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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAM LAL NEGI
PER G.S.PANNU, A.M :
The captioned are five appeals by three different assessees involving a common issue pertaining to charging of late fees u/s 234E of the Act for delay in filing of quarterly TDS statement. Since it was a common point between the parties that the issue as well as the facts and circumstances involved in the captioned appeals are similar, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
In order to appreciate the controversy, the appeal in ITA No. 4739/Mum/2016 in the case of M/s. Milestone Space is taken as the lead case. This appeal is directed against the order of CIT(A)-1, Thane dated 21.3.2016, which in turn has arisen against the intimation u/s 200A of the Income Tax Act, 1961 (in short ‘the Act’) dated 23.12.2013 issued by DCIT, CPC (TDS), Ghaziabad, U.P for the 4th quarter of financial year 2012-13. In brief, the relevant facts are that the assessee filed its quarterly TDS statement in the prescribed Form-24Q for the 4th quarter of financial year 2012-13 on 20.7.2013, which was otherwise due on 15.5.2013. Thus, the quarterly statement was filed belatedly by 66 days. The Assessing Officer processed the return and sent an intimation u/s 200A of the Act wherein he, inter-alia, determined late fee of Rs.13,200/- in terms of Sec. 234E of the Act for the delay in filing of
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quarterly TDS statement. The assessee preferred an appeal before the CIT(A), inter-alia, raising various points. One of the pertinent points was that Sec. 200A of the Act inserted w.e.f. 1.4.2010 did not contain any reference to the provisions of Sec. 234E of the Act upto 1.6.2015 and, therefore, in the impugned order dated 23.12.2013 passed u/s 200A of the Act, levy u/s 234E of the Act could not have been made. On this point, assessee also relied upon the decision of the Amritsar Bench of Tribunal in the case of Sibia Healthcare Private Ltd. vs Dy. Commissioner of Income-tax (TDS) in ITA No. 90/Asr/2015. The CIT(A) has considered the submissions of assessee, but has ultimately affirmed the charging of late fee by the Assessing Officer u/s 234E of the Act in an intimation passed u/s 200A of the Act. The CIT(A) while upholding the levy on merits has also observed that the action of Assessing Officer was also not appealable before him. Against the aforesaid decision of CIT(A), assessee is in appeal before us.
At the time of hearing, the learned representative for the assessee pointed out that the matter in dispute is no longer res integra and has been adjudicated by the following Benches of the Tribunal wherein charging of late fee u/s 234E of the Act in an intimation passed u/s 200A of the Act prior to 1.6.2015 has been held to be bereft of jurisdiction :-
i) Gajanan Constructions vs DCIT, CPC (TDS), ITA No. 1292 & 1293/PN/2015 dated 23.9.2016 ii) M/s. Kash Realtors Pvt. Ltd. & Ors., ITA No. 4199/M/2015 dated 27.7.2016
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On the other hand, the ld. DR pointed out that even prior to 1.6.2015, charging of fee u/s 234E of the Act in an intimation passed u/s 200A of the Act was justified and in this context she has referred to the decision of the Hon'ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan vs UOI, 63 taxmann.com 243 (Rajasthan), which has also been relied upon by the CIT(A).
We have carefully considered the rival submissions. The learned representative for the assessee had rightly asserted that the impugned issue is no longer res integra and has already been adjudicated upon by our coordinate Benches. In the case of M/s. Kash Realtors Pvt. Ltd. & Ors. (supra) our coordinate ‘J’ Bench has considered an identical controversy and has held as under :-
“5. We have heard the rival contentions and have also perused the material on record. The contention of the Ld. respective Counsels for the assessees has been that this issue has already been considered by the Amritsar Bench of the Tribunal in the case of “Sibia Healthcare Pvt. Ltd.vs. DCIT” (2015) 171 TTJ (ASR) 0145 wherein the Amritsar Bench of the Tribunal has held that since the intimation under section 200A is an appealable order before the Ld. CIT(A) (w.e.f. 1.7.2012) under section 246A(a) and therefore the Ld. CIT(A) could have examined the validity of the adjustments made under the intimation under section 200A in the light and scope of the provisions of section 200A. The Tribunal further observed that since there was no enabling provision under section 200A before 01.06.15 providing for the adjustment in respect of levy of fees under section 234E while processing the TDS statements, hence in the absence of such an enabling provision, no such levy could be affected. The provision for making adjustments regarding fees leviable under section 234E has been introduced by way of amendment made vide Finance Act, 2015
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w.e.f. 01.06.15 only. The Tribunal therefore held that the action of the AO in making adjustments with regard to the fees leviable under section 234E while processing the TDS statements under section 200A for the period prior to 1.6.2015, was not legally valid.
