THE PRINCIPAL, SALDIHA COLLEGE,BANKURA vs. ITO, WARD - 4(4), TDS, BANKURA & PURULIA

IN THE INCOME TAX APPELLATE TRIBUNAL “A”, BENCH KOLKATA

BEFORE SHRI S. S. GODARA, JM & Dr. A. L. SAINI, AM आयकर अपीलसं./I.T.A No.2455/Kol/2018 ("नधा"रण वष" / Assessment Year: 2014-15) The Principal, Saldiha College Vs. ITO, Ward – 4(4), TDS Bankura & Purulia Saldiha, Bankura – 722 173. "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAAJS 5748 K (Appellant) .. (Respondent) Appellant by : Shri S.M. Surana, Advocate Respondent by : Shri Dhrubajyoti Roy, JCIT, Sr. DR सुनवाईक"तार"ख/ Date of Hearing : 23/12/2019 घोषणाक"तार"ख/Date of Pronouncement : 31/12/2019 आदेश / O R D E R Per Shri S. S. Godara, JM This assessee’s appeal for assessment year 2014-15 arises against the Commissioner of Income Tax (A), Durgapur dated 30.07.2018 passed in case no.161/CIT(A)/DGP/2017-18 involving proceedings u/s 200A of the Income Tax Act, 1961 (in short ‘the Act’). Heard both the parties. Case file perused.

I.T.A No.2455/Kol/2018 The Principal, Saldiha College

“6. I have carefully considered the facts of the case an the arguments raised by the Ld: AR. After having perused the decision relied upon by him, I find that the Hon'ble ITAT Amritsar have also stated that, "However, as admittedly there are no orders from the Hon'ble Courts above retraining us from our adjudication on merits in respect of the issues in this appeal, and as, in our humble understanding, this appeal requires adjudication on a very short legal issue, within a narrow compass of material facts, we are proceeding to dispose of this appeal on merits." 7. Having stated thus, the Hon'ble ITAT Amritsar have gone ahead to analyse the case and deliver a judgment which turned out be in favour of the appellant and against the Revenue. 8. Apart from the above judgment relied upon by the Ld. AR I also find that there are judgments from the Hon'ble ITAT Delhi and Hon'ble ITAT Mumbai in which a similar view favouring the appellant against the Revenue has been taken. 9. However, I also find that there is a judgment by the Hon'ble Gujrat High Court in the case of Rajesh Kourani v. Union of India (2017) 83 taxmann.com 137 (Gujarat) (Special Civil Application No. 302 of 2014; decision delivered on June 20, 2017) wherein the same question was addressed by their Lordship. The question before them was whether the AO could levy late fee u/s 234 in intimation u/s 2ooA for an AY prior to o1.06.2o151 The Hon'ble High Court at Gujrat held the answer in affirmative and in favour of the Revenue. The substantial questions of law were as under: (i) Whether section 2ooA is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, arithmetical or prima facie in nature and does not create any charge in any manner - Held, yes (ii) Whether with effect from 1-6-2015, this provision specifically provides for computing fee payable under section 234E – Held, yes (iii) Whether however, section 234E is a charging provision creating a charge for levying fee for certain defaults in filing statements and fee prescribed under section 44E could be levied even without a regulatory provision being found in section 2ooA for computation of fee - Held, yes 10. The crux of the decision can be summarized as under: I.T.A No.2455/Kol/2018 The Principal, Saldiha College

