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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI G. MANJUNATHA, AM & SHRI RAM LAL NEGI, JM
This bunch of ‘8’ appeals filed by the assessee are directed against the consolidated order passed by the Commissioner of Income Tax Appeal–59, Mumbai dated 31/03/2018 for the Assessment Years (AY) 2016-17. Since facts and issues are identical, for the sake of convenience, these appeals were heard together and are disposed-off by this consolidated order.
The assessee has more or less raised commons ground of appeal in all appeals. For the sake of brevity, grounds of appeal raised in are reproduced as under:-
1(a) The Commissioner of Income Tax (Appeals)-59 [hereinafter referred as CIT (A)] erred in confirming the action of AO in levying the fees of Rs. 65,400/- under section 234E of the Income Tax Act, 1961 (Act) { on delay in filing Form 26QB} on purchase of each flat ignoring the fact that the Appellant had bought 96 flats through one allotment letter only. The Appellant submits that it has bought 96 flats in project “Acme Ozone”, Thane through one allotment letter dated 29/10/2015; hence, the levy of fees u/s 234E of the Act ought to have been levied and confirmed considering the transaction as one only. Therefore, the Appellant prays that the action of the AO confirmed by the CIT(A) in levying the fees u/s 234E of the Act considering the purchase of 96 flats as separate transactions deserves to be quashed. (b) The CIT(A) erred in holding that the levy u/s 234E of the Act is mandatory in nature. The appellant craves leave to add, amend and modify the above grounds of appeal
3. Brief facts of the case are that the assessee company, as stated, is engaged in the business of real estate construction and development. During the previous year relevant to the assessment year under dispute, the assessee entered into an agreement with M/s Accent Construction Pvt. Ltd. for purchase of ninety six flats in three buildings. Vide allotment letter dated 29th October 2015, the developer company allotted the flats to the assessee for a total consideration of Rs. 100,51,65,650. On the date of allotment letter itself i.e., 29th October 2015, out of the total sale consideration, the assessee paid an amount of Rs.55 crore to 4 Cornerview Construction & Developers Pvt. Ltd the assessee through cheque and while making such payment the assessee simultaneously deducted tax @ 1% under section 194IA of the Income Tax Act, 1961 (for short "the Act") amounting to Rs.55 lakh. The TDS amount was deposited in Government account on29th September 2016 and upon such payment challan–cum– statements as required under section 200(3) of the Act was generated on the very same day in Form no.26QB. While processing the TDS statement under section 200A of the Act, the Assessing Officer finding that TDS statements were not filed within the time prescribed under the statute levied fee under section 234E of the Act in respect of each TDS statement filed by the assessee. Challenging the levy of fee under section 234E of the Act, assessee filed appeals before the first appellate authority.
The Ld. AR for the assessee, at the time of hearing submitted that issue involved in these appeals is covered against the assessee by the decision of ITAT , Mumbai ‘C’ Bench in assessee’s own case for AY 2016-17 in bunch of appeals, where the Tribunal under similar set off facts held that when the assessee itself has filed separate TDS statement in respect of Tax Deduct at Source relating to each flats, while processing such statements u/s 200A of the I.T.Act, 1961, the AO has to levy late fee u/s 234E of the I.T.Act, 1961 for delay in filing each of such statement separately. The Ld. DR, on the other hand, fairly accepted that the issue is covered in favor of the revenue by the decision of ITAT in assessee’s own case for AY 2016-17
We have heard both the parties and perused the material available on record. We find that the Co-ordinate Bench of ITAT, Mumbai ‘C’ Bench in assessee’s own case, in bunch of appeals for AY 2016-17 had considered an identical issue of levy of late fee for filing TDS statements in form No. 26QB and after considering relevant facts held that the AO shall compute late fee prescribed u/s 234E of the I.T Act, 1961 in respect of each statement filed by the assessee separately. The relevant findings of the Tribunal are as under:-
We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon by the learned Authorized Representative. There is no dispute between the parties with regard to the primary facts. Vide allotment letter dated 29th October 2015, ninety six flats along with car parking space was allotted to the assessee for a total consideration of Rs.100,51,64,650, and on the date of allotment itself i.e., on 29th October 2015, the assessee paid a part of the sale consideration amounting to Rs.55 crore to the developer / builder and while making such payment, the assessee in compliance to the provisions contained under section 194IA of the Act has deducted tax at source @ 1%. Since there was a delay in filing the TDS statements as provided under section 200(3) of the Act, the Assessing Officer while processing the TDS statements under section 200A of the Act has levied fee under section 234E of the Act. Challenging the levy of fee under section 234E of the Act, the learned Authorized Representative has made submissions before us, which can be summarized as under:– i) Due to paucity of space in Form no.26QB, assessee was compelled to deposit TDS in separate challans–cum-statements instead of a single challan-cum-statement. Therefore, late fee should be levied in respect of a single challan–cum–statement; ii) Provision of section 194IA of the Act is not applicable as there is no transfer of immovable property; iii) Since Form no.26QB is a challan–cum–statement which is generated on the very date of payment of TDS, it does not come within the purview of section 200(3) of the Act; and iv) There is no additional work load on the Department as the assessee has filed the TDS statements before the due date of filing of return of income by the deductees for the assessment year 2016–17.
