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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’, NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
Date of hearing 06.06.2019 Date of pronouncement 24.06.2019 ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 23/01/2018 passed by the Ld. Commissioner of Income Tax (Appeals) [in short ‘the Ld. CIT(A)’] in relation to order for levy of fee for late filing of Quarterly Return for deduction of tax at source (TDS) for assessment year 2015-16. The grounds raised in the appeal are reproduced as under:
1. That the Ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in not allowing relief of Rs.40,600/- which was charged by the Ld. Assessing officer for late filing fee u/s 234E of Income Tax Act, 1961.
2. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in not allowing relief as rectification order u/s 154/200A of Income Tax cannot be passed without giving opportunity to the assessee. The A.O. passed rectification order u/s 154/200A of Income Tax without giving opportunity to the assessee.
3. That the appellant humbly prays that Rs. 40,600/- which was charged by the Ld. Assessing officer for late filing fee u/s 234E of Income Tax Act, 1961 upheld by the Ld. Commissioner of Income Tax (Appeals) may kindly be directed to be deleted.
4. That the appellant craves for permission to add any other ground of appeal before it is heard and disposed of.
2. Briefly stated facts of the case are that the assessee company filed returns of TDS in form No. 26QB for the 3rd quarter of 2014 on 27/12/2014, whereas the due date of filing of the said return was on 07/06/2014 and, thus, there was delay of 203 days. According to learned CIT(A), a rectification order under section 200A of the Income Tax Act, 1961 (in short ‘the Act’) was passed by the Central Processing Center (CPC), which was intimated to the assessee on 10th March, 2016 by email, wherein Rs.40,600/- was levied as late filing fee under section 234E of the Act. Before the Ld. CIT(A), the assessee contended that fee has levied under amended section 200A of the Act, which has been amended by Finance Act, 2015 w.e.f. 01/06/2015. According to the assessee, the late fee can be levied prospectively only and not in case of returns filed prior to 01/06/2015. The assessee relied on the decision of the Hon’ble Karnataka High Court in the case of Fatehraj Singhvi Vs UOI (2016) 73 taxmann.com 252 (Karn.) to support his contention that no computation for fee for demand or intimation under section 234E of the Act would have been made for TDS deducted irrespective of the statements are prepared/procured prior to 01/06/2015 and processed under section 200A of the Act. The assessee also submitted that no copy of the original order under section 200A of the Act was provided to the assessee and rectification made to the order under section 200A by the CPC was without giving any opportunity of being heard to the assessee. 2.1 The Ld. CIT(A) relying on the decision of the Hon’ble High Court of the Gujarat in the case of Rajesh Kourani Vs UOI 83 taxmann.com 137 (Gujarat) [2017] held “the levy of fee under section 234E of the Act prior to 01/06/2015 is legally correct as the charging section i.e. 234E came into operation from 01/06/2012.” 2.2 Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
At the outset, we may like to mention that the assessee was duly notified by the registered post for the date of hearing dated 06/06/2019. As per the record, notice has not returned back and thus, we can safely presume that the notice was duly served upon the assessee. Despite notifying, none attended on behalf the assessee, nor any application for adjournment was filed, accordingly, we were of the opinion that assessee was not interested in pursuing the appeal and thus, we proceeded to hear the appeal ex-parte, qua the assessee.
The Ld. DR, on the other hand, relied on the order of the lower authorities.
5. We have heard the rival submission and perused the relevant material on record. We find that the issue raised in the appeal is whether the Ld. CIT(A) was justified in confirming the levy of late fee under section 234E of the Act in the statement of tax deducted at source filed in form No.26QB and processed under section 200A of the Act. We also note that an amendment has been brought in the Finance Act, 2015, w.e.f., 01/06/2015, 234E of the Act in the statement processed under section 200A of the Act. The learned CIT(A) following the decision of Hon’ble Gujarat High Court in the case of Rajesh Kaurani (supra) where it is held that even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act. In the case of Fatehraj Singhvi (supra) decided by the Hon’ble Karnataka High Court, it is held that no late fee could be levied under section 234E of the Act in the returns processed prior to 01.06.2015. Thus, the Hon’ble court in the case of Fatehraj Singhvi (Supra), has restricted levy of late fee in returns processed prior to 01.06.2015 and not return filed prior to 01.06.2015. Section 200A, which has been amended w.e.f. 01.06.2015 also says about processing of returns. The relevant part of Section 200A(i) is reproduced as under: “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) ………………….. (b) ……………………… (c) the fee, if any, shall be computed in accordance with the provisions of section 234E; (d) ……….. (e) ………… (f) ………………….. 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.”