It has therefore been contended on behalf of the assessees that the TDS statements filed by the assessee has to be processed in the manner as laid down in the provisions of section 200A as in force during the relevant period. That the levy of fees under section 234E of the Act, thus, cannot be a subject matter of process, while processing the statement under section 200A of the Act so far as the period prior to 01.06.15 is concerned.
The Ld. D.R., on the other hand, has relied upon the decision of the Hon’ble Bombay High Court in the case of “Rashmikant Kundalia vs. Union of India” dated 09.02.15 which decision has been relied upon by the Ld. CIT(A) in the impugned order wherein the jurisdictional Hon’ble Bombay High Court has upheld the constitutional validity of section 234E. The Ld. D.R. has further submitted that, even otherwise, the section 234E of the Act is an independent section and the AO (TDS) has otherwise jurisdiction to levy penalty for delay in filing TDS statements as provided under section 200(3) of the Act. It has therefore been contended that the AO(TDS) has rightly exercised his jurisdiction while making adjustment of the fees leviable under section 234E for non compliance/delay in filing the TDS statements as provided under section 200(3) of the Act.
We have heard the rival contentions and have also gone through the case laws cited before us. So far as the reliance of the Revenue on the decision of the Hon’ble Bombay High Court in the case of “Rashmikant Kundalia vs. Union of India” (supra) is concerned, we find that in the said case the constitutional validity of section 234E was challenged. The Hon’ble Bombay High Court has upheld the validity of the section 234E. However, the issue whether the fees leviable under section 234E can be adjusted while processing the TDS statements under section 200A of the Act in relation to the period
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prior to 01.06.15, has neither been raised before the Hon’ble Bombay High Court nor has been adjudicated. Hence, the reliance of the Revenue on the decision of the Hon’ble Bombay High Court in the case of “Rashmikant Kundalia vs. Union of India” (supra) so far as the issue is concerned, is of no help to the Revenue. One of the contentions raised before the Hon’ble Bombay High Court was that under the provisions of the Act, no appeal is provided for or from an arbitrary order passed under section 234E of the Act. The Hon’ble Bombay High Court observed that a right of appeal is not a matter of right but is a creature of statute and if the legislature deems it fit not to provide a remedy of appeal, so be it. The Hon’ble Bombay High Court has observed that even in such a scenario, the aggrieved party is not left remediless rather such aggrieved person can always approach the Hon’ble High Court in extraordinary equitable jurisdiction under article 226/227 of the Constitution of India, as the case may be.
However, in the cases before us, the grievance of the assessees is not against the levy of fees under section 234E of the Act independently rather, the issue is that while processing the TDS statements under section 200A of the Act, whether or not, the fees leviable under section 234E can be adjusted therein? No doubt, the order passed under section 200A is an appealable order before the Ld. CIT(A) under section 246 of the Act (w.e.f. 1.7.2012). The appellate order of the Ld. CIT(A) passed under 250 of the Act is further appealable before this Tribunal under section 253 of the Act. Hence, we do not find any illegality in the course adopted by the assessees of invoking the appealable jurisdiction of this Tribunal for redressal of their grievance on this issue.
