this section shall, after paying the tax collected to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority31, or the person authorised by such authority, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.32 The provisions of Section 200(3) of the Act put an obligation on a person who has deducted a sum on or after 1st day of April, 2005 to prepare

statements as prescribed and deliver or cause to be delivered to the

prescribed income tax authority or the person authorized by such authority

a statement in such form and verified in such manner and setting forth

such particulars and within such time as may be prescribed. Rule 31A of

the Income Tax Rules, 1962 (in short the Rules) provided for quarterly

statement of deduction of tax as per Sub-Section (3) of Section 200 of the

Act wherein every person being a person responsible for deduction of tax

under Chapter XVIIB shall, in accordance with the provisions of Sub-Section

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(3) of Section 200, deliver or cause to deliver or cause to be delivered to

the Director General of Income Tax Systems or the person authorized by

the Director General of Systems quarterly statements in form No. 24Q and 26Q as the case may be on or before 15th of July, 15th of October and 15th of January in respect of first three quarters of the financial year and 15th

June for the last quarter of the financial year. The provisions of levy of fees

U/s 234E of the Act for failure in furnishing the statements has been

inserted by the Finance Act, 2012 w.e.f. 01/7/2012. For failure to file

statement within time prescribed in sub-Section (3) of Section 200 of the

Act of Rs. 200 every day during which failure continued but not exceeding

the tax deductible was the amount of fee to be levied. The provisions for

processing of statement of tax deductible at source were introduced by the

Finance Act No. 2 2009 w.e.f. 01/10/2010 wherein the fee for failure to

furnish the statement U/s 234E was made appealable by substituting

Clause (c) to (f) of Section 200A by the Finance Act 2015 w.e.f. 01/6/2015.

It was stated in the written submissions that the fee for late filing the

statement U/s 234E can be levied only on the issue of intimation U/s 200A

w.e.f. 01/6/2015 only. The Hon’ble Bombay High Court in the case of

Rashmikant Kundalia Vs. Union of India (2015) 229 taxman 596 (Bom)

while examining the constitutional validity of Section 234E has upheld the

validity and also held as under:

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"200. Duty of person deducting tax.- (1) Any person deducting any sum in accordance with the foregoing provisions of this chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.

(2) Any person being an employer, referred to in sub-section (1A) of Section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs.

(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of Section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.

*[Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.]"

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"G Levy of fee in certain cases

234E. Fee for default in furnishing statements.-(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."

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Government financially as the Government has to pay interest for delay in granting the refunds; and (iv) the delay in receipt of refunds results into a cash flow crunch, especially for business entities.

"10. In case of levying tax there is no quid pro quo between the Tax payer and the State. But element of quid pro quo is a must in case of imposing Fee. By virtue of impugned amendment, a dealer is entitled to get service indirectly from the authority upon payment of late fee. His irregular filing of return is regularised upon payment of late fee without being suffered from penal consequences which can not be categorised as nothing but special service. Thus, there exists quid pro quo in imposing late fee.

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Tribunal at page 14 of the impugned judgment) removed all the doubts on this issue." (Emphasis supplied)

