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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘B’ MUMBAI
Before: Shri JOGINDER SINGH, & Shri G. MANJUNATHA
आदेश / O R D E R Per Joginder Singh (Judicial Member) These two appeals are by the assessee against the impugned orders both dated 22/06/2018 of the Ld. First Appellate Authority, Mumbai, sustaining the levy of addition fee under section 234E of the Income Tax Act, 1961 (hereinafter the Act), amounting to Rs.39,400/- for the fourth quarter relating to TDS Form No.26Q (Assessment Year 2014-15) and Rs.7,282/- for 2nd Quarter relating to TDS Form No.26Q (Assessment Year 2015-16).
2. During hearing, the ld. counsel for the assessee, Mrs. Renu Kapoor, relied upon the decision of the Chandigarh Bench of the Tribunal in the case of Sonalac Paints & Coating Ltd. vs DCIT (2018) 194 TTJ (Chd) 771.
On the other hand, the ld. DR, Shri S. K. Mishra, contended that there are conflicting decisions on the issue in hand.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid decision dated 01/05/2018 for ready reference and analysis:-
“These appeals by the assessee’s are directed against the orders of the CIT(A)-1 Chandigarh dated 31/03/2017 pertaining to 2013-14, assessment year.
It was common ground between both the parties that the issue involved in all the appeals was identical, relating to levy of fees u/s 234E of the Income Tax Act, for delay in filing TDS returns. Therefore all the appeals were heard together and are being disposed of by way of this common order.
The facts involved in all the above appeals are identical, being that an intimation u/s 200A of the Act was made to the assessees on processing TDS returns filed by them, levying thereunder fees u/s 234E for late filing of the TDS returns. The details of the said intimations passed in each of the above cases is as under :
S.NO. of the assessee Date of Fees levied Intimation under 234E(Rs.) section 200A 1 1158/2017 M/s Sonalac Paints & 11.1.2014 14,000 Coating Ltd. Chandigardh 2. 963/2017 M/s Nagpal Trading 11.1.2014 33,800 Company Chandigarh
Against the aforesaid intimations, levying fees u/s 234E on the assessees, appeal was filed before the CIT(A) who dismissed all the above appeals holding them to be non maintainable for the reason that no appeal lay against levy of fees u/s 234E. The ld. CIT(A) relied upon the decisions of the Hon'ble Bombay High Court in the case of Rashmikant Kundalia Vs Union of India 373 ITR 268 and the Hon'ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan v. Union of India [2015] 63 taxmann.com 243 in this regard. Aggrieved by the same, the assessee has come up in appeal before us raising the following common grounds in both the appeals:
1. That on the facts, circumstances of the case and in law, the Worthy CIT(A) through his order dated 31.03.2017 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961.
2. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has grossly erred in holding that appeal against order passed u/s 200A, wherein fee u/s 234E has been charged, is not maintainable before him u/s 246A. 3. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he had erred in creating a demand of Rs 14,000/- u/s 234E on account of late filing of TDS statement by passing intimation u/s 200A even when the said demand raised through intimation u/s 200A is beyond the powers of Ld. AO and even on the facts of the case, no fee should have been levied on the appellant. 4. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he was unjustified in charging fee of Rs. 14,000/- u/s 234E on account of late filing of TDS statement by passing intimation u/s 200A even when there was reasonable cause which prevented the appellant from filing the TDS statement in time. 5. That on the facts, circumstances of the case and in law, the Worthy CIT(A) has erred in confirming the action of Ld. AO wherein he was unjustified in charging fee of Rs. 14,000/- u/s 234E on account of late filing of TDS statement by passing intimation u/s 200A even when the impugned intimation was issued without allowing even a single opportunity of being heard to the appellant. 6. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal
on or before the disposal of the same.
5. During the course of hearing before us, ld. counsel for the assessee stated that the fees in the present case was levied while processing the TDS returns u/s 200A of the Act, prior to 01.06.2015, and that as per the provisions of Section 200A of the Act, which existed on the date when the above returns were processed, no adjustment on account of fees u/s 234E could be made while processing the said returns u/s 200A of the Act. The ld. counsel for the assessee pointed out that the mandate to make such adjustment was provided by the Statute only w.e.f.
