DISTRICT PROJECT OFFICE KOZHIKODE,KOZHIKODE vs. ACIT, CPC TDS, KOZHIKODE, KOZHIKODE

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 220/Coch/2021 Assessment Year : 2014-15 District Project Office, Kozhikode, KP 19841, Koliyot The Assistant building, Commissioner of Katcheri Village, Income Tax, Balussery road, CPC-TDS, Karaparamba, Vs. Kozhikode. Kozhikode – 673 010. TAN: CHND01446E APPELLANT RESPONDENT Assessee by : None : Smt J M Jamuna Devi, Sr. Revenue by AR Date of Hearing : 15-09-2022 Date of Pronouncement : 15-09-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 15/09/2021 passed by the NFAC, Delhi for A.Y. 2014-15 on following grounds of appeal: “1. Staff employed by assessee are on deputation basis from various sections of Education Department of Kerala government. Their service with the assessee ends after 5 years or whenever they are called back from their respective section of the department. Remaining employees working with the assessee are on contract basis and their appointment may or may not be renewed. As there is no

Page 2 of 7 ITA No. 220/Coch/2021 permanent staff looking after administrative matters of the assessee the new appointees who frequently change are unable to keep track of various important tasks of the assessee. 2. There is no deliberate inaction or negligence on the part of the assessee and the fact that the assessee had been electronically filing TDS returns for subsequent quarters and accessing details of TDS statements thereafterdoes not point out that the assessee was aware of the lapses and intentionally abstained from acting on order imposing late fee. 3. Documentary evidence for substantiating grounds for condonation of delay would include extracts of attendance register maintained by the assessee during the period of delay which will reaffirm the appeal grounds given above. 4. Adjudication on merits will result in deletion of late fee imposed under Section 234E. It is only on account of delay in appeal filing not being condoned that the assessee is losing out on relief which it would have obtained had the appeal been filed within the time limit prescribed. 5. In view of the above, we pray before you that the appeal may please be allowed.” 2. Brief facts of the case are as under: 2.1 The Ld.CIT(A) has noted that assessee deducted TDS pertaining to A.Y. 2013-14 and filed Quarterly eTDS return in form 24Q for third Qtr was filed on 31/03/2014. The same was processed by the CPC, Ghaziabad on 18/04/2014 wherein a late fee of Rs.15,000/- was levied u/s. 234E and intimation u/s. 200A of the Act was issued to the assessee. Against this the assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) observed that there was a delay of 1535 days in filing the appeal. 2.2 The Ld.CIT(A) dismissed the appeal filed by assessee for the year under consideration by holding it as not maintainable and defective. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before us now.

Page 3 of 7 ITA No. 220/Coch/2021 5. The Ld.AR submitted that the Ld.CIT(A) dismissed the appeal by not condoning the delay of 1535 days by holding that there was no sufficient cause. The Ld.AR submitted that the post of person dealing with TDS e-return was vacant and as the Government had not appointed anyone, the delay in filing the TDS return occurred. He also submitted that inadvertently the plea of condonation of delay was sought as a ground in Form 35 filed before the Ld.CIT(A). 5.1 On merits, 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 1-6-2015, 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. Therefore he submitted that the issue raised by way of charging the fees under section 234E is not valid and the same is to be deleted. 5.2 The Ld.Sr.DR relied on the orders passed by the authorities below. She 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. 6. 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

Page 4 of 7 ITA No. 220/Coch/2021 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 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

Page 5 of 7 ITA No. 220/Coch/2021 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. 22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is 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

Page 6 of 7 ITA No. 220/Coch/2021 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 on merits by granting proper opportunity of being heard to the assessee. 7. The Ld.CIT(A) is directed to provide the assessee with the order passed u/s. 200A of the Act. 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 open court on 15th September, 2022.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Cochin, Dated, the 15th September, 2022. /MS /

Page 7 of 7 ITA No. 220/Coch/2021 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Cochin 3. CIT 6. Guard file By order

Assistant Registrar, ITAT, Cochin