M/S CHILL POINT ENGINEERS PVT LTD,CHANDIGARH vs. DEPUTY COMMISSIONER OF INCOME TAX, GAZIABAD

PER BENCH

All the above appeals have been filed by the assessees against

separate orders of CIT(A)-I Chandigarh dated 31.03.2017 pertaining to

2013-14 assessment year.

involved in all the appeals was identical, relating to levy of fees u/s

234E of the Income Tax Act, for delay in filing TDS returns. Therefore

all the appeals were heard together and are being disposed of by way of

this common order.

that an intimation u/s 200A of the Act was made to the assessees on

processing TDS returns filed by them, levying thereunder fees u/s 234E

for late filing of the TDS returns. The details of the said intimations

passed in each of the above cases is as under :

S.NO. ITA No. Name of the assessee Date of Fees levied Intimation u/s 234E u/s 200A (Rs.) 1. 961/2017 M/s Chill Point Engineers 10.01.2014 12,200/- Pvt. Ltd. Chandigarh 2. 962/2017 Globizz Overseas Consultants 13.03.2014 43,149/- Pvt.Ltd., Chandigarh 3. 1146/2017 M/s Kohli Iron & Stees P.Ltd. 11.01.2014 46,400/- Chandigarh 4. 1147/2017 M/s Kohli Iron & Stees P.Ltd. 11.01.2014 46,400/- Chandigarh

assessees, appeal was filed before the CIT(A) who dismissed all the

above appeals holding them to be non maintainable for the reason that

no appeal lay against levy of fees u/s 234E. The ld. CIT(A) relied upon

the decisions of the Hon'ble Bombay High Court in the case of

Rashmikant Kundalia Vs Union of India 373 ITR 268 and the Hon'ble Rajasthan High Court in the case of Dundlod Shikshan Sansthan v.

Union of India [2015] 63 taxmann.com 243 in this regard. Aggrieved by

the same, the assessee has come up in appeal before us raising the

following common grounds in all the appeals:

CIT(A) through his order dated 31.03.2017 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961.

assessee stated that the fees in the present case was levied while

processing the TDS returns u/s 200A of the Act, prior to 01.06.2015,

and that as per the provisions of Section 200A of the Act, which existed

on the date when the above returns were processed, no adjustment on

account of fees u/s 234E could be made while processing the said

returns u/s 200A of the Act. The ld. counsel for the assessee pointed

out that the mandate to make such adjustment was provided by the

Statute only w.e.f. 01.06.2015 by way of an amendment made to

Section 200A by the Finance Act, 2015. The ld. counsel for the

assessee, therefore, stated that the adjustment made in the present

case of levying fees u/s 234E while processing the TDS return u/s 200A

of the Act was bad in law. The ld. counsel for the assessee pointed out

that the ITAT in a number of cases had deleted fees levied in identical

circumstances holding that prior to 01.06.2015, fees u/s 234E could

not be charged by way of making adjustment while processing TDS

return u/s 200A of the Act. Our attention was drawn to the following

case laws in support of the above proposition :

High Court in the case of Rajesh Kourani Vs UOI reported in 83

Taxman.com 137/ 297 CTR 502 had held that the amendment made to

Section 200A authorizing the AO to make adjustment of the fees to be

levied u/s 234E while processing TDS returns,w.e.f. 01-06-2015, was

retrospective in nature. Copy of the order was placed before us. Ld. DR,

therefore, stated that the fees in the present case had been rightly

charged by way of adjustment made while processing return u/s 200A

of the Act.

Karnataka High Court in the case of Fatheraj Singhvi & ors. Vs Union of

India & Ors.289 CTR 602 (Kar) had ruled in favour of the assessee, that

prior to 01.06.2015, no adjustment on account of fees u/s 234E could

be made by the AO while processing returns u/s 200A of the Act. The

ld. counsel for the assessee further stated that as per the established

principles of interpretation of Statute, where two views were possible on

an issue, the view favourable to the assessee was to be taken. In this

regard, ld. counsel for the assessee relied upon the decision of Apex

Court in the case of CIT Vs Poddar Cement Pvt. Ltd. (1997) 226 ITR 625

and CIT Vs Vegetable Products Ltd. 88 ITR 192 (1973).

The ld. counsel for the assessee further stated that the CIT(A) had

erred in dismissing the appeal stating that it is non-maintainable. Ld.

counsel for the assessee pointed out that intimation made u/s 200A are

appealable to the CIT(A) as per provisions of Section 246A of the Act,

which outlines the appealable orders before the Commissioner (Appeals)

and it is against this intimation that the assessee had filed appeal to

the CIT(A).

authorities below and also gone through the documents and orders

referred to before us by both the parties. The issue in the present

appeal pertains to levy of fees u/s 234E on account of late filing of TDS

returns. The facts on record are that the said fees were levied while

processing the TDS returns filed by the assessee as per the provisions

of Section 200A of the Act and further that fees in all the above cases

was levied prior to 01.06.2015. Further, we have noted that the

provisions of Section 234E for levy of fees on account of late filing of

TDS returns was brought on the Statute vide Finance Act, 2012 w.e.f.