(a) Prior to 01 July, 2012, the Act contained a single provision in section 272A providing for penalty in case of default in filing the withholding tax statements. (b) With effect from 01 July, 2012, three major changes were introduced in the Act – Section 234E was introduced to levy fee of INR 2oo per day for every day of default in case of late filing of the withholding tax statements (c) The intent of section 2j4E is to make withholding tax compliance more stringent. Section 2ooA provides for the procedure of processing of withholding tax statements and authorises the AO to make certain prima- facie adjustments. Section 2ooAwas amended with effect from 01 June, 2015 to include the adjustment to be made by the AO in respect of levy under section z34E while processing the withholding tax statements. (d) A machinery provision cannot override a charging provision. Section 2ooA does not create any charge and merely provides a mechanism for processing the withholding tax statements. When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. lt would be inappropriate that the fee under section z34E could not be levied in the absence of a regulatory provision i.e. section 2ooA of the Act. (e) Even in the absence of amendment in section 2ooA, it was always open for the Revenue to charge the fee in terms of section 44E of the Act. With the amendment, the adjustment was brought within the fold of section 2ooA of the Act. Hence, the amendment was clarificatory in nature. (f) Section 2ooA is not a source of substantive power. Substantive power to levy fee could be traced to section 44E of the Act. Further, the fee under section 44E of the Act is not in lieu of the penalty of section 271H of the Act. Both are independent levies. 11. In plain terms, section 2ooA is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, as noted earlier arithmetical or prima facie in nature. With effect from 1.6.2015, this provision specifically provides for computing the fee payable under section 234E. On the other hand, section z34E is a charging provision creating a charge for levying fee for certain defaults in filing the statements. Under no circumstances a machinery provision can override or overrule a charging provision. Section 2ooA does not create any charge in any manner. It only provides a mechanism for processing a statement for tax deduction and the method in which the same would be done. When section 234E has already created a charge for levying I.T.A No.2455/Kol/2018 The Principal, Saldiha College

fee that would thereafter not have been necessary to have yet another provision creating the same charge. Viewing section 2ooA as creating a new charge would bring about a dichotomy. In plain terms, the provision is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late Filing of the statements. (para 19). 12. Even in absence of section 2ooA with introduction of section 234\ it was always open for the revenue to demand and collect the fee for late filing of the statements. Section 2ooA would merely regulate the manner in which the computation of such fee would be made and demand raised. In other words, the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied is not acceptable. Any such view would amount to a charging section yielding to the machinery provision. If at all, the re-casted clause (c) of sub-section (t) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the revenue to charge the fee in terms of section 234E. By amendment, this adjustment was brought within the fold of section 2ooA this would have one direct effect. An order passed under section 200A is rectifiable under section 154 and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A, any calculation of the fee would not pertake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the re-casted clause ©, this situation also would be obviated. Even prior to 1.6.2015, it was always open for the revenue to calculate fee in terms of section 234E. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E. (Para 20). 13. Respectfully following the decision of the Hon’ble Gujrat High Court, it is held that the AO CPC was entitled and was very much within his rights to levy late fee u/s 234 in intimation u/s 200A of the Act. The appeal is, therefore, decided against the appellant and is treated as ‘dismissed’.” 4. Learned Departmental Representative vehemently contended during the course of hearing that both the lower authorities’ have rightly gone by various judicial precedents (supra) deciding this issue against the assessee. We however notice that hon’ble Karnataka high court judgement in writ appeals no. 2663 to 2666/15 Sri Fatheraj Singhvi vs Union of India decided on 26.08.2016 has held that such late fee is not applicable period prior to 01.06.2015 as the relevant I.T.A No.2455/Kol/2018 The Principal, Saldiha College

statutory provision carries prospective effect only. Faced with this situation, we quote Hon’ble apex court judgement in CIT vs Vegetable Products 88 ITR 192 (SC) had hold benefit of doubt in these circumstances goes to the taxpayer only. We, therefore, delete the impugned 234E late fee levy of Rs. 1,21,200/-.

Order is pronounced in the open court on 31.12.2019. (A. L. Saini) JUDICIAL MEMBER कोलकाता /Kolkata; "दनांक/ Date: 31/12/2019 (Biswajit, Sr.PS)

आदेशक"""त"ल"पअ"े"षत/Copy of the Order forwarded to : The Appellant - The Principal, Saldiha College. 1. The Respondent- ITO, Ward-4(4), TDS Bankura & Purulia 2. आयकरआयु"त(अपील) / The CIT(A), Kolkata [sent through email] 3. आयकरआयु"त/ CIT 4. "वभागीय""त"न"ध, आयकरअपील"यअ"धकरण, कोलकाता/ DR, ITAT, Kolkata [sent 5. through email] गाड"फाईल / Guard file. 6. स"या"पत""तBy Order