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Facts
The assessee filed TDS returns belatedly for certain quarters. The CPC issued intimations for late filing fees under Section 234E, which were challenged by the assessee. The CIT(A) dismissed the appeal due to delay and lack of sufficient cause for condonation.
Held
The Tribunal condoned the 9-day delay in filing the appeal. On merits, relying on the Karnataka High Court's decision in Fatheraj Singhvi, the Tribunal held that the amendment to Section 200A making it prospective from 01.06.2015 means late filing fees under Section 234E cannot be levied for periods prior to this date.
Key Issues
Whether late filing fees under Section 234E can be levied for periods prior to the amendment of Section 200A, which made the process prospective from June 1, 2015.
Sections Cited
Section 200A of the Income Tax Act, Section 234E of the Income Tax Act
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SMT. BEENA PILLAI & SMT.RENU JAUHRI
Balaji Graphics Art Pvt Ltd vs ACIT (TDS)-CPC, A-904, Shree Vallabhyog CHS Aayakar Bhawan, Sector-3, Ltd Vaishali, Ghaziabad, U.P.-201 Daftary Road, Pushpa Park 010 Malad(E), Mumbai-400 097 PAN :AAECB4052G APPELLANT RESPONDENT Assessee represented by Shri Rashmikant D Kundalia Department represented by Shri Paresh Deshpande, SR AR Date of hearing 07-10-2024 Date of pronouncement 10-10-2024 O R D E R PER : BEENA PILLAI (JM)
Present appeal filed by the assessee arises out of order dated 28/06/2019 passed by the Ld.CIT(A)-59, Mumbai for Assessment Year 2013-14 on following grounds of appeal:-
1. Under the facts and circumstances of the case and in law, the automated system has grossly erred in sending the intimations under Section 200A of IT Act,
2 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd 1961 to Assessee for raising the fee-demands for the periods prior to July 01,2015.
Under the facts and circumstances of the case and in law, the automated system has grossly erred in overdriving a demand amounting to unjust enrichment in legal parlance, despite the timely availability of credit for the TDS to the impugned Deductees.
2. Under the facts and circumstances of the case and in law, the demand generated by the intimation for the levy of fees is an illegitimate child of two legally alien parents, namely, Section 234E and Section 200A of the ITA and hence untenable in the legal world.
3. Under the facts and circumstances of the case and in law, the Ld. CIT (A) failed to render justice by overlooking the facts/merits of the case and by applying the pedantic and static approach.
4. The appellant craves leave to add, amend, modify or delete any of the grounds of appeal.”
Brief facts of the case are as under:- The assessee is a Private Limited Company, engaged in the business of printing and advertising activities. The assessee hired services from professional, contractors and others for smooth functioning of affairs. It was submitted that the salary payment of employees/professionals were were subjected to TDS. It is submitted that, the assessee deposited the TDS collected on regular basis. However, TDS returns for the quarters II, in Form 24Q and quarter III & IV in Form No.26Q was filed belatedly.
3 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd 2.1. The CPC, vide intimation under section 200A of the Act levied late filing fee u/s 234e AS UNDER:. Asst. Yr. Form No. Late Fee u/s 234E 2013-14 24Q-Q2 41,253 2013-14 24Q-Q3 29,800 2013-14 26Q-Q3 30,196 2013-14 24Q-Q4 4,600 Aggrieved by the intimation issued by the CPC, the assessee filed appeal before the Ld.CIT(A).
2.2. It was noted by the Ld.CIT(A) that the appeal filed by the assessee was with huge delay, the details of which are as under:
Form Date of Order Due date Actual Delay as Actual Date of No./Qtr filing TDS date /e- of filing appeal per Delay sending mail filing Return appeal appellant (days) by post dispatch date 24Q-2 07.06.13 22.11.13 22.12.13 25.01.19 821 1859 30.12.13 24Q-3 07.06.13 22.11.13 22.12.13 25.01.19 821 1859 30.12.13 24Q-4 07.03.13 23.11.13 23.12.13 25.01.19 821 1858 30.12.13 26Q-4 20.05.13 15.06.13 15.07.13 25.01.19 1909 2019 26.06.13 26Q-3 13.06.13 18.07.13 25.01.19 25.01.19 2016 2016 27.06.13
4 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd 2.3. The Ld.CIT(A), considered the reason for delay in filing Forms 24Q & 26Q was of the opinion that the delay cannot be condoned as there was no sufficient cause. The Ld.CIT(A) relied on various judicial precedents wherein sufficient cause was to be explained by the assessee in absence of which, the principles of natural justice cannot be extended. The Ld.AR submitted that the Ld.CIT(A) dismissed the appeal by not condoning the delay and held that there was no sufficient cause. The Ld.CIT(A) thus dismissed the appeal as unadmitted.
Aggrieved by the order of the Ld.CIT(A), assessee preferred appeal before this Tribunal.