6. In the instant case the quarterly return has been filed on 27.12.2014 with a delay of 203 days. According to the learned CIT(A), the rectification order was passed by the CPC and intimated to the assessee by e-mail on 10.03.2016, wherein late fee of Rs.40,600/- was charged u/s 234E of the Act. But assessee says that he has not received any original order of processing of return and received only rectification order levying late fee. Thus, moot question of dispute is whether the return was processed prior to 01.06.2015 or not. If it is processed prior to 01.06.2015, no late fee can be levied in view of the decision of the Hon’ble Karnataka High Court in the case of Fatehraj Singhvi Vs. Deputy Commissioner of Income Tax (TDS) (ITA No. 442/Agra/2017, dated 09.04.2018) has considered both the decisions of Hon’ble Karnatka High Court in the case of Shri Fatehraj Singhvi (supra) and decision of Hon’ble Gujarat Hon’ble High Court in the case of Shri Rajesh Kaurani (supra). The Tribunal held that where there is difference of opinion in two decisions of the High Courts, in view of the decisions of the Hon’ble Supreme Court in the case of CIT Vs. Vatika Township Private Limited (2014) 367 ITR 466(SC) and CIT Vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), the decision favourable to the assessee should be followed. The Coordinate Bench of Agra in the case of Sudarshan Goyal vs. DCIT (TDS) (ITA No. 442/Agra/2017 order dated 09/04/2018) has adjudicated this issue as under: “The issue involved in this appeal is as to whether late filing fee u/s 234E of the IT Act has rightly been charged in the intimation dated 10.11.2013 issued u/s 200A of the Act while processing the TDS returns/statement, the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015. Before 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/ s 234E. As such, as per TDS statement filed for a period prior to 01.06.2015, no late fee could be levied in the intimation issued u/s 200A of the Act.
3. Heard. The Id. CIT(A), while deciding the matter against the assessee, has placed reliance on 'Rajesh Kaurani vs. UOT, 83 Taxmann.com 137 (Guj), wherein, it has been held that section 200A of the Act is a machinery provision providing the mechanism for processing a statement of deduction of tax at source and for making adjustments. The Id. CIT(A) has held that this decision was & S.A. No. 01/Agra/ 2018 delivered after considering numerous IT AT/ High Court decisions and so, this decision in Rajesh Kaurani (supra) holds the field.
4. We do not find the view taken by the Id. CIT(A) to be correct in law. As against Rajesh Kaurani' (supra), 'Shri Fatehraj Singhvi and Others vs.UOT, 73 Taxmann.com 252 (Ker), as also admitted by the Id. CIT(A) himself, decides the issue in favour of the assessee. The only objection of the Id. CIT(A) is that this decision and others to the same effect have been taken into consideration by the Hon'ble Gujarat High Court while passing Rajesh Kaurani' (supra). However, while observing so, the Id. CIT(A) has failed to take into consideration the settled law that where there is a cleavage of opinion between different High Courts on an issue, the one in favour of the assessee needs to be followed. It has so been held by the Hon'ble Supreme Court in 'CIT vs. Vegetable Products Ltd.', 88 ITR 192 (SC). It is also not a case where the decision against the assessee has been rendered by the Jurisdictional High Court qua the assessee.
In 'Shri Fatehraj Singhvi and Others' (supra) it has been held, inter alia, as follows: "22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, IT.A No. 442/Agra/2017 & S.A. No. 01/Agra/2018 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."
In view of the above, respectfully following 'Shri Fatehraj Singhvi and Others' (supra), 'Sibia Healthcare Pvt. Ltd. vs. DCIT (TDS)', order dated 09.06.2015 passed in for A.Y.2013-14, by the Amritsar Bench of the Tribunal, and 'Shri Kaur Chand Jain vs. DCIT, CPC (TDS) Ghaziabad', order dated 15.09.2016, in ITA No.378/ASR/2015, for A.Y. 2012-13, I.T.A No. 442/Agra/2017 & S.A. No. 01/Agra/2018 the grievance of the assessee is accepted as justified. The order under appeal is reversed. The levy of the fee is cancelled.”