So far as the issue whether for the period prior to 01.06.15, such adjustment can be made while processing the statements under section 200A of the Act is concerned, we find that the Amritsar Bench of the Tribunal in the case of “Sibia Healthcare Pvt. Ltd. vs. DCIT” (supra) has held that in the absence of enabling provision under section 200A prior to 01.06.15 such a power was not vested with the AO (TDS). The said decision has been further followed by the
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Ahmedabad Bench of the Tribunal in a recent decision dated 05.02.16 in the case of “Varun Radiators Pvt. Ltd. vs DCIT (CPC- TDS)” 2016- TIOL-436-ITAT-AHM. However, we have come across another decision of the Chennai Bench dated 10.07.15 in the case of “Smt. G. Indhirani & Others vs. DCIT, CPC-TDS” in ITA No.109/Mas/2015 & others wherein the Chennai Bench of the Tribunal has considered the decision of the Amritsar Bench of the Tribunal in the case of “Sibia Healthcare Pvt. Ltd. vs. DCIT” (supra) and has arrived at a similar finding that under section 200A, in the absence of enabling provision for the period before 01.06.15, the levy of fee under section 234E while processing the TDS statements was not permissible to the AO (TDS). However, the co-ordinate Chennai Bench of the Tribunal has also examined the other contention of the Revenue that section 234E is an independent section and the fees can be levied by the AO (TDS), independent of the provisions of section 200A, for the default/delay in filing the TDS statements as prescribed under section 200(3) of the Act. The Tribunal, considering the above submissions, held that if the assessee fails to pay the fees before filing the statement under section 200(3) of the Act, the Assessing Authority may pass a separate order levying of such a fee under section 234E of the Act, if the same is not barred by time limit or otherwise under any other provisions of law. The Assessing Authority, however, could not adjust the fees leviable under section 234E while processing the TDS statement under section 200A of the Act. However, after 01.06.15 the Assessing Authority is well within his limit to levy fee under section 234E of the Act even while processing the statement under section 200A and making adjustment. The relevant part of the decision of the Chennai Bench of the Tribunal for the sake of completeness is reproduced as under:
“4 The Ld.counsel invited our attention to Section 234A of the Act and submitted that when an assessee fails to deliver the statement within the prescribed time, the assessee is liable to pay by way of fee a sum of Z200/- for every day during such a period the failure continues. Referring to the word used in the section 234E "he shall be liable to pay", the Ld.counsel pointed out that the assessee is liable to pay fee. However, it does not empower the Assessing Officer to levy the fee. Section 234E(3) of the Act
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provides for payment of the fee before delivery of statement under Section 200(3) of the Act. Therefore, the fee has to be paid by the assessee voluntarily before filing the statement under Section 200(3) of the Act and the assessing authority has no power to levy the fee.
On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that Section 234E of the Act provides for payment of fee, if the assessee fails to deliver the statement as prescribed in Section 200(3) of the Act. Therefore, the Assessing Officer has every authority to levy fee either by a separate order or while processing the statement under Section 200A of the Act.
We have considered the rival submissions on either side and perused the relevant material on record. Section 200A of the Act provides for processing of the statement of tax deducted at source by making adjustment as provided in that Section. For the purpose of convenience, we are reproducing the provisions of Section 200A of the Act:-
"200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely :—
(a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely :— (i) any arithmetical error in the statement ; or (ii) an incorrect claim, apparent from any information in the statement
(b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement ;
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(c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest ;
(d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and
(e) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor:
Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.
Explanation - For the purposes of this sub-section, "art incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement-
(i) of an item, which is inconsistent with another entry of the same or some other item in such statement (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act;
(2) For the purposes of processing of statements under sub- section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.
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The Assessing Officer cannot make any adjustment other than the one prescribed above in Section 200A of the Act. By Finance Act, 2015, with effect from 01.06.2015, the Parliament amended Section 200A by substituting sub-section (1) of clauses (c) to (e).For the purpose of convenience, we are reproducing the amendment made in Section 200A by the Finance Act, 2015 as under:-
"In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:-
"(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;
(d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee;
(e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and
(f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor."
Therefore, it is obvious that prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act. The Parliament for the first time
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enabled the Assessing Officer to make adjustment by levying fee under Section 234E of the Act with effect from 01.06.2015. Therefore, as rightly submitted by the Ld.counsel for the assessees, while processing statement under Section 200A of the Act, the Assessing Officer cannot make any adjustment by levying fee under Section 234E prior to 01.06.2015. In the case before us, the Assessing Officer levied fee under Section 234E of the Act while processing the statement of tax deducted at source under Section 200A of the Act. Therefore, this Tribunal is of the considered opinion that the fee levied by the Assessing Officer under Section 234E of the Act while processing the statement of tax deducted at source is beyond the scope of adjustment provided under Section 200A of the Act. Therefore, such adjustment cannot stand in the eye of law.
The next contention of the assessee is that Section 234E of the Act says that the assessee "shall be liable to pay" by way of fee, therefore, the assessee has to voluntarily pay the fee and the Assessing Officer has no authority to levy fee. The argument of the Ld.counsel for the assessee is very attractive and fanciful. However, we do not find any substance in that argument. When Section 234E clearly says that the assessee is liable to pay fee for the delay in delivery of the statement with regard to tax deducted at source, the assessee shall pay the fee as provided under Section 234E(1) of the Act before delivery of the statement under Section 200(3) of the Act. If the assessee fails to pay the fee for the periods of delay, then the assessing authority has all the powers to levy fee while processing the statement under Section 200A of the Act by making adjustment after 01.06.2015. However, prior to 01.06.2015, the Assessing Officer had every authority to pass an order separately levying fee under Section 234E of the Act. What is not permissible is that levy of fee under Section 234E of the Act while processing the statement of tax deducted at source and making adjustment before 01.06.2015. It does not mean that the Assessing Officer cannot pass a separate order under Section
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234E of the Act levying fee for the delay in filing the statement as required under Section 200(3) of the Act.