"22. A three-Judge Bench of this Court in B.S.E. Brokers' Forum v. Securities and Exchange Board of India [(2001) 3 SCC 482] after considering a large number of authorities, has held that much ice has melted in the Himalayas after the rendering of the earlier judgments as there was a sea change in the judicial thinking as to the difference between a tax and a fee since then. Placing reliance on the following judgments of this Court in the last 20 years, namely, Sreenivasa General Traders v. State of A.P. [(1983) 4 SCC 353], City Corpn. of Calicut v. Thachambalath Sadasivan [(1985) 2 SCC 112 : 1985 SCC (Tax) 211], Sirsilk Ltd. v. Textiles Committee [1989 Supp (1) SCC 168 : 1989 SCC (Tax) 219], Commr. & Secy. to Govt., Commercial Taxes & Religious Endowments Deptt. v. Sree Murugan Financing Corpn. [(1992) 3 SCC 488], Secy. to Govt. of Madras v. P.R. Sriramulu [(1996) 1 SCC 345], Vam Organic Chemicals Ltd. v. State of U.P. [(1997) 2 SCC 715], Research Foundation for Science, Technology & Ecology v. Ministry of Agriculture [(1999) 1 SCC 655] and Secunderabad Hyderabad Hotel Owners' Assn. v. Hyderabad Municipal Corpn. [(1999) 2 SCC 274] it was held that the traditional concept of quid pro quo in a fee has undergone considerable transformation. So far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of a fee provided the fee so charged is not excessive. It was not necessary that service to be rendered by the collecting authority should be confined to the contributories alone. The levy does not cease to be a fee merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have a direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. Quid pro quo in the strict sense was not always a sine qua non for a fee. All that is necessary is that there should be a reasonable relationship between the levy of fee and the services rendered. It was observed that it was not necessary to establish that those who pay the fee must receive direct or special benefit or advantage of the services rendered for which the fee was being paid. It was held that if one who is liable to pay, receives general benefit from the authority levying the fee, the element of service required for collecting the fee is satisfied." (Emphasis supplied)

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and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this Court in its extraordinary equitable jurisdiction under Article 226/227 of the Constitution of India, as the case may be. We therefore cannot agree with the argument of the Petitioners that simply because no remedy of appeal is provided for, the provisions of section 234E are onerous. Similarly, on the same parity of reasoning, we find the argument regarding condonation of delay also to be wholly without any merit.

'46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. This violation can, of course, be in different ways e.g. if a State Legislature makes a law which only Parliament can make under List I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the

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statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Msgr. Mark Netto v. State of Kerala [(1979) 1 SCC 23 : AIR 1979 SC 83] SCC para 6 : AIR para 6. Also, it is none of the concern of the court whether the legislation in its opinion is wise or unwise.

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constitutionality of the statute because the court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of specialisation when policies have to be laid down with great care after consulting the specialists in the field, it will be wholly unwise for the court to encroach into the domain of the executive or legislative (sic legislature) and try to enforce its own views and perceptions.' 22. Therefore even looking at it from the perspective as set out in the aforesaid judgment, we are of the clear view that Section 234E of the Income Tax Act, 1961 does not violate any provision of the Constitution and is therefore intra vires, Constitution of India. 23. In view of the aforesaid discussion in this judgment, we find no merit in this Writ Petition and the same is hereby dismissed. Rule is discharged. However, in the facts and circumstances of the case, we leave the parties to bear their own costs.”

Thus, the Hon'ble High Court had considered the issue and decided in para

18 of the order. Further I would like to mention that Section 246A of the

Act provides regarding the appealable order before the CIT(A). The

outcome of processing under sub-Section (1) of Section 200A are

appealable w.e.f. 01/6/2015 only. Prior to that the levy of fees U/s 234E

was not an appealable order. Thus, the fees for failure to furnish the

statement as per Section 200 of the Act is levied U/s 234E of the Act and

the period from 01/7/2012 to 01/6/2015 is not appealable. Thus, the fees

levied for default in quarter 4 of financial year 2013-14 and 2014-15 and

the demand was raised on 19/06/2014, 23/06/2014 and 12/02/2015 are

not appealable. However, the revenue had not produced any evidence to

establish this fact. As per the assessee’s claim the demand notice had not

received on e.mail as mentioned by the revenue. The relevant date of

service of notice of demand is 02/2/2016, therefore, this issue raised in all

ITA 660 to 664/JP/2017_ 14 Cantt Board Vs ITO (TDS) these appeals is restored back to the file of the ld. CIT(A) to be decided on

merit and also the issue in ITA No. 664/JP/2017 where notice of demand was served on 02/09/2015 is restored back to the file of the ld. CIT(A) to

be decided on merit.

Order pronounced in the open court on 18/09/2017.

Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur Tk;iqj Tk;iqj Tk;iqj fnukad@Dated:- 18th September, 2017 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Cantt Board, Nasirabad, Ajmer. 1. izR;FkhZ@ The Respondent- The ITO TDS, Ajmer. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 660 to 664/JP/2017) 6.

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत