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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
All these appeals are filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [the Ld. CIT(A)] in certain orders dated 4/8/2022 arising out of the orders passed U/s. 2 200A of the Income Tax Act, 1961 [the Act]. Since the issues involved in all the appeals are identical, for the sake of convenience, these appeals are clubbed, heard together and disposed off in this consolidated order.
At the outset, it is noted from the record that there is a delay of 4 days in filing all the instant appeals before the Tribunal. In this regard, the Ld. Authorized Representative brought our attention to the affidavit filed by the and read out the contents of the affidavit which read as under:
“1……..
2………During the relevant period the chartered accountant was busy in attending to tax audits and therefore he could not prepare the appeal in time.
3. Thus, the delay of 4 days in filing the appeal was beyond the control of the appellant and was neither intentional nor deliberate. Hence, it is prayed that the said delay of 4 days in filing the appeal may kindly be condoned in the interest of substantial justice.”
After hearing the Ld. AR and on perusal of the contents of the affidavit filed by the assessee we are of the considered view that the delay of 4 days in filing all the present appeals beyond the prescribed time limit is not attributable to the assessee nor deliberate. Therefore, we hereby condone the delay of 4 days in 3 filing all the instant appeals and proceed to adjudicate the appeals on merits.
In all the instant appeals, since the assesse has raised three identical grounds, the grounds raised by the assessee for the AY 2015-16 in are extracted herein below for the sake of reference:
“1. The CPC-TDS is not correct in levying the late filing fee U/s. 234E of the Income Tax Act, 1961.
2. There was a reasonable cause on the part of the appellant Educational Society which resulted in delay in filing the TDS statement and therefore, the levy of late fee would cause genuine hardship to the assessee and hence the same ought to have been deleted.
3. Any other ground that may be urged at the time of hearing of the appeal.”
The brief facts of the case are that for the FY 2014-15, 2015-16 and 2016-17 relevant to the AYs 2015-16, 2016-17 & 2017-18, the assessee has filed TDS Quarterly returns in Form No.24Q and 26Q beyond due date specified under the Act.
Subsequently, the Ld. AO assessed TDS quarterly returns filed by the assessee and passed intimation orders U/s. 200A of the Income Tax Act, 1961 for the AYs 2015-16, 2016-17 & 2017-18 and levied late filing fee U/s. 234E of the Act on account of 4 delayed filing of the TDS returns for the AYs under consideration.
Aggrieved by the orders of the Ld. AO, the assessee filed appeals before the Ld. CIT(A) belatedly beyond the prescribed time limit specified under the Act. Before the Ld. CIT(A), the assessee has filed petitions explaining the belated filing of the TDS returns with a prayer for condonation of delay in all the appeals. Before the Ld. CIT(A) the assessee has also submitted that the delay in filing the appeals before the First Appellate Authority may be condoned to advance substantial justice on the ground that the issues involved on merits regarding levy of late filing fee U/s. 234E of the Act is now covered in favour of the assessee by various decisions as per which there is no provisions under the Act to levy late filing fee before insertion of section 200A by Finance Act, 2015 w.e.f 1/6/2015. The Ld. CIT (A) dismissed the appeals of the assessee by holding that the explanation given by the assessee for late filing of the appeal before the First Appellate Authority does not constitute “sufficient cause”. To support his view, the Ld. CIT (A) relied on various decisions which find a place in the order of the Ld. CIT(A). Aggrieved by the orders of the Ld. CIT (A), the assessee is in appeal before the Tribunal for the AYs 2015-16, 2016-17 & 2017-18 raising the grounds mentioned herein above.
Before us, at the outset, it is the contention of the Ld. Authorized Representative [Ld. AR] that the enabling provision for computation of fee while processing the statements was inserted in section 200A only w.e.f 1/6/2015 and therefore, the charging section i.e., section 234E cannot be enforced prior to 1/6/2015.
The Ld. AR further submitted that the amended provision applies for all the returns pertaining to the period after 1/6/2015 and not for the returns pertaining to the period prior to 01/06/2015 notwithstanding the fact that the returns pertaining to the period prior to 01/06/2015 were filed after 01/06/2015 or processed after 01/06/2015. The Ld. AR further submitted that in the present cases, the due date for filing the TDS returns falls before the specified date of 1/6/2015 and therefore section 234E cannot be enforced since it is prior to 1/6/2015. The Ld. AR therefore submitted that the Ld. Revenue Authorities erred in levying and confirming the levy of late fee U/s. 234E of the Act while processing the TDS return U/s. 200A of the Act for the relevant period under consideration. In support of his view the Ld. AR relied on the judgment of the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India [2016] 73 taxmann.com 252 (Karnataka); judgment of the Hon’ble Kerala
6 High Court in the case of United Metals vs. ITO (TDS) reported in [2022] 137 taxmann.com 115 (Kerala); decision of the Pune Bench of the Tribunal in the case of Medical Superintendent Rural Hospital, Nashik vs. DCIT, CPC (TDS), Ghaziabad in to 661/Pun/2018, dated 25/10/2018. The Ld. AR therefore pleaded that the decision of the Ld. Revenue Authorities may be set-aside and the assessee may be granted relief by deleting the late fee levied U/s. 234E of the Act.