At the outset, it is submitted that there is a delay of 9 days in filing the present appeal before this Tribunal. The assessee filed condonation petition stating that, the date of filing of the appeal clashed with certain festivals due to which assessee could not provide necessary details and the authorised representative could not process the filing of this appeal before this Tribunal. The assessee vide affidavit dated 18/09/2019 prayed for the condonation of delay in filing the present appeal before this Tribunal.
3.1. The Ld.DR though objected for the condonation of delay, however, could not controvert the reason that caused the delay.
5 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd We have perused the submissions advanced by both sides based on the records placed before us.
We note that the reason provided by the assessee causing 9 days delay in filing present appeal before this Tribunal cannot be overlooked and cannot also be attributed to the assessee, following the principles enunciated by Hon’ble Supreme Court in the case of Collector, Land Acquisition vs MST Kattiji & Ors reported in 167 ITR 471, we condone the delay in filing the present appeal before this Tribunal. Accordingly, the application for condonation of delay stands allowed.
On merits of the case, the Ld.AR submitted that late filing fee of the TDS return cannot be levied before 01.06.2015 as has been observed by the Hon’ble Karnataka High Court in case of Fatheraj Singhvi v. Union of India reported in (2016) 73 taxmann.com 252. It is submitted that the amendment to section 200A(1) is procedural in nature and in view thereof, the Ld.AO while processing the TDS statements/returns in the present set of appeals for the period prior to 01-06-2015, was not empowered to charge fees under section 234E. Hence, the intimation issued by the Ld.AO under section 200A in the present appeals does not stand and test of law. Even otherwise, the Ld.AR submitted that, the TDS deducted and paid with delay included interest paid for late payment for all quarters as per the statutory
6 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd provision. Therefore he submitted that the issue raised by way of charging the fees under section 234E is not valid and the same may be deleted. 5.1 The Ld.DR on the contrary relied on the orders passed by the authorities below. It is submitted that assessee has not filed any separate application for condonation of delay and therefore the Ld.CIT(A) was right in dismissing the appeal as defective.
We have perused the submissions advanced by both sides in the light of records placed before us.
We note that due to non-filing of the appeal as per the requirement of law, the Ld.CIT(A) dismissed the appeal as non-maintainable however on merits, we note that the issue of levy of penalty u/s. 234E for a delayed filing of eTDS return cannot be levied for the year under consideration as the amendment made to the act by Finance Bill 2015 w.e.f. 01/06/2015 by way of introduction of a new clause (c). It is also noted that prior to 01.06.2015, there was no enabling provision in the Act for raising a demand in respect of levy of fee u/s. 234E and since the years under consideration are prior to 01.06.2015, no late fee can be levied u/s. 234E of the Act.
6.1 We note that for A.Y. under consideration, the CPC issued intimation levying penalty u/s. 234E for delay in filing eTDS return. It is the submission of the assessee that section 200A was amended by the Finance Bill, 2015 w.e.f. 01.06.2015 wherein a new clause (c) was 7 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd inserted w.e.f. 01.06.2015. This issue has been considered by Hon’ble Karnataka High Court in case of Fatheraj Singhvi v. Union of India (supra). The Hon’ble Court held as under: "21. However, if Section 234E providing for fee was brought on the state 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 Section 200A which has been brought about with effect from 1.6.2015 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 be a aspect which may be required to be considered before such provisions 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 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 Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 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 clause (c) to (f) under Section 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 8 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd
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 clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having Assessment Years: 2013-14 to 2015-16 retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest."
6.2. The Hon'ble High Court have explained the position of charging of late filing fees under section 234E of the Act and the mechanism provided for computation of fees and failure for payment of fees under section 200A of the Act which was brought on Statute w.e.f. 01.06.2015. The said amendment was held to be prospective in nature and hence, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 6.3 In the interest of justice and having regards to the observations of various High Courts on the merits of the case, we remand this appeal back to Ld.CIT(A) to decide the issue on merits by condoning the delay. Assessee is directed to file all relevant documents explaining the delay based on which the Ld.CIT(A) shall pass detailed order in accordance with law. The Ld.CIT(A) is also directed to decide the issue
9 ITA 5871/Mum/2019 Balaji Graphics Art Pvt Ltd on merits by granting proper opportunity of being heard to the assessee.
6.4. In view of the above observation by the Hon’ble High Court, we are of the opinion that the Ld.CIT(A) erred in dismissing the appeal as not maintainable. This issue deserves to be remanded back to the Ld.CIT(A) to consider it on merits. Any delay in filing the appeal before Ld.CIT(A) is also condoned.
Accordingly, the appeal filed by the assessee for the year under consideration stands allowed for statistical purposes. In the result, the appeal filed by assessee stands allowed for statistical purposes.
Order pronounced in the open court on 10/10/2024.