01.06.2015 by way of an amendment made to Section 200A by the Finance Act, 2015. The ld. counsel for the assessee, therefore, stated that the adjustment made in the present case of levying fees u/s 234E while processing the TDS return u/s 200A of the Act was bad in law. The ld. counsel for the assessee pointed out that the ITAT in a number of cases had deleted fees levied in identical circumstances holding that prior to 01.06.2015, fees u/s 234E could not be charged by way of making adjustment while processing TDS return u/s 200A of the Act. Our attention was drawn to the following case laws in support of the above proposition :
1.
M/s Khanna Watches Ltd. V DCIT CPC(TDS) ITA 731 to 735/CHD/2015 dated 29.10.2015 2. Sibia Healthcare Pvt. Ltd. Vs DCIT (2015) 121 DTR 81 (Amritsar) 6. At this juncture, the ld. DR pointed out that the Hon'ble Gujarat High Court in the case of Rajesh Kourani Vs UOI reported in 83 Taxman.com 137/ 297 CTR 502 had held that the amendment made to Section 200A authorizing the AO to make adjustment of the fees to be levied u/s 234E while processing TDS returns, w.e.f. 01-06-2015, was retrospective in nature. Copy of the order was placed before us. Ld. DR, therefore, stated that the fees in the present case had been rightly charged by way of adjustment made while processing return u/s 200A of the Act.
7. In rebuttal, ld. counsel for the assessee stated that the Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs Union of India & Ors.289 CTR 602 (Kar) had ruled in favour of the assessee, that prior to 01.06.2015, no adjustment on account of fees u/s 234E could be made by the AO while processing returns u/s 200A of the Act. The ld. counsel for the assessee further stated that as per the established principles of interpretation of Statute, where two views were possible on an issue, the view favourable to the assessee was to be taken. In this regard, ld. counsel for the assessee relied upon the decision of Apex Court in the case of CIT Vs Poddar Cement Pvt. Ltd.
(1997) 226 ITR 625 and CIT Vs Vegetable Products Ltd. 88 ITR 192 (1973). The ld. counsel for the assessee further stated that the CIT(A) had erred in dismissing the appeal stating that it is non- maintainable. Ld. counsel for the assessee pointed out that intimation made u/s 200A are appealable to the CIT(A) as per provisions of Section 246A of the Act, which outlines the appealable orders before the Commissioner (Appeals) and it is against this intimation that the assessee had filed appeal to the CIT(A).
We have heard the rival contentions, perused the orders of the authorities below and also gone through the documents and orders referred to before us by both the parties. The issue in the present appeal pertains to levy of fees u/s 234E on account of late filing of TDS returns. The facts on record are that the said fees were levied while processing the TDS returns filed by the assessee as per the provisions of Section 200A of the Act and further that fees in all the above cases was levied prior to 01.06.2015. Further, we have noted that the provisions of Section 234E for levy of fees on account of late filing of TDS returns was brought on the Statute vide Finance Act, 2012 w.e.f. 01.07.2012 and also that Section 200A, which deals with the processing of TDS returns, gave no mandate to make adjustments on account of levy of fees u/s 234E prior to 01.06.2015 and that the same was brought on the Statute only vide Finance Act, 2015 w.e.f. 01.06.2015. The other relevant Section taken note of is the provisions of Section 246A which lists the orders against which appeal lies to the CIT(A) and which we find that the same includes intimations passed u/s 200A of the Income Tax Act for the relevant assessment year.
