2019 (7) TMI 1213 - AT - Income Tax

Tribunal rules against CIT(A) on TDS returns, limits Section 234E, invalidates fees pre-2015

The Tribunal held that the CIT(A) exceeded its authority by declaring TDS returns as non est, as there is no provision in the law for such a declaration. ... Power of CIT(A) for enhancement - appeal relates to fee for default in furnishing statements u/s. 234E - The CIT(Appeals) accepted the claim of the assessee in view of the judgment of the Hon’ble High Court of Karnataka wherein it was held that amendment made u/s. 200A providing that fee u/s. 234E could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect, accordingly, fee u/s. 234E cannot be charged and cancelled the intimation u/s. 200A, he however, declare return of TDS filed by the assessee is non est HELD THAT:- In the case of Manoj Kumar Jaiswal . [2019 (5) TMI 528 - ITAT BANGALORE] , this Tribunal decided identical issue holding that the Act contains provision for declaring a return of income filed as invalid u/s.139(9). There is no such provision for declaring a return of TDS as invalid. Therefore, there is no power conferred, either under those provisions or under any other provisions of the Act, to declare the return of TDS filed u/s. 200(3) as non est. The Tribunal also held that in appeal against an order u/s.200A, the provision of law applicable, in so far as the powers of CIT(A) in an appeal u/s.200A, was clause (c) of section 251 and that clause empowers the CIT(A) to pass such orders in the appeal as he thinks fit. The Tribunal held that a reading of the aforesaid clause would show that the CIT(Appeals) in the cases to which the said clause applies, can pass such orders as he thinks fit, but that power is circumscribed by the words “in the appeal”. Therefore, the CIT(Appeals) cannot travel beyond the subject matter of the appeal, which was as to whether fee u/s. 234E can be levied or not; and not the question, whether the return of TDS filed by the assessee is non est in law? Since the facts and circumstances of the case in these appeals are identical to the case referred to above, following the decision in those appeals, we allow the appeals of the Assessee by holding that the conclusion of the CIT(Appeals) holding that return of TDS filed by the assessee is non est in law is not valid in the eyes of law and the said direction is directed to be deleted and the order of the CIT(Appeals), to this extent, is held to be bad in law. - Decided in favour of assessee. Issues Involved:1. Levy of fee under Section 234E for delayed filing of TDS statements.2. Validity of TDS returns filed without payment of fee under Section 234E.3. Powers of the CIT(A) in declaring TDS returns as non est and enhancement of orders.Detailed Analysis:1. Levy of Fee under Section 234E for Delayed Filing of TDS Statements:The assessee filed TDS statements for various quarters which were processed by CPC TDS, Bengaluru. Due to delays in filing these statements, the AO levied late fees under Section 234E of the Income-Tax Act, 1961. The assessee contended that the provisions of Section 234E, inserted by the Finance Act, 2012, were only applicable prospectively from 1.6.2015, as per the decision of the Karnataka High Court in Fatehraj Singhvi v. UOI. Thus, the fee could not be levied for periods before this date.2. Validity of TDS Returns Filed Without Payment of Fee under Section 234E:The CIT(A) initially accepted the assessee's claim, referencing the Karnataka High Court's decision, and cancelled the fee levied under Section 234E. However, the CIT(A) later proposed that the TDS statements filed by the assessee were non est (invalid) because they were filed beyond the prescribed time and without the payment of the fee under Section 234E.3. Powers of the CIT(A) in Declaring TDS Returns as Non Est and Enhancement of Orders:The CIT(A) argued that under Section 234E, the fee must be paid before delivering the TDS statement, and thus statements filed without this fee were invalid. The assessee countered that under Section 251(1)(c), the CIT(A) did not have the power to enhance the scope of the appeal to declare the TDS returns as non est. The Tribunal, referencing its decision in Manoj Kumar Jaiswal & others Vs. ACIT, held that there is no provision in the Act to declare a TDS return as non est. The Tribunal emphasized that the CIT(A)'s powers are limited to the subject matter of the appeal, which was the levy of fee under Section 234E, not the validity of the TDS returns.Judgment:The Tribunal ruled that the CIT(A) did not have the authority to declare the TDS returns as non est and that such a declaration was not supported by any provision in the Act. The Tribunal followed the jurisdictional High Court's decision, which restricted the prospective application of Section 234E to post-1.6.2015 periods. Consequently, the Tribunal allowed the appeals of the assessee, holding that the CIT(A)'s conclusion that the TDS returns were non est was invalid and directed the deletion of this part of the CIT(A)'s order.Conclusion:In conclusion, the Tribunal upheld that the levy of fees under Section 234E for periods before 1.6.2015 was invalid, and the CIT(A) overstepped its powers by declaring the TDS returns as non est. The appeals by the assessee were allowed, and the CIT(A)'s order was partially overturned.