HARILAL DESAR RANA CLOTHING COMPANY LLP,MUMBAI vs. DCIT (CPC)-TDS,

Brief facts of the case are that the assessee commenced its business activities on 17.8.2013 and for the purpose of carrying on and conducting business, the assessee has taken the premises on rental basis on 6.7.2013 on monthly rental of Rs.40,000/- which was to be paid by 10th of the succeeding calendar month and the TDS on rent u/s 194I of the Income Tax Act, 1961 was to be deducted at the time of payment of the rent. The assessee filed Form No.26C for second quarter on 13.11.2013 which was due to file on 15.10.2013 in respect of tax deducted of Rs.7300/- thereby delay in filing he return by 29 days for which penalty of Rs.5800/- was imposed under section 234E and also interest of Rs.99 was charged for late payment under section 201A of the Act vide intimation dated 6.1.2014 received from TDS, CPC, Aayakar Bhavan, Sector-3, Vaishali, Gaziabad, UP-201010. The appeal filed by the assessee before the ld.CIT(A) also stood dismissed by following the decision of the Hon’ble High Court of Bombay in the case of Rashmikant Kundalia V/s Union of India dated, 9th Feb, 2015 in which the Hon’ble Bombay High Court has held that the fee sought to be levied under section 234E is not in the guise of the tax that is sought to be levied on the deductor. The court further held that the provisions of section 234E are not 3 I.T.A. No.2934/Mum/2015 onerous on the ground that the section does not empower the AO to condone the delay in late filing of the TDS return/statements, or that no appeal is provided for from an arbitrary order passed under section 234E. The Honble court observed that the right of appeal is not a matter of right but a creature of statute and if the legislature deems it fit not to provide a remedy of appeal, so be it and even in such scenario it is not as if the aggrieved party is remediless. Such person can always approach this court in extra ordinary equitable jurisdiction under Article 226/227 of the Constitution of India as the case may be. The Honble Court has held that we cannot agree with the arguments of the petitioner that simply because no remedy of appeal is provided for, the provisions of section 234E of the Act are onerous. Similarly, on the same parity of reasoning, we find the arguments regarding the condonation of delay also to be wholly without any merits.

We have heard the rival contentions, perused the material placed before us including the case law relied upon by both the parties. The ld. AR vehemently argued before us that the late filing fee u/s 234E of the Act is not leviable under the provisions of the Act and was wrongly levied by the AO and upheld by the FAA. The ld. AR drew our attention to the provisions of sections 234E, 200A (a,b,c,d,e and f) and also the provisions of section 200 subsection (3) of the Act. The ld. AR argued before us that the provisions of section 200(3) of the Act require the assessee to file a statement within a 4 I.T.A. No.2934/Mum/2015 prescribed period for each quarter which was inserted from 1.4.2005 and the provisions of section 272A(2)(k) providing for levy of penalty of Rs.100 per day for each day of default in filing TDS also came to be inserted from 1.4.2005. The ld. AR submitted that on 1.4.2010 section 200A was inserted providing for the processing of the TDS statement and the consequent issuance of the intimation to the deductor, determining the amount payable or refundable by it. But in the initial provisions of section 200A, there was no reference for fee payable under section 234E. On 1.7.2012, section 234E provided for levying of fee of Rs.200/- per day for each day of default in filing the TDS. We find merit in the argument of the ld.AR that the provisions of section 200A(1)(c) of the Act there was no authority or competence or jurisdiction on the part of the concerned officer or department to compute or determine the fee under section 234E in respect of assessment which falls prior to 1.6.2015 as the said provisions was also brought on the statute book w.e.f. 1.6.2015 and consequently no demand u/s 234E should have been determined and raised upon the assessee. In the case of Fatheraj Singhvi V/s Union of India 2016] 73 taxmann.com 252 (Karnataka), the Hon’ble Karnataka High Court has decided an identical issue wherein it has been held that no fee under section 234E was payable in respect of period which relates to or falls prior to 1.6.2015. The relevant extract is reproduced below :