In the above factual and legal background, we shall now proceed to adjudicate the issue before us. The ld. CIT(A), as we find, dismissed assessees’ appeal holding them to be non maintainable and the reason for the same was the observations in the orders passed by the Hon'ble Bombay High Court and the Hon'ble Rajasthan High Court that no appeal lies against levy of fees u/s 234E. We are not in agreement with the ld. CIT(A) on this issue. As pointed out above, the fees u/s 234E in the present case was levied in the intimations made u/s 200A of the Act. Such intimations are appealable before the CIT(A) as per the provisions of Section 246A of the Act and in the present case, the assessee had filed appeals against these intimations made u/s 200A. Therefore, all the appeals were maintainable and the ld. CIT(A) had wrongly dismissed the assessees’ appeals holding them to be nonmaintainable. As for the reliance placed by the CIT(A) on the orders passed by the Hon'ble Bombay High Court and Hon'ble Rajasthan High Court, we find that the said judgements have been misinterpreted by the CIT(A). In both these cases, the constitutional validity of Section 234E was challenged before the Hon'ble High Courts and one of the pleas taken by the counsels of the assessees against the introduction of the said Section in the Statute was that there was no provision for filing appeals against the orders passed levying fees u/s 234E. It was in this context that the Hon'ble High Court held that even if no appeal lay against levy of fees u/s 234E, the remedy of writ still remained with the aggrieved parties and therefore, the constitutional validity of the said Section could not be challenged on this ground. It may be noted that the observation of the Hon'ble High Courts was in the context of no appeal lying against the levy of fees u/s 234E per-se, but where fees are levied by way of adjustment made in intimations u/s 200A, the said intimations are appealable as per the Statute before the CIT(A). In such cases, the levy of fees is challenged by way of filing appeals against the intimations passed against Section 200A and this is the distinguishing fact between the observations made by the Hon'ble Courts where they observed that no appeal lay against levy of fees u/s 234E. The Hon'ble High Courts, obviously were not seized with the adjustment of levy of fees u/s 234E in intimations made u/s 200A and therefore, this observation of the Hon'ble High Court cannot be read to be in the context of adjustment made on account of levy of fees u/s 234E in the intimations passed u/s 200A which, otherwise, are appealable before the CIT(A). In view of the above, the order passed by the ld. CIT(A), we hold, is not as per law.
Now coming to the merits of the case, we find force in the argument of the ld. counsel for the assessee that prior to 01.06.2015, there was no mandate, as per the Statute, to make any adjustment on account of levy of fees u/s 234E while processing TDS returns u/s 200A. We have taken note of the order of the Hon'ble Gujarat High Court holding the amendment made to Section 200A w.e.f. 01.06.2015, giving power to make adjustment on account of fees u/s 234E while processing returns u/s 200A, to be retrospective in nature, stating that this power given to the AO is a machinery provision while the substantive provision of the power to levy fees u/s 234E was always there on the Statute from 01.06.2012. But at the same time, we note that the Hon'ble Karnataka High Court held that levy of fees u/s 234E while processing returns, TDS u/s 200A prior to 01.06.2015 was without any authority of law. With two divergent views of the Hon'ble High Courts on the issue and in the absence of any decision by the jurisdictional High Court, we concur with the ld. counsel for the assessee that as per the well accepted rule of construction if two reasonable constructions of a statute are possible the construction which favours the assessee must be adopted. In view of the same, respectfully following the decision of the Karnataka High Court in the case of Fatheraj Singhvi (supra), we hold that the fees levied in all the present cases u/s 234E prior to 01.06.2015 in the intimations made u/s 200A was without authority of law and the same is, therefore, directed to be deleted. In view of the above, all the appeals of the assessees stand allowed.
In the result, both appeals of the assessees are allowed.” It is noted that while coming to the aforesaid conclusion, the Chandigarh Bench of the Tribunal also considered the decisions of M/s Khanna Watches Ltd. V DCIT CPC(TDS) ITA 731 to 735/CHD/2015 dated 29/10/2015, Sibia Healthcare Pvt. Ltd. Vs DCIT (2015) 121 DTR 81 (Amritsar), Fatheraj Singhvi & ors. Vs Union of India & Ors.289 CTR 602 (Kar),CIT Vs Poddar Cement Pvt. Ltd. (1997) 226 ITR 625 and CIT Vs Vegetable Products Ltd. 88 ITR 192 (1973). The Hon'ble Apex Court in Vegetable Products held that when two views are possible, the view which favours the assessee may be adopted. In the aforesaid case, the Bench concluded that the fees levied under section 234E, prior to 01st June 2015, in the intimations made under section 200A of the Act was without authority of law and therefore, deserves to be deleted. Following the aforesaid cases, the appeals of the assessee are allowed.
Finally, the appeals of the assessee are allowed.
This order was pronounced in the open court in the presence of the ld. representatives from both sides at the conclusion of the hearing on 17/09/2018.