M/S. D D MOTORS,HARYANA vs. DCIT (CPC- TDS), GHAZIABAD

This appeal is preferred by the assesee against order dated 13.12.2016 passed by the Ld. CIT (Appeals), Hisar for the assessment year 2013-14. 2017 D D Motors vs DCIT 2.0 Brief facts of the case are that the assesee is a partnership firm which came into existence in July, 2012. Tax deduction at source amounting to Rs. 34,486/- was made for the first time in the fourth quarter of the financial year 2012-13 and the payment for the same was made on 26.4.2013 i.e. before the due date. However, the filing of the return of TDS was delayed and it was filed on 12th September, 2013 instead of the due date of 15th May, 2013. A fee of Rs. 24,000/- u/s 234E of the Income Tax Act, 1961 (hereinafter called ‘the Act’) @ Rs. 200/- for the delay of 120 days was charged as per intimation u/s 200A of the Act vide intimation dated 11th February, 2014. The assessee preferred an appeal before the first appellate authority against the levy of the late fee. The Ld. First appellate authority dismissed the assesee’s appeal and now the assesee is before the Tribunal challenging the confirmation of levy u/s 234E of the Act.

3.0 None was present on behalf of the assessee when the appeal was called out for hearing. No application for adjournment has also been received from the assessee. However, a perusal of the record shows that written submissions have been filed on behalf of the assessee. Therefore, we are proceeding to 2017 D D Motors vs DCIT adjudicate the issue before us by considering the written submissions submitted by the assessee in this regard.

4.0 It has been submitted in the written submissions that levy of fee u/s 234E of the Act cannot be a subject matter of processing while processing the statement u/s 200A of the Act. It has been submitted that w.e.f. 1.6.2015, section 200A of the Act has been amended empowering the Assessing Officer (AO) to levy fee u/s 234E of the Act while processing u/s 200A of the Act but prior to 1.6.2015, the AO had no authority to levy fee u/s 274E of the Act. It has been submitted that in this case the intimation u/s 200A was passed on 11th February, 2014 and, therefore, the case of the assessee stood prior to the amendment to section 200A of the Act. The assessee has placed reliance on coordinate benches of Chennai, Amritsar and Ahmedabad benches of the Tribunal in this regard which are also a part of the written submissions.

5.0 The Ld. Sr. DR supported the order of the Ld. CIT (A) and submitted that the fee had been correctly levied.

6.0 We have gone through the written submissions and the case laws relied upon by the assessee and have also 2017 D D Motors vs DCIT heard the Sr. DR and have also gone through the impugned order.

6.1 We may produce, for ready reference, section 234E of the Act, which was inserted by the Finance Act 2012 and was brought into effect from 1st July 2012. This statutory provision is as follows:

“234E. Fee for defaults 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 subsection (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.” 6.2 We may also reproduce the Section 200A which was inserted by the Finance Act 2009 with effect from 1st April 2017 D D Motors vs DCIT 2010. This statutory provision, as it stood at the relevant point of time, was as follows:

“200A: Processing of statements of tax deducted at source (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 Ahd/2015 And 3 Others 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 n 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 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 tobe payable by, or the amount of refund due to, him under clause (c); and (e) the amount of refund due to the deductor in pursuance of the determination under clause (c) 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 2017 D D Motors vs DCIT 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 subsection (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 subsection. 6.3 By way of Finance Act 2015, and with effect from 1st June 2015, there is an amendment in Section 200A and this amendment, as stated in the Finance Act 2015, is as follows:

In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:-- "(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 all 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.”

2017 D D Motors vs DCIT 6.4 In effect, thus, post 1st June 2015, in the course of processing of a TDS statement and issuance of intimation under section 200A in respect thereof, an adjustment could also be made in respect of the "fee, if any, shall be computed in accordance with the provisions of section 234E". There is no dispute that what is impugned in the appeal before us is the intimation under section 200A of the Act, as stated in so many words in the impugned intimation itself, and, as the law stood, prior to 1st June 2015, there was no enabling provision therein for raising a demand in respect of levy of fees under section 234E. While examining the correctness of the intimation under section 200A, we have to be guided by the limited mandate of Section 200A, which, at the relevant point of time, permitted computation of amount recoverable from, or payable to, the tax deductor after making the following adjustments:

(a). after making adjustment on account of "arithmetical errors" and "incorrect claims apparent from any information in the statement" - Section 200A(1)(a)

(b). after making adjustment for 'interest, if any, computed on the basis of sums deductible as computed in the statement". - Section 200A(1)(b)

ITA No. 956/Del 2017 D D Motors vs DCIT 6.5 No other adjustments in the amount refundable to, or recoverable from, the tax deductor, were permissible in accordance with the law as it existed at that point of time. In view of the above, in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order under section 246A (a), and, therefore, the Ld. CIT (A) ought to have examined the legality of the adjustment made under this intimation in the light of the scope of the section 200A. The Learned CIT (A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is, thus, an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. Similar view has been taken by the coordinate bench of Chennai in the case of Smt. G. Indhirani vs. DCIT in 1020 & 1021/Mds/2015, M/s. Rajaguru Spinning Mills Ltd. vs. DCIT in ITA No. 1089/Mds/2015, Shri A ITA No. 956/Del 2017 D D Motors vs DCIT Dhakshinamurthy vs. DCIT in M/s. Padma Textiles vs. DCIT in ITA No. 1091/Mds/2015, M/s. Murthy Lungi Company vs. DCIT in ITA No. 1092/Mds/2015. ITAT Ahmedabad bench has also taken similar view in the case of Notional Specialties Products vs. ITO in ITA No. 3372 to 3375/Ahmadabad/2015 and Amritsar bench in the case of Sibia Health Care Pvt. Ltd. vs. DCIT (TDS) in ITA No. 90/Amritsar/2015 has also taken a similar view. The Ld. Sr. DR has also not brought to our notice any other order of the Tribunal negating the ratio laid down by the coordinate benches of the Tribunal. Accordingly, respectfully following the order of the coordinate benches as aforesaid, we delete the fee levied u/s 234E in the present appeal.

7.0 In the final result appeal of the assesee stands allowed.