M/S PROMOPTEC RENEWABLE ENERGY SOLUTIONS PRIVATE LIMITED ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CPC TDS , GHAZIABAD

O R D E R Per Bench All these 17 appeals are filed by the assessee and these are directed against a combined order of ld. CIT(A)-9, Bangalore dated 10.09.2018 in respect of delayed filing of various TDS returns for various quarters of Financial Years 2012-13 to 2014-15 in form nos. 26Q and 24Q. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.

from ITA No. 3092/Bang/2018. The same are as under. “1. The order passed by the First Appellate Authority is prejudicial to the interest of the appellant and erroneous in law.

2. The First Appellate Authority erred in law to hold that the statement filed by the Appellant under Section 200(3) as non-est even though the issue before the First Appellate Authority was only on non-levy of late filing fee under Section 234E for the period prior to 01.06.2015 and not on the validity of the statement filed under Section 200(3).

3. Without prejudice to Ground No 2 above, the First Appellate Authority, having held that the Appellant is not liable to pay the late to 3108/Bang/2018 Page 2 of 6 filing fee under Section 234E prior to 01.06.2015 and having cancelled the orders under Section 200A, erred in treating the statements under Section 200(3) as non-est for not paying the late filing fee before filing the statement for the period prior to 01.06.2015.”

3. At the very outset, it was submitted by ld. AR of assessee that the issue in dispute in the present appeals is squarely covered in favour of the assessee by the Tribunal order rendered in the case of Manoj Kumar Jaiswal Vs. ACIT as reported in [2019] 104 taxmann.com 372, copy of which is available on pages 1 to 7 of the case law paper book. He drawn our attention to para nos. 8 to 15 of this Tribunal order. He submitted that the facts in the present case are similar and therefore, by following this Tribunal order, the present appeals should be allowed. The ld. DR of revenue supported the order of CIT(A) but he could not point out any difference in facts in the present case and in the case cited by ld. AR of assessee as noted above.

4. We have considered the rival submissions. We find that in para no. 3 of the combined order, the ld. CIT(A) has reproduced the grounds raised by assessee. For ready reference, this para no. 3 from the impugned order of CIT(A) is reproduced hereinbelow. “3. The appellant has taken following grounds of appeal:

1. That the order of the learned Assistant Commissioner of Income Tax CPC TDS is prejudicial to the interests of the appellant and erroneous in law and against the facts and circumstances of the case.

2. That the learned ACIT erred in law and on facts in levying a fee of Rs. 23,800, Rs. 60,523, Rs. 47,800, Rs. 73,318, Rs. 25,400, Rs.67,800, Rs.49,400, Rs. 86,800, Rs. 26,000, Rs. 50,000, Rs. 68,400, Rs. 40,800, Rs.60,200, Rs. 2200, Rs. 29,200, Rs. 22,400, Rs. 41,800 under section 234E of the Act towards delay in filing the TDS return.

3. That the learned ACIT erred in law and on facts in levying fee under section 234E of the Act even, though mode and manner of enforceability of such levy is not expressly prescribed prior to 01.06.2015.

4. That the learned ACIT erred in not following the order of the Jurisdictional High Court. Each of the above grounds is without prejudice to one another the appellant seeks the leave of the learned Commissioner of Income Tax Appeals 13 to add delete amend or modify otherwise once or any of the grounds of appeal either before or at the time of hearing this appeal.” to 3108/Bang/2018 Page 3 of 6

5. Now we reproduce paras 8 to 15 from the Tribunal order rendered in the case of Manoj Kumar Jaiswal Vs. ACIT (supra). These paras reads as under. “8. The next argument of the ld. Counsel for the assessee was that u/s. 251(1)(c) of the Act which is applicable in the present case, the CIT(A) has no power to enhance and therefore in an appeal challenging the validity of levy of fee u/s. 234E of the Act by the assessee, he cannot go into the question, whether TDS return filed by the assessee has to be treated as non est. The CIT(Appeals), however, held that the CIT(A) has plenary powers in disposing of an appeal and that the CIT(A) was duty bound to correct errors in the orders of lower authorities. The CIT(A), therefore, rejected this contention of the assessee also.

9. Aggrieved by the order of CIT(Appeals), in declaring the return filed by the assessee as non est, the assessee has preferred the present appeal before the Tribunal because if the return of TDS filed by the assessee is treated as non est, the other consequences under the Act for non-deduction of tax at source might follow and hence these appeals by the Assessees.

10. We have heard the rival submissions. The ld. DR relied on the order of CIT(Appeals) and further placed reliance on the decision of the Hon’ble Gujarat High Court in the case of Rajesh Kourani v. UOI [2017] 83 taxmann.com 137 (Guj) wherein the Hon’ble High Court took a view that levy of fee u/s. 234E of the Act is possible even without a regulatory provision u/s. 200A of the Act and therefore the levy of fee u/s. 234E of the Act w.e.f.1.7.2012, when those provisions were introduced, was valid. We are of the view that this Tribunal is bound to follow the decision of the Hon’ble High Court of Karnataka which is the jurisdictional High Court and therefore this argument advanced by the ld. DR cannot be accepted. Even otherwise, the issue before the Tribunal is with regard to action of the CIT(A) in treating the return of TDS filed by the assessee as non est and therefore the decision of the Hon’ble Gujarat High Court, with respect, is not relevant for adjudicating on the issue involved in the present appeal. In all other respects, the ld. DR relied on the order of CIT(Appeals).