On the other hand, Ld. Departmental Representative heavily relied on the orders of the Ld. Revenue Authorities specifically with respect to the levy / imposition of late fee u/s. 234E of the Act by the Ld. AO. It is the submission of the Ld. DR that since the assessee filed its TDS statements beyond the stipulated time as per the TDS provisions, late fee was levied on account of default in furnishing the statements beyond the prescribed time limit under the Act. The Ld. DR further submitted that the fee charged U/s. 234E is not in lieu of penalty as the fee charged under section 234E is not in the nature of penalty and is a fee which the deductor shall be liable to pay in the event of delay in filing the TDS statements as prescribed. The Ld. DR further submitted that the Fee charged U/s. 234E is a fixed fee charged
7 in the case of statements are rendered beyond the stipulated time which is happened in the instant case. The Ld. DR also submitted that it is rightly observed by the Hon’ble Bombay High Court in the case of Rashmikant Kundalia vs. Union of India (supra) “because of late filing of TDS statements Department is overburdened with extra work which is otherwise not required if the TDS statements are furnished within the prescribed time limit.”
The Ld. DR also heavily relied on the decision of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. Union of India (supra) for the proposition that “a machinery provision (section 200A) cannot override the substantive provision of law”.
The Ld. DR therefore pleaded that since the action taken by the Ld. Revenue Authorities is in accordance the provisions of the Act and also in accordance with law, as discussed above, and hence the order of the Ld. Revenue Authorities need not be disturbed / interfered with.
We have heard both the sides, perused the material available on record as well as the orders of the Ld. Revenue Authorities. The main question that arises in this appeal is whether TDS returns pertaining to the period prior to 01/06/2015, if filed after 01/06/2015 and processed after
8 01/06/2015 whether they attract the amended provisions of Finance Act, 2012 and the specific provision for levy of “fee” under section 234E of the Act which was inserted w.e.f 1/6/2015. In the present case the due date for filing its TDS statement for the Q1 of FY 2014-15 in Form No. 26Q is 30/06/2014 which falls within the specified date of 1/6/2015 ie., insertion of the new provisions but the assessee filed its TDS returns on 27/11/2015 ie., beyond the due date for filing the TDS returns. The Ld. AO treating this filing / furnishing of TDS statement as a default since it is not filed within the stipulated time as per the TDS provisions and imposed late fees u/s. 234E amounting to Rs. 1,00,000/- and passed order U/s. 200A of the Act dated 01/12/2015. On appeal, the Ld. CIT(A) dismissed the appeal of the assessee due to belated filing of the appeal and held that the reasons given by the assessee do not constitute sufficient and reasonable cause for the belated filing of the appeals. Aggrieved by the order of the Ld. CIT(A), the assessee filed the present appeals.
9 9. In the present case, to file the TDS return for the FY 2014- 15, Quarter-1 relevant to the AY 2015-16 is 30/06/2014 but the assessee filed the return on 27/11/2015. In our considered view since the enabling provision for computation of fee while processing the statements was inserted in section 200A only w.e.f 1/6/2015 and therefore, the charging section i.e., section 234E cannot be enforced to the cases prior to 1/6/2015. Further, we are of the view that the amended provision applies for all the returns pertaining to the period after 1/6/2015 and not for the returns pertaining to the period prior to 01/06/2015 notwithstanding the fact that the returns pertaining to the period prior to 01/06/2015 were filed after 01/06/2015 or processed after 01/06/2015.
The Hon’ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India [2016] 73 taxmann.com 252 (Karnataka) observed that “one may at the first blush say that, since the section 234E is a charging section for fee, the liability was generated or had accrued, if there was failure to deliver or cause to be delivered the statement/s of TDS within the prescribed time. But section 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement……”. The observations and relevant held portions in the judgment of the Hon’ble Karnataka High Court (supra) are extracted herein below for reference:
"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 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 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."
Further, the Hon’ble Kerala High Court in the case of United Metals vs. ITO (TDS) reported in [2022] 137 taxmann.com 115 (Kerala) observed as under:
“Amendment in section 200A by way of incorporating sub-clause (c) to clause (f) which referred to computation of fee payable under section 234E was brought into effect from 1/6/2015, therefore, demand raised for levying late fee under section 234E for period prior to 1/6/2016 would not be sustainable.”