Similarly, the Coordinate Bench of Jaipur in the case of M/s Mentor India Ltd Vs DCIT (ITA No. 738/JP/2016 order dated 16/12/2016) has taken a view favourable to the assessee observing as under: “6. Now the assessee is in appeal before us. In ITA No. 438/JP/2016, the only effective ground is against confirmation of late filing fee of Rs. 48,402/'; charged by the A.O. U/s 234E of the Act. In this regard, the Ld. AR of the assessee has reiterated the arguments as made in the written submissions and has further submitted that the issue is no more res-integra. He placed reliance on the decision of the ITAT, Ahmadabad decision in the case of Perfect Cropscience Pvt. Ltd. Vs DCIT in ITA No. 2957 to 2963/Ahd/2015 and the decision of the Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs Union of India & Drs. (2016) 289 CTR (Kar) 602.
7. On the contrary, the Id DR has opposed the submissions and supported the orders of the authorities below. She relied on the decision of the Hon'ble Jurisdictional High Court rendered in the case of Dundlod Shikshan Sansthan Vs. Union of India (2015) 63 taxmann.com 243 (Raj.).
We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the authorities below. Recently the Coordinate Bench of Jaipur ITAT in the case of M/s. Sandeep Jhanwar Advisory Services Pvt. Ltd. Vs. The TDS CPC, Gaziabad in ITA No. 722 & 723/JP/2016 for the A. Y. 2013 J 4 / Q-3 & 4 has allowed the appeal of the assessee by observing as under:- "3.5. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. We have also gone through the case laws relied upon by the Id. Counsel. We find merit into the contention of Id. Counsel that he High Court has decided the validity of section 234E, but has not decide the issue of power of AO for levy of tax under section 234E in the judgment rendered in the case of M/ s. Dundlod Shikshan Sansthan and Others (supra) as relied by Id. CIT (A). We have considered the recent decision of Hon'ble Karnataka High Court in the case of Shri Fatheraj Singhvi & Ors (supra) wherein the issue of levy of fees u/s 234E on statements processed u/s 200A before 01.06.2015 has been categorically discussed by the Hon'ble High Court and in para 24 of the said order it was held that "no demand for fee u/s 234E can be made in intimation issued for TDS deducted u/s 200A before Geeta Star Hotels & Resorts Pvt. Ltd. Vs. DCIT 01.06.2015". We have also gone through the judgment of Hon'ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd. (supra) wherein the Hon'ble Apex Court has discussed in detail the general principle of concerning retrospectively and held that unless contrary intention appears, a legislation is presumed not to have a retrospective operation. Respectfully following the above judgments of Hon'ble Supreme Court and Hon'ble Karnataka High Court, we set aside the order of Id. CIT (A) and direct the AO to drop the demand raised of Rs. 4,200/- u/s 234E on statements processed u/s 200A before 01.06.2015. Thus grounds raised by the assessee are allowed." The Hon'ble Jurisdictional High Court in the case of Dundlod Shikshan Sansthan Vs. Union of India (supra) has decided the issue of vires of Section 234E of the Act. The Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs Union of India & Ors. (supra) has held that the demand U/s 200A for computation and intimation for the payment of fee U/s 234E could not be made in purported exercise of power U/s 200A for the period of the respective assessment years prior to 1st June, 2015. When the intimation of the demand notices U/s 200A is held to be without authority of law so far as it relates to computation and demand of fee U/s 234E, the question of further scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise. We find that the Hon'ble Jurisdictional High Court in the case of Dundlod Shikshan Geeta Star Hotels & Resorts Pvt. Ltd. Vs. DCIT Sansthan Vs. Union of India (supra) has also considered the decision of the Hon'ble Bombay High Court in the case of Rashmikant Kundalia Vs. Union of India (2015) 229 Taxman 596 wherein the Hon'ble High Court has decided the nature of demand. The Hon'ble High Court has held that Section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the department has to prove due to the late filing of the TDS statements. Hence from both the decisions relied upon by the Id. DR, the issue of power of imposing late fee is not decided but the Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs. Union of India & Ors. (supra) has decided the issue in favour of the assessee and held that the late fee U/s 234E of the Act has raised vide impugned demand notice U/s 200A of the Act. We find force in the contention of the Id. AR of the assessee. If there is conflicting views taken by the two Hon'ble Courts, then the view, which favours the assessee should be adopted. In this regard, the Id AR of the assessee has relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township P. Ltd. (2014) 367 ITR 466 (SC). In view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vatika Township (supra), the demand so raised are directed to be deleted. Similarly identical findings have also been given in all the appeals of other assessment years."
8. In view of above, we feel it appropriate to restore the issue in dispute to the file of learned CIT(A) to ascertain the date of processing of return and provide a copy of the said order of processing to the assessee and decide the issue in accordance with law after affording adequate opportunity of being heard to both the parties 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 24th June, 2019.