The contention of the assessee can also be examined in the light of the provisions of Indian Penal Code. Section 396 of Indian Penal Code provides for punishment for dacoity with murder. The punishment is imprisonment for life or rigorous imprisonment for a term which may be extended to ten years and also liable to fine. For the purpose of convenience, we are reproducing Section 396 of Indian Penal Code, hereunder:-
"396. Dacoity with murder - If any one of five or more persons, who are conjointly committing dacoity, commits murder in so committing dacoity, every one of those persons shall be punished with death, or imprisonment for life, or rigorous imprisonment for a term which may extend to ten years, and shall also be liable to fine."
Similarly, Section 408 of Indian Penal Code provides for criminal breach of trust by a clerk or servant. In addition to imprisonment which may extend to seven years, the accused who is found to be guilty shall also be liable to fine. Similarly, the other provisions of Indian Penal Code also say that in addition to imprisonment, the accused shall be liable to pay fine. The language used by the Parliament in Indian Penal Code is "shall also be liable to fine". This means that the Magistrate or Sessions Judge, who tries the accused for an offence punishable under the provisions of Indian Penal Code, in addition to punishment of imprisonment, shall also levy fine. If the contention of the Ld.counsel for the assessees is accepted, then the Magistrate or Sessions Judge, as the case may be, who is trying the accused for the offence punishable under Indian Penal Code, may not have authority to levy fine.
It is well known principle that the fine prescribed under the Indian Penal Code has to be levied by the concerned Magistrate or Sessions Judge who is trying the offence
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punishable under the Indian Penal Code. Therefore, the contention of the Ld.counsel that merely because the Parliament has used the language “he shall be liable to pay by way of fee", the assessee has to pay the fee voluntarily and the Assessing Officer has no authority to levy fee could not be accepted. No one would come forward to pay the fee voluntarily unless there is a compulsion under the statutory provision. The Parliament welcomes the citizens to come forward and comply with the provisions of the Act by paying the prescribed fee before filing the statement under Section 200(3) of the Act. However, if the assessee fails to pay the fee before filing the statement under Section 200(3) of the Act, the assessing authority is well within his limit in passing a separate order levying such a fee in addition to processing the statement under Section 200A of the Act. In other words, before 01.06.2015, the assessing authority could pass a separate order under Section 234E levying fee for delay in filing the statement under Section 200(3) of the Act. However, after 01.06.2015, the assessing authority is well within his limit to levy fee under Section 234E of the Act even while processing the statement under Section 200A and making adjustment.
In view of the above discussion, this Tribunal is of the considered opinion that the Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in so far as levy of fee under Section 234E is set aside and fee levied is deleted. However, the other adjustment made by the Assessing Officer in the impugned intimation shall stand as such.
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In the result, all the appeals filed by the assessees are allowed as indicated above.”
Respectfully following the above proposition laid by the Chennai Bench of the Tribunal in the case of “Smt. G. Indhirani &Others vs. DCIT, CPC-TDS” (supra) after duly considering the decision ofthe Amritsar Bench of the Tribunal in the case of “Sibia Healthcare Pvt. Ltd.vs. DCIT” (supra), we hold that the AO (TDS) in the above captioned appeals has exceeded his jurisdiction in making adjustments of fees leviable under section 234E while processing the TDS statements under section 200A of the Act. Therefore, the adjustments made by the lower authorities of fees leviable under section 234E while processing the intimation under section 200A are hereby set aside.”
Ostensibly, the Bench has held that the impugned order passed by the Assessing Officer u/s 200A of the Act even prior to 1.6.2015 is an appealable order. Thus, the said objection of the CIT(A) in the impugned order has also been repudiated. Insofar as the justification for levy of late fee u/s 234E of the Act prior to 1.6.2015 in an intimation u/s 200A of the Act is concerned, the Bench has specifically held that prior to 1.6.2015 such power was not available to the Assessing Officer while framing intimation u/s 200A of the Act. The aforesaid discussion also clearly reveals that the judgment of the Hon'ble Bombay High Court in the case of Rashmikant Kundalia (supra) has been duly considered, which has already been referred to by the CIT(A). The detailed discussion, which is reproduced above, clearly supports the stand of the assessee before us.