Insofar as assessee’s contention regarding applicability of section 194IA of the Act is concerned, we are unable to accept the same due 11 to following reasons. Undisputedly, at the time of making payment of Rs.55 crore to the seller of the flats, the assessee itself has deducted tax at source in compliance to the provisions contained under section 194IA of the Act. Thus, it is patent and obvious that the assessee and the seller of the flats have treated the transaction of sale of flats as a transaction coming within the purview of section 194IA of the Act. In any case of the matter, the deductee has not expressed any reservation with regard to the applicability of section 194IA of the Act to the subject transaction. Therefore, the assessee being a deductor cannot plead inapplicability of the aforesaid provision. In fact, in our view, the contention of inapplicability of section 194IA of the Act is redundant and is not available to be taken by the assessee. Once the assessee has proceeded to deduct tax at source under section 194IA of the Act, all legal consequences arising in pursuance thereto would automatically follow. As per rule 30A the tax deducted at source under section 194IA has to be deposited within the time and in the manner prescribed therein and in terms of rule 31A assessee has to submit the statements of TDS as provided under section 200(3) of the Act. In fact, a cursory look at Form no. 26QB would reveal that it refers to Rule 30A and 31A of the Rules. The assessee having deducted tax at source not only has to deposit the TDS amount to the Government account, but it has to file a statement under section 200(3) of the Act within the prescribed time limit. It is evident, the assessee has also followed the aforesaid procedure. The only default on the part of the assessee is, it has neither paid the TDS amount nor filed the statement under section 200(3) read with rule 30A and 31A within the time prescribed therein. Therefore, in case of any default in filing the statement in terms of section 200(3) of the Act, the provisions contained under section 234E would automatically get triggered and fee prescribed therein has to be paid. While processing the TDS statement under section 200A of the Act, the Assessing Officer is empowered to levy fee under section 234E of the Act, which the Assessing Officer has done in the present case.
The validity of the provision contained under section 234A of the Act came up for scrutiny before the Hon'ble Jurisdictional High Court in case of Rashmikant Kundalia & Anr. v/s Union of India, [2015] 373 ITR 268 (Bom). While deciding the issue, the Hon'ble Jurisdictional High Court not only upheld the validity of section 234E of the Act, but also observed that the delay in furnishing of TDS returns/statements has a cascading effect and leads to an additional work burden upon the Department. The Hon’ble High Court held, to compensate for the additional work burden forced upon the Department, the fee under section 234E of the Act is contemplated which is not punitive in nature. The fee is a fixed charge for the extra service which the Department has to provide due to the late filing of the TDS statement. The Court held, the fee charged under section 234E of the Act is nothing but a privilege and a special service to the deductor allowing him to file TDS returns / statements beyond the time prescribed by the Act and the Rules. The Court has held that on payment of the fee under section 234E of the Act, the deductor is allowed to file the TDS returns/statements beyond the prescribed time so that it can be regularized. Thus, from the aforesaid decision of the Hon'ble Jurisdictional High Court, it is evident that the fee under section 234E of the Act is nothing but a privilege or special service allowed to a deductor for late filing of the TDS statements. In fact, as could be seen from the submissions made by the assessee before the learned Commissioner (Appeals) and even before us, it does not dispute the applicability of section 234E of the Act. The only issue raised by the assessee is, whether it should be made applicable to all TDS statements or to a single TDS statement. Thus, viewed in the aforesaid perspective, the contention of the learned Authorized Representative that the provision of section 194IA of the Act is not applicable deserves to be rejected. The decision of the Hon’ble Supreme Court in case of Balwant Vitthal Kadam v/s Sunil Baburao I. Kadam, (supra), therefore, would not apply.
As regards the second contention of the learned Authorized Representative that section 200(3) of the Act, would not apply to a statement in Form no.26QB, as it is a challan–cum–statement generated on the date of payment itself, we are unable to accept the same. No doubt, the provision contained under section 234E of the Act makes it clear that it will be applicable if the deductor fails to deliver the TDS statement within the time prescribed in sub–section (3) of section 200 of the Act. Whereas, sub–section (3) of section 200 of the Act makes it clear that furnishing of TDS statement in the prescribed form, manner and time applies to all TDS provisions including section 194IA of the Act contained under Chapter–XVII. Therefore, assessee’s claim that since the challan–cum–statement is generated on a single date, therefore, it will not come within the purview of section 200(3) of the Act, is unacceptable. Thus, we are of the view that the TDS statements in Form no.26QB also comes within the ambit of section 200(3) of the Act.
The next contention of the learned Authorized Representative that no additional burden is cast on the Departmental Authorities is also equally unacceptable considering the fact that there is a delay in filing the TDS statement in Form no. 26QB. As held by the Hon'ble Jurisdictional High Court in case of Rashmikant Kundalia & Anr. (supra) for the purpose of allowing the assessee to file TDS statement beyond the prescribed time and for regularizing the same, fee under section 234E of the Act has to be charged as it is in the nature of a privilege and special service provided to the assessee. Therefore, this contention of the learned Authorized Representative also fails.
Now, coming to the primary contention of the learned Authorized Representative that all the transactions relating to purchase of flats should be taken as a single transaction for the purpose of filing the TDS statement and computing fee under section 234E of the Act, we do not find any merit in such contention. On a perusal of the allotment letter dated 29th October 2015, a copy of which is placed in paper book and, more particularly, Annexure–B to the said letter reveals that the details and description of each of the flat along with cost thereof has been specifically mentioned. It is also a fact that the assessee has computed and deposited the TDS amount on the basis of the cost of each flat. In that view of the matter, the claim of the assessee that purchases of all the flats is to be taken as a single transaction, therefore, the levy of fee prescribed under section 234E of the Act is to be restricted to one challan–cum–statement filed in Form no.26QB, is unacceptable. When the assessee itself has filed separate TDS statements in respect of the tax deducted at source relating to the respective flats, while processing such statements under section 200A of the Act, the Assessing Officer has to levy fee under section 234E of the Act taking into account the delay in filing each of the statements. That being the case, assessee’s contention that fee under section 234E of the Act is to be restricted to one transaction is not acceptable. At this stage, it will be relevant to observe, clause (c) of sub–section (1) of section 200A of the Act contemplates that while processing the TDS return, fee under section 234E of the Act shall be computed. Thus, use of word “shall” in the aforesaid provision makes it mandatory on the part of the Assessing Officer to levy fee under section 234E of the Act. Since, the assessee has filed separate TDS statements under section 200(3) of the Act read with rule 26QB, there is no error on the part of the Assessing Officer in computing fee under section 234E of the Act while processing such statements.
As regards the contention of the learned Authorized Representative that appeal against levy of fee under section 234E of the Act is maintainable before the learned Commissioner (Appeals), we find merit in the same. Therefore, to that extent, the assessee’s contention is accepted. However, it will not make much difference as learned Commissioner (Appeals) has decided the issue on merit. In view of the aforesaid, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. Grounds are dismissed.
In this view of the matter and consistent with view taken by the Co-ordinate Bench, we are of the considered view that the Ld. CIT(A) has rightly confirmed late fee computed u/s 234E of the I.T.Act, 1961 for late filing of TDS statements in form No. 26QB. We do not find any reason to interfere with the findings of Ld. CIT(A) and hence, we are inclined to uphold order of the Ld. CIT(A) and dismissed appeals filed by the assessee.
In the result, all appeals filed by the assessee are dismissed.
Order pronounced in the open court on this 16 /07/2019