The Pune Bench of the Tribunal vide its order dated 25/10/2018 in the case of Medical Superintendent Rural Hospital, Nashik vs. DCIT, CPC (TDS) (supra), has observed as under:
“16…………..the Assessing Officer while processing TDS returns / statements for the period prior to 01/06/2015 was not empowered to charge late filing fees under section 234E of the Act, even in the cases where such TDS returns were filed belatedly after June, 2015 and even in cases where the Assessing Officer processed the said TDS returns after June, 2015. Accordingly……………the demand raised by charging late filing fee u/s 234E of the Act is not valid and the same is deleted.”
Now, coming to the facts of the instant case before me, the assessee had deducted tax at source U/s. 195 of the Act but belatedly filed the returns on 27/11/2015 under the bonafide intention that the amended provisions will not attract for levy of 12 late fee U/s. 234E of the Act since the due date for filing the returns for Q1 of FY 2014-15 is 30/06/2014. Since the period under consideration is the 1st Quarter of FY 2014-15 ie., prior to the amendment to section 200A(1) of the Act wherein clause (c) was inserted w.e.f 01/06/2015 and the assessee had already deposited the tax at source prior to the amendment to section 200A(1), the levy of late fee u/s. 234E for default in furnishing the statement beyond the stipulated time is not sustainable in law. Further, respectfully following the ratio laid down in the judgment deliverd by the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi (supra); judgment of the Kerala High Court in the case of United Metals (supra) and various decisions of the Tribunal (supra), I am of the view that the levying of late fee under section 234E for the period prior to 1/6/2015 is not sustainable in law.
Thus, in the instant case since the period of default was before the said date ie., 01/06/2015, there is no merit in charging late filing fee U/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 154 r.w.s 200A of the Act Thus, the grounds raised by the assessee are allowed.
With respect to 192 & 193/Viz/2022, the grounds of appeal as well as the issue raised in these three appeals are identical to that the of the grounds and the issue raised in the appeal ITA No. 190/Viz/2022, which is adjudicated in the above paragraphs of this order, our decision given thereof mutatis mutandis applies to the present appeals (ITA Nos. 191, 192 & 193/Viz/2022) also. Accordingly, the appeals filed by the assessee are allowed.
In the result, all the four appeals filed by the assessee are allowed.
आयकर अपील सं./ 195, 196 & 197/Viz/2022 (AYs’ 2016-17 & 2017-18)
This appeal filed by the assessee is against the orders of the Ld. CIT(A), NFAC, Delhi, dated 04/08/2022 for the AY 2016-17 & 2017-18 arising out of the order passed u/s. 200A of the IT Act, 1961, dated 15/02/2018 & 15/12/2018.
The crux of the issue involved in this appeal is whether the return pertaining to the period prior to 01/06/2015 but filed after 01/06/2015 and processed after 01/06/2015 attract the 14 amended provisions of section 200A read with section 234E inserted w.e.f 01/06/2015 which is a specific provision for levy of fee for default in furnishing the TDS statements belatedly.
In the present cases the assessee filed its TDS statement for the 4th Quarter of FY 2015-16 & 2016-17 in Form No. 26Q & 24Q on 12/02/2018. Accordingly, the Ld. AO vide order passed U/s. 200A, imposed late fees U/s. 234E of the Act. In these cases since the assessee has filed its TDS returns on 12/02/2018 which is after the date of insertion of specific provision for levy of late fee U/s. 234E ie., 01/06/2015. Therefore, the action taken by the Ld. AO in levying the late fee for default in furnishing the TDS statement beyond the stipulated time is in accordance with law. Therefore, we have no hesitation to come to a conclusion that the orders of the Ld. Revenue Authorities invoking the provisions of section 234E in order to levy late fee for default in furnishing the TDS statement beyond the stipulated time is in accordance with law and accordingly the grounds raised by the assessee are hereby dismissed.
In the result, four appeals filed by the assessee are dismissed.
Pronounced in the open Court on the 15th December, 2022.
Sd/- Sd/- (एस बालाकृ�णन) (दु�वू� आर.एल रे�डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सद�य/ACCOUNTANT MEMBER �या�यकसद�य/JUDICIAL MEMBER Dated :15.12.2022 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- 1. �नधा�रती/ The Assessee– Mohammed Vaziruddin Educational Society, D.No. 75-6-12, Prakash Nagar, Rajahmundry, Andhra Pradesh. 2. राज�व/The Revenue –Income Tax Officer, 4th & 5th Floor, Shiva Towers, D.No. 46-20-15, Danavaipeta, Rajamahendravaram.