We may also make a reference to another detailed order passed by the Pune Bench of the Tribunal in the group of cases of Gajanan
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Constructions & Ors. (supra) wherein also similar inference has been drawn, namely, that prior to 1.6.2015 the Assessing Officer was not empowered to charge fee prescribed u/s 234E of the Act while framing an intimation u/s 200A of the Act.
Notably, the Pune Bench of Tribunal has also referred to the judgment of the Hon'ble Karnataka High Court in Writ Petition nos. 2663-2674/2015(T-IT) & Ors. in Sri Fatheraj Singhvi & Ors vs. Union of India & Ors. dated 26.8.2016 wherein the intimation issued u/s 200A of the Act levying fee for delay in filing of TDS statement as per Sec. 234E of the Act has been quashed. The Pune Bench of Tribunal has referred to the judgment of Hon'ble Karnataka High Court in the following words:-
“33. We further find that in recent judgment dated 26.08.2016, the Hon’ble Karnataka High Court in Writ Appeal Nos.2663-2674/2015(T- IT) & Ors in Sri Fatheraj Singhvi & Ors Vs. Union of India& Ors has quashed the intimation issued under section 200A of the Act levying the fees for delayed filing the TDS statements under section 234E of the Act. The Hon’ble High Court notes that the Finance Act, 2015 had made amendments to section 200A of the Act enabling the Assessing Officer to make adjustments while levying fees under section 234E of the Act was applicable w.e.f. 01.06.2015 and has held that it has prospective effect. Accordingly, the Hon’ble High Court held that “intimation raising demand prior to 01.06.2015 under section 200A of the Act levying section 234E of the Act late fees is not valid”. However, the Hon’ble High Court kept open the issue on constitutional validity of section 234E of the Act. We have already referred to the decision of Hon’ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) in this regard, wherein the constitutional validity of section 234E of the Act has been upheld.”
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The Pune Bench has duly noted that the Hon'ble Karnataka High Court held that intimation u/s 200A of the Act raising demand prior to 1.6.2015 of the late fee envisaged u/s 234E of the Act is not valid. In view of the aforesaid precedents, in our view, there is no justification for the impugned orders of income-tax authorities.
Insofar as the reliance placed by the ld. DR on the judgment of the Hon'ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan (supra) is concerned, the same, in our view, does not help the Revenue. Firstly, the said decision is primarily with regard to the constitutional validity of the late fee chargeable in pursuance to Sec. 234E of the Act, which is not the subject matter of controversy before us; secondly, it is noticeable that even if the judgment of the Hon'ble Rajaasthan High Court supports the levy of late fee u/s 234E of the Act in the present situation, but clearly the same is contrary to the judgment of the Hon'ble Karnataka High Court in the case of Sri Fatheraj Singhvi & Ors (supra). Under these circumstances, there being two contrary views, and in the absence of any decision of the jurisdictional High Court, we are inclined to follow the view which is favourable to the assessee following the ratio of judgment of Hon'ble Supreme Court in the case of Vegetable Products Ltd., 88 ITR 192 (SC). In view of the aforesaid discussion and the precedents which are directly on the point, we hold that the levy of late fee of Rs.13,200/- u/s 234E of the Act in an intimation passed u/s 23.12.2013, being prior to 1.6.2015, is beyond the scope and ambit of the then existing provisions of Sec. 200A of the Act.
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In view of the aforesaid, the order of CIT(A) is set-aside and the late fee of Rs.13,200/- charged u/s 234E of the Act is deleted. Thus, the appeal of assessee in ITA No. 4739/Mum/2016 is allowed.
Insofar as appeals being ITA Nos. 4745/Mum/2016, 4743/Mum/2016, 4747/Mum/2016 & 4748/Mum/2016 are concerned, it was a common point between the parties that the facts and circumstances in the said appeals are pari materia to those considered by us in ITA No. 4739/Mum/2016 in the case of M/s. Milestone Space, therefore, our decision therein shall apply mutatis mutandis to the said appeals also.
Resultantly, the captioned appeals of the assessees are allowed as above.
The above decision was pronounced in the open court in the presence of both the parties at the conclusion of hearing on 28th February, 2017.
Sd/- Sd/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Date : 28th February, 2017 *SSL* Copy to : 1) The Appellant 2) The Respondent 3) The CIT(A) concerned
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4) The CIT concerned 5) The D.R, “J” Bench, Mumbai 6) Guard file By Order
Dy./Asstt. Registrar I.T.A.T, Mumbai