PRAKASH INDUSTRIES LTD.,,NEW DELHI vs. DCIT, NEW DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA Nos.5865/Del/2016, 5866/Del/2016, 5867/Del/2016, 5868/Del/2016, 5869/Del/2016 Asstt. Years: 2013-14, 2013-14, 2014-15, 2014-15, 2014-15

Prakash Industries Ltd. DCIT Near IOCL Crossing, TDS-CPC Sri Van Najafgarh Bijwasan New Delhi. Road, Bijwasan, New Delhi – Vs. 110 061 PAN AABCP6765H (Appellant) (Respondent)

Assessee by: Shri Ajay Wadhwa, Advocate Department by : Shri Surender Pal, Sr. DR Date of Hearing 29/07/2019 Date of 29/07/2019 pronouncement O R D E R PER BENCH The aforesaid appeals have been filed by the assessee against separate impugned orders of even date 19.9.2016, passed by Ld. CIT (Appeals) 41 New Delhi in relation to the order passed u/s 200A, levying penalty late filing fee u/s. 234E for the various quarters of the assessment years 2013-14 and 2014-15. Since issues involved in all the appeals are common arising out of set of facts, therefore, same are being disposed of by way of

this consolidated order and our findings given in ITA No. 5865/Del/16 will apply mutatis mutandis for all the years.

S. No. ITAT Appeal No. Amount: AY: Quarter: Date of filing TDS Date of intimation statement 1 5865/D/16 132,190 2013-14 Q2 25.07.14 24.09.14 2 5866/D/16 88,940 2013-14 Q4 25.07.14 24.09.14 3 5867/D/16 27,320 2014-15 Q1 22.09.14 25.09.14 4 5868/D/16 56,600 2014-15 Q2 25.07.14 29.07.14 5 5869/D/16 14,480 2014-15 Q4 25.07.14 24.09.14

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) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor.” 5. Thereafter, by way of amendment, clause (c) to sub section (1) has been substituted, which reads as under:- “(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;” 6. Section 234E was brought in statute w.e.f. 1.7.2012 which provides for fee for default in furnishing statements where a person fails to deliver or cause to be delivered a statement within the time prescribed under section 200(3) or proviso to sub section (3) of section 206C. Section 234E cannot be read in isolation, because it only prescribes the mode of calculation of the fee and it has to be read with the mechanism and the mode provided for its enforcement, that is, the provision which imposes the fee. The amendment made u/s 200A for levying such fee u/s 234E had only come into effect in 1.6.2015 and it cannot be held to operate retrospective because prior to the amendment there was no computation of fee for demand for the payment of fee u/s 234E which could have been made for TDS deducted for any assessment year prior to 1.6.2015. It is trite law that the

provision which imposes fees or tax and imposes any kind of liability cannot be given retrospective effect, especially when statute itself provides its operation from prospective date. This Tribunal in the case of Meghna Gupta vs. ACIT (2018) 99 taxmann.com 334 has held that levy of fee u/s 200A in accordance with provision of section 234E cannot be imposed prior to 1.6.2015. The Tribunal strongly referred and relied upon the judgment of Hon’ble Karnataka High Court in the case of Fatheraj Singhvi v. Union of India (2016) 289 CTR 602 wherein the lordship has observed and held as under :- “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 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 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 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) 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.{Para 17] 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 putting 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, the contention of the respondent-revenue that insertion of clauses (c) to (f) under section 200A(1) should be treated as retroactive in character and not prospective is unacceptable. [Para 21] 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, it is found that substitution made by clauses (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, it is made 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.[Para 22] 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.{Para 23}

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. In view of the reasons recorded, when the amendment made under section 200A 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.[Para 24] 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 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. it is found 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. At this stage, it may also be recorded that 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. But, they submitted that the question of constitutional validity of section 234E may be kept open to be considered by the Division Bench and the judgment of the Single Judge may not conclude the constitutional validity of section 234E .[para 25] Under these circumstances, no further discussion would be required for examining the constitutional validity of section 234E. Save and except to observe that the question of constitutional validity of section 234E before the Division Bench of this Court shall remain open and shall not be treated as concluded. [Para 26] In view of the aforesaid observations and discussion. the impugned notices under section 200A 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 for the TDS for the period prior to 1-4-2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect 10

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 Single Judge. [Para 27]”

sd/- sd/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/07/2019 Veena Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi