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Income Tax Appellate Tribunal, RAIPUR BENCH
Before: SHRI RAVISH SOOD & DR. DIPAK P. RIPOTE
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.291/RPR/2016 िनधा�रणवष� / Assessment Year : 2013-14 District Marketing Officer, The ITO (TDS), Chhattisgarh State Co-operative Vs Raipur (CG). Marketing Federation Limited, Near Hotel Atithi, Near Railway Station, Jagdalpur (CG). TAN: JBPC0191B Appellant/Assessee Respondent / Revenue Applicant by Shri Nikhilesh Beghani Respondent by Shri G.N. Singh Date of hearing 03/11/2022 Date of pronouncement 19/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the assessee against the order of ld.Commissioner of Income Tax(Appeals)-I, Raipur, dated 01.03.2016for Assessment Year 2013-14emanating from the order of ITO (TDS) u/s 201(1) and 201(1A) of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’)dated 18.03.2014. The assessee has raised the following ground of appeal: “GROUND NO.I That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax (Appeals) ("the Ld.CIT(A)") is highly unjustified, bad in law, without providing reasonable opportunity of being heard and not in accordance with the provisions of law. It is
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation prayed that the Appellate Order passed under section 250 of the Act may please be cancelled on this ground alone. GROUND NO.II On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has erred in confirming the Order of the Learned Income Tax Officer (TDS) ("the AO ) in treating the appellant as "an assesses in default" in respect of payment to persons whose PAN are not available holding tax on same as deductible at the higher rate of 20% which is highly illegal/ unjustified, unwarranted, not proper on facts and not in accordance with the provisions of law. Hence, it is prayed that the demand of Rs.14,59,663/- may please be deleted. GROUND NO.III On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has erred in confirming the Order of the AO in treating the appellant liable for deduction of tax at source as per section 194-C of the Act at the rate of 2% instead of 1% which is highly illegal, unjustified, unwarranted, not proper on facts and not in accordance with the provisions of law. Hence, it is prayed that the demand of Rs.3,37,324/- may please be deleted GROUND NO.IV On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has erred in confirming the Order of the AO in imposing late filing fees of Rs.41,600/- for delayed filing of Quarterly TDS Statements under section 234E of the Act which is highly illegal, unjustified, unwarranted, not proper on facts and not in accordance with the provisions of law. Hence, it is prayed that the demand of Rs.41,600/- may please be deleted. V) That the appellant craves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal. 2. The ld. AR vehemently submitted before us that the parties to whom the payments were made, were having PAN numbers and the assessee deposited TDS immediately after the Survey action of the Department. Therefore, the order passed by ITO (TDS) is bad in law.
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation 3. The ld. DR submitted that the TDS liability accrues at the time of actual payment or book entry in the books of account of the assessee of the payments on mercantile basis, whichever is earlier. In this case, at the time of payments, the PAN numbers of the persons to whom the payments were made, were not available and TDS was not deducted. Therefore, it is a default u/s 201 and hence, ITO’s order is as per law.
We heard both the parties, perused the records. In this case, there was a Survey u/s 133A of the Act for verification of TDS liability by ITO (TDS). During Survey, it was observed that there was non deduction of TDS on payments made to various parties for F.Y. 2012-13. It was also observed by the ITO that the assessee had not obtained PAN of the persons to whom the payments were made. The total amount of TDS payable by the deductor because of non obtaining of PAN was at Rs.14,59,663/- as mentioned in the order by the ITO. Also, the deductor has given the details of payments made to various contractors on whose payments TDS was not made. The ITO has enclosed the list of these payments with the order.
We have observed that the assessee in the paper book at page 46 has filed a copy of reply which was filed before the ITO(TDS)
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation after the survey. The relevant portion of the said letter is reproduced here as under: “On perusal of the same, your honour would appreciate that in most of the cases (more particularly payments made to Nikhil Raj Das, Rajesh Saha & Ashok Korram), the assessee has made payment of vehicle hire charges in respect of vehicles used by the personnel of the assessee for various purposes however, at the time of making the payments or subsequently, the assessee has not deducted tax at source as required under the provisions of section 194-I or 194-C of the I.T. Act but after, the conduct of TDS Verification deposited tax at source under the provisions of section 194-I of the I.T. Act, the details of which are mentioned elsewhere in this reply.
It is further submitted that the payment of Rs.5,79,510/- to Shri Manish Gupta vide Voucher No.10/0185/12-13/P on 22nd January, 2013 is towards contractual works such bags which is a payment to contractors within the ambit of section 194-C of the I.T. Act attracting deduction and deposit of tax at the rate of 1%. Similarly, payment of Rs.7,56,142/- to Shri Manish Gupta vide Voucher No.11/0009/12-13/P on 2nd February, 2013 is also towards contractual works such as Hamali/Labour/Loading & Unloading Charges etc. which is a payment to contractors within the ambit of section 194-C of the I.T. Act attracting deduction and deposit of tax at the rate of 1%. Similarly, payment of Rs.2,35,906/- to Shri Mohd. Yunus Keshkal vide Voucher No.11/0021/12-13/P on 7th February, 2013 is also towards contractual works such as filling of HDPE Bags, stitching, stacking, loading & unloading, hamali/labour charges of such bags which is a payment to contractors within the ambit of section 194-C of the I.T. Act attracting deduction and deposit of tax at the rate of 1%. However,
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation it is submitted that the assessee has not deducted tax at source under the provisions of Chapter XVII-B of the I.T. Act but after, the conduct of TDS Verification inadvertently deposited tax at source under the provisions of section 194-I of the I.T. Act, the details of which are mentioned elsewhere in this reply.”
