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Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI DUVVURU RL REDDY]
आदेश / O R D E R PER BENCH:-
These are appeals filed by different assessees directed against different orders of the learned Commissioner of Income Tax (Appeals)-17, Chennai (hereinafter called as ‘CIT(A)’) dated 14.05.2019 for the assessment years 2013-14 (Q2), 2013-14 (Q3), 2013-14 (Q4), 2013-14 (Q2), 2013-14 (Q3), 2014-15 (Q1), 2014-15 (Q2), 2014-15 (Q3) 2014- 15(Q4), 2014-15 (Q1), 2014-15 (Q2), 2014-15 (Q3) 2014-15 (Q4), 2015- 16 (Q1), 2015-16 (Q2), 2015-16 (Q3), 2015-16 (Q1), 2015-16 (Q2), 2014-15 (Q1), 2014-15 (Q2), 2014-15(Q3), 2014-15 (Q1), 2014-15 (Q2), 2014-15(Q3), 2015-16 (Q1), 2015-16 (Q2), 2015-16 (Q1) and 2015-16 (Q2) respectively.
Since, the identical facts and issues are involved in these appeals, 2. we proceed to dispose the same vide this common order.
For the sake of convenience and clarity the facts relevant in for assessment year 2013-14 (Q2) are stated herein.
ITA Nos.1944-1971/2019. :- 3 -:
The Assessee raised the following grounds of appeal: 4.
‘’1. For that the order of the Learned Commissioner of Income Tax (Appeals), Chennai u/s. 250 of the Income Tax Act, 1961 is opposed to law, facts and circumstances of the case and the principles of natural justice.
For that the Learned Commissioner of Income Tax (Appeals) erred in dismissing the appeal stating that in the absence of specific reasons for delay in filing the appeal the delay is not condoned and the appeal is dismissed as barred by limitation.
3. For that the Learned Commissioner of Income Tax (Appeals) by dismissing the appeal on limitation has erred in indirectly confirming the addition of Rs. 4,200/- u/s 234E of the Income Tax Act. (Tax effect — Rs. 4,200/-)
4. For that the Learned Commissioner of Income Tax (Appeals) ought to have appreciated the fact that the provisions of Section 200A r.w.s 234E are applicable only from 01.06.2015.
For that the Learned Commissioner of Income Tax (Appeals) erred in not considering the decision rendered by the Jurisdictional Tribunal in the case of Dollars & Pounds v. The Assistant Commissioner of Income Tax, CPC TDS (ITA Nos. 2015 to 2030/CHNY/2OI8)
For that the Learned Commissioner of Income Tax (Appeals) erred in not considering the decision rendered by the Jurisdictional Tribunal in the case of G lndhirani vs DC1T (ITA Nos 1019 to 1021/MDS/ 2015) (2015) 60 taxmann.com 312.
For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon’ble Tribunal may be pleased to delete the fee levied u/s 234E of the Act and/or pass such other orders as this Hon’ble Tribunal may deem fit’’.
The brief facts of the case are as under: 5.
The appellant namely M/s. D.S.M. Soft Pvt. Ltd, is a company incorporated under the provisions of the Companies Act, 1956. During
ITA Nos.1944-1971/2019. :- 4 -: the financial year 2012-13 (Q2) the appellant had deducted tax at source and paid to the Central Government. The applicable quarterly statement was filed belatedly on 19.11.2014 and it was processed on 23.11.2014 and levied late fee of Rs. 7,000/- u/s. 234E of the Income Tax Act, 1961 (in short ‘the Act’).
Being aggrieved, an appeal was preferred before ld. CIT(A), who 6. vide impugned order confirmed the levy of late fees u/s. 234E of the Act.
Being aggrieved, the appellant is in appeal before us in the present appeal.
The issue in the present appeal is decided in favour of the 7. assessee by the decision of Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & Ors vs. Union of India & Ors. 73 taxmann.com 252, wherein it was held as follows.
‘’17. The examination of the aforesaid contentions show that, s. 234E has come into force on 1st July, 2012. Therefore, one may at the first blush say that, since s. 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, in our view, s. 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement. As observed by us hereinabove, when s. 234E was inserted in the Act simultaneously, s. 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 s. 234E, the fee payable is provided but the mechanism provided was that if there was failure to furnish statements
ITA Nos.1944-1971/2019. :- 5 -: within the prescribed date, the penalty under s. 271H(1) and (2) could be imposed. However, under sub-s. (3) of s 271H, the exception is provided that no penalty shall be levied for the failure referred to under cl. (a) of sub-s. (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 s. 271(l)(a) cannot be imposed if the deductor complies with the requirement of sub-s. (3) of s. 271H. Hence, it can be said that the fee provided under s, 234E would take out from the rigors of penalty under s. 271H but of course subject to the outer limit of one year as prescribed under sub-s. (3) of s. 271H. It can also be said that when the Parliament intended to insert the provisions of s. 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 s. 271H. Be it recorded that, prior to s. 271H of the Act inserted in the statute book, the enforceability of requirement to file return under s. 200(3) and s. 206C(3) was by virtue of s. 272A(2)(k) of the Act which provided for the penalty of Rs. 100 per day for each day of default in filing TDS statements. But, when s. 234E was inserted w.e.f. 1st July, 2012 simultaneously, a second proviso was added under s. 272A(2) w.e.f. 1st July, 2012 as under : "272A. Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. (1)..... (2) If any person fails (a) to comply with a notice issued under sub-s. (6) of s. 94; or (b) to give the notice of discontinuance of his business or profession as required by sub-s. (3) of s. 176; or (c) to furnish in due time any of the returns, statements or particulars mentioned in s. 133 or s. 206 or s. 206C or s. 285B; or (d) to allow inspection of any register referred to in s. 134 or of any entry in such register or to allow copies of such register or of any entry therein to be taken; or ITA Nos.1944-1971/2019. :- 6 -:
(e) to furnish the return of income which he is required to furnish under sub-s. (4A) or sub-s. (4G) of s. 139 or to furnish it within the time allowed and in the manner required under those sub-sections; or (f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in s. 197A; or (g) to furnish a certificate as required by s. 203 or s. 206C; or (h) to deduct and pay tax as required by sub-s. (2) of s. 226; (i) to furnish a statement as required by sub-s. (2C) of s. 192; (j) to deliver or cause to be delivered in due time a copy of the declaration referred to in sub-s. (1A) of s. 206C; (k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-s. (3) of s. 200 or the proviso to sub-s. (3) of s. 206C; (1) to deliver or cause to be delivered the statements within the time specified in sub-s. (1) of s. 206A; (m) to deliver or cause to be delivered a statement within the time as may be prescribed under sub-s. (2A) of s. 200 or sub-s. (3A) of s. 206C, he shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues : Provided that the amount of penalty for failures in relation to a declaration mentioned in s. 197A, a certificate as required by s. 203 and returns under ss. 206 and 206C and [statements under sub-s. (2A) or sub- s. (3) of s. 200 or the proviso to sub-s. (3) or under sub- s. (3A) of s. 206C] shall not exceed the amount of tax deductible or collectible, as the case may be : Provided further that no penalty shall be levied under this section for the failure referred to in cl. (k), if such failure relates to a statement referred to in sub-s. (3) of s. 200 or the proviso to sub-s. (3) of s. 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.
ITA Nos.1944-1971/2019. :- 7 -:
........"
The aforesaid shows that in the cl. (k) if the said failure relates to a statement referred to in sub-s. (3) of s. 200 or the sub-s. (3) of s. 206C, no penalty shall be imposed for TDS after 1st July, 2012.
Hence, it can be said that, the mechanism provided for enforceability of s. 200(3) or 206C(3) for filing of the statement by making it penal under s. 272A(2)(k) is done away in view of the insertion of s. 271H providing for penal provision for such failure to submit return. When the Parliament has simultaneously brought about s. 234E, s. 271H and the aforesaid proviso to s. 272A(2), it can be said that, the fee provided under s. 234E is contemplated to give a privilege to the defaulter to come out from the rigors of penalty provision under s. 271H(l)(a) if he pays the fee within one year and complies with the requirement of sub-s. (3) of s. 271H.
In view of the aforesaid observations and discussion, two aspects may transpire one, for s. 234E providing, for fee and given privilege to the defaulter if he pays the fee and hence, when a privilege is given for a particular purpose which in the present case is to come out from rigors of penal provision of s. 271H(l)(a), it cannot be said that the provisions of fee since creates a counter benefit or reciprocal benefit in favour of the defaulter in the rigors of the penal provision, the provisions of s. 234E would meet with the test of quid pro quo.
However, if s. 234E providing for fee was brought on the statute 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 s. 200A which has been brought about w.e.f. 1st June, 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 foe a aspect which may be required to be considered before such provision 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 ITA Nos.1944-1971/2019. :- 8 -:
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 s. 234E, the Parliament also provided for its utility for giving privilege under s. 271H(3) that too by expressly put bar for penalty under s. 272A by insertion of proviso to s. 272A(2), it can be said that a particular set up for imposition and the payment of fee under s. 234E was provided but, it did not provide for making of demand of such fee under s. 200A payable under s. 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the learned counsel for respondent-Revenue that insertion of cl. (c) to (f) under s. 200A(1) should be treated as retroactive in character and not prospective.
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, we find that substitution made by cl. (c) to (f) of sub-s. (1) of s. 20QA can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under s. 200A for computation and intimation for the payment of fee under s. 234E could not be made in purported exercise of power under s. 200A by the respondent for the period of the respective assessment year prior to 1st June, 2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under s. 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 aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under s. 200A are so far as they are for the period prior to 1st June, 2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid.
If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in allt matters, the intimation given in purported exercise of power under s. 200A are in respect of fees under s. 234E for the period prior to 1st June, 2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under s. 200A, the same has necessitated the appellant-original petitioner to challenge the validity of s. 234E
ITA Nos.1944-1971/2019. :- 9 -: of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under s. 200A of the Act which has come into effect on 1st June, 2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under s. 234E could be made for the TDS deducted for the respective assessment year prior to 1st June, 2015. Hence, the demand notices under s. 200A by the respondent-authority for intimation for payment of fee under s. 234E can be said as without any authority of law and the same are quashed and set aside to that extent.
As such, as recorded earlier, it is on account of the intimation received under s. 200A for making computation and demand of fees under s. 234E, the same has necessitated the appellant to challenge the constitutional validity of s. 234E. When the intimation of the demand notices under s. 200A is held to be without authority of law so far as it relates to computation and demand of fee under s. 234E, we find that the question of further scrutiny for testing the constitutional validity of s. 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 s. 234E of the Act. At this stage, we may also record that the learned counsels appearing for the appellant had also declared that if the impugned notices under s. 200A are set aside, so far as it relates to computation and intimation for payment of fee under s. 234E, the appellant-petitioners would not press the challenge to the constitutional validity of s. 234E of the Act. But, they submitted that the question of constitutional validity of s. 234E may be kept open to be considered by the Division Bench and the judgment of the learned Single Judge may not conclude the constitutional validity of s. 234E of the Act.
Under these circumstances, we find that no further discussion would be required for examining the constitutional validity of s. 234E of the Act. Save and except to observe that the question of constitutional validity of s. 234E of the Act before the Division Bench of this Court shall remain open and shall not be treated as concluded’’.
and even the Co-ordinate Bench of the Tribunal had followed the above decision in the case of Shri. G.Radhakrishnan vs. DCIT, in dated 30.07.2018, wherein it was held as follows:
ITA Nos.1944-1971/2019. :- 10 -:
“3. None was present for the assessee, however, it has filed a written submission, wherein, it has submitted that the E-TDS statement should be processed u/s. 200A(1)(C) which was inserted by the Finance Act, 2015 w.e.f. 01.06.2015 only. According to the provisions of section 200A(1), no intimation can be sent u/s. 200A, after the expiry of one year from the end of the financial year in which the statement is filed. In this case, the assessee filed the E- TDS on 29.06.2013, which was processed on 16.01.2014. The revised order, if any, can be passed on or before 31.03.2015 i.e., after one year from 31.03.2014. It has further pleaded that the ITAT, A Bench, Chennai in its orders in 1020 & 1021/Mds/2015 dated 10.07.2015 in the case of Smt. G. Indhirani vs. The Deputy Commissioner of Income Tax, CPC-TDS, Ghaziabad has set aside the intimation u/s. 200A for the reason that prior to 01.06.2015, there was no enabling provision in section 200A of the Act for levy of fees u/s. 234E while processing the statement of tax deducted at source. The ITAT has also held that it is open to the Assessing Officer to pass a separate order u/s. 234E of the Act levying fee, provided the limitation for such a levy did not expire. Thus, the assessee submitted that the order passed by the officer dated 27.12.2016 is barred by limitation. Per contra, the DR supported the orders of the Ld. AO and the Ld. CIT(A).
We find merit in the submissions made by the assessee. As held by this ITAT, the intimation sent to the assessee u/s. 200A dated 16.01.2014 raising the demand of Rs. 9,000/- u/s. 234E towards levy of late filing fee is invalid as there was no enabling provision in section 200A, viz., clause (1)(C) of section 234E, prior to 01.06.2015 for levy of fees u/s. 234E while processing the statement of tax deducted at source. It was open for the AO to pass separate order u/s. 234E levying the fee, provided the limitation for such a levy did not expire. However, in this case, the AO has not passed any order u/s. 234E independently within 31.03.2015 and hence, the impugned order is set aside.”
Respectfully following the above decisions, we allow the appeal filed by assessee.
ITA Nos.1945 to 1961/Chny/2019 of M/s. D.S.M. Soft Pvt. Ltd and to 1971/CHNY/2019 of M/s.DSC BPO PVT Ltd
Since, the facts in the present appeals are identical to the facts in appeals filed by the assessee on the above lines indicated in appeal ITA
ITA Nos.1944-1971/2019. :- 11 -:
No.1944/Chny/2019 supra. Hence, the above captioned appeals filed by the assessees are allowed.
In the result, the appeals filed by the assessees in to 1971/CHNY/2019 stand allowed.
Order pronounced on 17th day of October, 2019, at Chennai.