11. The ld. Counsel for the assessee reiterated the stand as was put forth before the CIT(Appeals) and further placed reliance on the following decisions for the proposition that exercise of powers of enhancement by the CIT(Appeals) is restricted only to matters which are subject matter which arose for consideration before the AO and he cannot introduce a new source in an appeal:-

1. The Commissioner of Income Tax v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC).

2. Commissioner of Income Tax v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC)

3. Commissioner of Income Tax v. National Co. Ltd. [1993] 199 ITR 445 (Calcutta).

12. On the parity of ratio laid down in the aforesaid decision, it was submitted that the action of the CIT(Appeals) in declaring return of TDS filed by the assessee as non est was not the subject matter of appeal and the subject matter to 3108/Bang/2018 Page 4 of 6 of appeal was only with regard to correctness of levy of fee u/s. 234E of the Act. In that view of the matter, it was submitted that the CIT(Appeals) erred in going into an issue which was not subject matter of appeal before him. This submission was made without prejudice to the argument that u/s. 251(1)(c), the CIT(A) does not have powers of enhancement. U/s. 251(1)(c) which is applicable in the present case, the CIT(A) may pass such orders in the appeal as he thinks fit. It was submitted that the words “in the appeal” in section 251(1)(c) makes it clear that the CIT(Appeals) cannot travel beyond the subject matter of the appeal which in the case of assessee was validity of levy of fee u/s. 234E of the Act. It was, therefore, submitted that the order of CIT(Appeals) to the extent that it declares the return of income as non est, should be held to be bad in law and quashed.

13. We have given a very careful consideration to the rival submissions. The first aspect is as to, whether the TDS return filed u/s. 200(3) of the Act can be declared as non est. We have already extracted the provisions of section 200(3) of the Act. There is no such power conferred, either under those provisions or under any other provisions of the Act, to declare the return of TDS filed u/s. 200(3) as non est. As rightly contended by the learned counsel for the Assessee, the Act contains provision for declaring a return of income filed as invalid u/Sec.139(9) of the Act. There is no such provision for declaring a return of TDS as invalid. This is a clear indication in the Act that return of TDS cannot be declared as non est. A return of TDS only evidences payment of taxes which are withheld by a payee who, under the provisions of the Act, is bound to deduct tax at source. Declaring a return of TDS as non est, cannot have the effect of treating the payee as an Assessee in default and expose him to other consequences under the Act as an Assessee in default. Section 234E (3) lays down that the fee to be paid u/s. 234E of the Act shall be paid before the return of TDS is filed u/s. 200(3) of the Act. This provision, in our view, does not confer power on the CIT(A) to declare the return of TDS as non est in law in a case where the return of TDS is filed without payment of fee u/s.234E of the Act. Besides the above, in the present case, the levy of fee u/s. 234E of the Act has already been deleted by the CIT(A) and therefore these provisions cannot be of any help to the conclusions of the CIT(Appeals) that the return filed without payment of fee u/s. 234E of the Act is invalid and can be declared as non est in law.

14. As far as the power of enhancement under Explanation to section 251(1) which was relied on by the ld. DR is concerned, the Explanation is only with regard to clauses (a), (aa) and (b) of section 251(1) of the Act and is not applicable to clause (c). The provisions of Sec.251 of the Act reads thus:- Powers of the Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of ITA Nos. 3092 to 3108/Bang/2018 Page 5 of 6 the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.”

15. It is not in dispute before us that clause (c) of section 251(1) is the clause applicable in the present case. A reading of this clause shows that the CIT(Appeals) in the cases to which the said clause applies can pass such orders as he thinks fit, but that power is circumscribed by the words “in the appeal”. Therefore, the CIT(Appeals) cannot travel beyond the subject matter of the appeal, which in the present case is as to, whether fee u/s. 234E of the Act can be levied or not; and not the question, whether the return of TDS filed by the assessee is non est in law? We are, therefore, of the view that the CIT(Appeals) had no power in the appeal in the present case to declare the return of TDS filed by the assessee as non est in law. In that view of the matter, we are of the view that the conclusion of the CIT(Appeals) holding that return of TDS filed by the assessee is non est in law is not valid in the eyes of law and the said direction is directed to be deleted and the order of the CIT(A) to this extent is held to be bad in law. Consequently, the appeal by the assessee in is allowed.”

6. From the above paras reproduced from the Tribunal order, it is seen that in that case, it was held by the Tribunal that CIT(A) has no power in the appeal to declare the returns of TDS filed by the assessee as non-est in law. For taking this view, it is noted by Tribunal in para 15 of this Tribunal order as reproduced above that clause (c) of section 251(1) of IT Act is applicable and as per this clause, the CIT(A) cannot travel beyond the subject matter of the appeal. The Tribunal also noted that in that case, the issue in dispute raised before CIT(A) was this as to whether the fees u/s. 234E can be levied or not and this was not the question before CIT(A) as to whether the return of TDS filed by assessee is non-est in law and on this basis, it was held by Tribunal that CIT(A) has no power in that case to declare TDS return filed by the