Thus, it is a fact that TDS was not deducted as per provisions of the Act. It is also not denied by the assessee that the TDS was deductible on the said payments. The assessee has deducted TDS only after the survey conducted by the Department for TDS verification. The TDS liability arises at the time of credit of income to the account of the payee or at the time of payment in cash / cheque or any other mode, whichever is earlier. Thus, in this case, there is no dispute that at the time of payment TDS was not deducted. The TDS liability as mentioned arises at the time of payment or credit to the account of the payee, whichever is earlier. Section 201 of the Act defines the ‘assessee in default’ who has not deducted tax at source. Therefore, in this case since the tax was not deducted at source, we uphold the order of ITO(TDS) passed u/s 201(1) for F.Y. 2012-13. Accordingly, grounds of appeal No.1, 2 and 3 of assessee are dismissed.
The ITO (TDS) has also levied late fee u/s 234E of the Act as calculated in the order. The issue involved is levy of late fee u/s.234E of the Act, for delay in submitting TDS statement. There is
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation no dispute regarding delay in submitting the TDS statements. This issue is covered in favour of the assessee. The ITAT Pune in the case of Medical Superintendent Rural Hospital, vs. DCIT, CPC(TDS) [2018] 100 taxmann.com 78 (Pune Tribunal) has observed as under: “11.We have heard the rival contentions and perused the record. The issue arising in the present bunch of appeals is against levy of late filing fees under section 234E of the Act while issuing intimation under section 200A of the Act, in the first bunch of appeals. The second bunch of appeals in the case of Junagade Healthcare Pvt. Ltd. is against order of Assessing Officer passed under section 154 of the Act rejecting rectification application moved by assessee against intimation issued levying late filing fees charged under section 234E of the Act. The case of assessee before us is that the issue is squarely covered by various orders of Tribunal, wherein the issue has been decided in respect of levy of late filing fees under section 234E of the Act, in the absence of empowerment by the Act upon Assessing Officer to levy such fees while issuing intimation under section 200A of the Act. The Tribunal vide order dated 21.09.2016 with lead order in Maharashtra Cricket Association v. Dy. CIT [2016] 74 taxmann.com 6 (Pune - Trib.) relating to assessment years 2013-14 and 2014-15 for the respective quarters deliberated upon the issue and held as under: —
"34. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation
fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law."
The said proposition has been applied in the next bunch of appeals with lead order in Vidya Vardhani Education & Research Foundation v. Dy. CIT [2017] 88 taxmann.com 894 (Pune - Trib.) and also in Swami Vivekanand Vidyalaya (supra) and Medical Superintendant Rural Hospital v. ACIT [IT Appeal Nos.2072 & 2073 (PUN) of 2017, order dated 21-12-2017], which has been relied upon by the learned Authorized Representative for the assessee.
The Hon'ble High Court of Karnataka in the case of Fatheraj Singhvi (supra) had also laid down similar proposition that the amendment to section 200A of the Act w.e.f. 01.06.2015 has prospective effect and is not applicable for the period of respective assessment years prior to 01.06.2015. The relevant findings of the Hon'ble High Court are in paras 21 and 22, which read 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
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation
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.
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation 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 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."
The Hon'ble High Court thus held that where the impugned notices given by Revenue Department under section 200A of the Act were for the period prior to 01.06.2015, then same were illegal and invalid. Vide para 27, it was further held that the impugned notices under section 200A of the Act were for computation and intimation for payment of fees under section 234E of the Act as they relate for the period of tax deducted at source prior to 01.06.2015 were being set aside.
Respectfully following the above decision of ITAT Pune Bench, we hold that the levy of late fee under section 234E of the Act, is bad in law for the AY 2013-14. Therefore, the Assessing
ITA No.291/RPR/2016, for A.Y. 2013-14 Dist. Marketing Officer, Chhattisgarh State Co-op. Marketing Federation Officer is directed to delete the said late fee. Accordingly, the ground of appeal No.4 is allowed.
In the result, the appeal of assessee is partly allowed. Order pronounced in the open Court on 19th December, 2022.
Sd/- Sd/- (RAVISH SOOD) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 19th December, 2022 / GCVSR आदेशक��ितिलिपअ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Applicant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-I, Raipur. 4. The Pr. CIT-I, Raipur. 5. DR, ITAT, “Raipur” Bench. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.