01.07.2012 and also that Section 200A, which deals with the

processing of TDS returns, gave no mandate to make adjustments on

account of levy of fees u/s 234E prior to 01.06.2015 and that the same

was brought on the Statute only vide Finance Act, 2015 w.e.f.

01.06.2015. The other relevant Section taken note of is the provisions

of Section 246A which lists the orders against which appeal lies to the

CIT(A) and which we find that the same includes intimations passed

u/s 200A of the Income Tax Act for the relevant assessment year.

to adjudicate the issue before us. The ld. CIT(A), as we find, dismissed

assessees’ appeal holding them to be non maintainable and the reason

for the same was the observations in the orders passed by the Hon'ble

Bombay High Court and the Hon'ble Rajasthan High Court that no

appeal lies against levy of fees u/s 234E. We are not in agreement with

the ld. CIT(A) on this issue. As pointed out above, the fees u/s 234E in

the present case was levied in the intimations made u/s 200A of the

Act. Such intimations are appealable before the CIT(A) as per the

provisions of Section 246A of the Act and in the present case, the

assessee had filed appeals against these intimations made u/s 200A.

Therefore, all the appeals were maintainable and the ld. CIT(A) had

wrongly dismissed the assessees’ appeals holding them to be non-

maintainable. As for the reliance placed by the CIT(A) on the orders

passed by the Hon'ble Bombay High Court and Hon'ble Rajasthan High

Court, we find that the said judgements have been mis-interpreted by

the CIT(A). In both these cases, the constitutional validity of Section

234E was challenged before the Hon'ble High Courts and one of the

pleas taken by the counsels of the assessees against the introduction of

the said Section in the Statute was that there was no provision for filing

appeals against the orders passed levying fees u/s 234E. It was in this

context that the Hon'ble High Court held that even if no appeal lay

against levy of fees u/s 234E, the remedy of writ still remained with the

aggrieved parties and therefore, the constitutional validity of the said

Section could not be challenged on this ground. It may be noted that

the observation of the Hon'ble High Courts was in the context of no

appeal lying against the levy of fees u/s 234E per-se, but where fees are

levied by way of adjustment made in intimations u/s 200A, the said

intimations are appealable as per the Statute before the CIT(A). In

such cases, the levy of fees is challenged by way of filing appeals

against the intimations passed against Section 200A and this is the

distinguishing fact between the observations made by the Hon'ble

Courts where they observed that no appeal lay against levy of fees u/s

234E. The Hon'ble High Courts, obviously were not seized with the

adjustment of levy of fees u/s 234E in intimations made u/s 200A and

therefore, this observation of the Hon'ble High Court cannot be read to

be in the context of adjustment made on account of levy of fees u/s

234E in the intimations passed u/s 200A which, otherwise, are

appealable before the CIT(A). In view of the above, the order passed by

the ld. CIT(A), we hold, is not as per law.

argument of the ld. counsel for the assessee that prior to 01.06.2015,

there was no mandate, as per the Statute, to make any adjustment on

account of levy of fees u/s 234E while processing TDS returns u/s

200A. We have taken note of the order of the Hon'ble Gujarat High

Court holding the amendment made to Section 200A w.e.f. 01.06.2015,

giving power to make adjustment on account of fees u/s 234E while

processing returns u/s 200A, to be retrospective in nature, stating that

this power given to the AO is a machinery provision while the

substantive provision of the power to levy fees u/s 234E was always

there on the Statute from 01.06.2012. But at the same time, we note

that the Hon'ble Karnataka High Court held that levy of fees u/s 234E

while processing returns, TDS u/s 200A prior to 01.06.2015 was

without any authority of law. With two divergent views of the Hon'ble

High Courts on the issue and in the absence of any decision by the

jurisdictional High Court, we concur with the ld. counsel for the

assessee that as per the well accepted rule of construction if two

reasonable constructions of a statute are possible the construction

which favours the assessee must be adopted. In view of the same,

respectfully following the decision of the Karnataka High Court in the

case of Fatheraj Singhvi (supra), we hold that the fees levied in all the

present cases u/s 234E prior to 01.06.2015 in the intimations made

u/s 200A was without authority of law and the same is, therefore,

directed to be deleted. In view of the above, all the appeals of the

assessees stand allowed.

Order pronounced in the Open Court on 27.04. 2018.

Sd/- Sd/-

(SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER

‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

Asstt. Registrar ITAT,Chandigarh.