2016 (10) TMI 430 - AT - Income Tax

Tribunal sets aside Section 234E demands in pre-2015 intimation cases

Concept Management Consulting Ltd. Versus DCIT-CPC-TDS, Uttar Pradesh

The Tribunal allowed all appeals, setting aside demands under Section 234E in intimation processed under Section 200A before 01-06-2015. The decision was ... Demand raised by the AO u/s 234E of the Act in the intimation processed u/s 200A - Held 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 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 assessee, 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 intimation u/s 200A has been processed prior to 01-06-2015. - Decided in favour of assessee. Issues Involved:1. Demand raised by the AO under Section 234E of the Income Tax Act in the intimation processed under Section 200A prior to 01-06-2015.Issue-wise Detailed Analysis:1. Demand Raised by the AO under Section 234E in Intimation Processed under Section 200A Prior to 01-06-2015:The primary issue in these appeals concerns the levy of fees under Section 234E for delays in filing TDS statements, processed under Section 200A before 01-06-2015. The Tribunal referenced the case of M/s Kash Realtors P Ltd & Others, where a similar issue was adjudicated.The Tribunal noted that Section 234E was inserted into the Income Tax Act on 01-07-2012, and an amendment to Section 200A was made effective from 01-06-2015, allowing fees under Section 234E to be adjusted during the processing of TDS statements. In the cases at hand, the AO (TDS) raised demands for fees under Section 234E for periods between 01-07-2012 and 01-06-2015, which were challenged by the assessees.The Tribunal cited the Amritsar Bench decision in 'Sibia Healthcare Pvt. Ltd. vs. DCIT,' which held that prior to 01-06-2015, there was no enabling provision under Section 200A to adjust fees under Section 234E during the processing of TDS statements. This position was supported by subsequent decisions from the Ahmedabad and Chennai Benches.The Revenue relied on the Bombay High Court's decision in 'Rashmikant Kundalia vs. Union of India,' which upheld the constitutional validity of Section 234E. However, the Tribunal clarified that this case did not address whether fees under Section 234E could be adjusted under Section 200A for periods before 01-06-2015.The Tribunal further emphasized that while Section 234E is an independent section allowing the AO to levy fees for delays in TDS filings, such fees could not be adjusted during the processing of TDS statements under Section 200A before the amendment on 01-06-2015. The Tribunal concluded that the AO could levy fees under Section 234E through a separate order but not as an adjustment under Section 200A prior to the amendment.In conclusion, the Tribunal set aside the demands raised under Section 234E in the intimation processed under Section 200A before 01-06-2015, consistent with the view taken by the coordinate bench in the cited cases. Consequently, all the appeals of the assessee were allowed.Outcome:The Tribunal allowed all the appeals, setting aside the demands raised under Section 234E in the intimation processed under Section 200A prior to 01-06-2015. The decision was pronounced in court on 24.8.2016.