2020 (4) TMI 257 - AT - Income Tax

Tribunal Overturns Commissioner's Decision on TDS Returns Jurisdiction

The Tribunal allowed all appeals by the assessee, holding that the Commissioner of Income Tax (Appeals) exceeded jurisdiction by declaring TDS returns as ... Levy of fee under Section 234E for delayed furnishing of TDS statements - Processing of TDS statements under Section 200A - Validity of declaring a TDS statement non est - Powers of the Commissioner (Appeals) under clause (c) of Section 251Levy of fee under Section 234E for delayed furnishing of TDS statements - Processing of TDS statements under Section 200A - Whether fee under Section 234E could be levied/was chargeable in the intimations issued under Section 200A in respect of TDS statements filed for the periods in question. - HELD THAT: - The Tribunal followed the jurisdictional High Court decision relied on by the assessee and the earlier Bench decision in Manoj Kumar Jaiswal (identical issue) to treat the levy of fee under Section 234E, as contested before the CIT(A), as not sustaining any direction to declare the TDS statement invalid. The CIT(A) had earlier deleted the levy of fee under Section 234E; the Tribunal observed that the central question before the appeal was the correctness of the levy and noted that the question whether fee computation could be made while processing under Section 200A was a matter determined in favour of the assessee by the reasoning adopted. Consequently, the Tribunal proceeded on the basis that the levy of fee under Section 234E, as challenged, had been addressed by the CIT(A) and was not to be sustained so as to justify declaring the returns non est. [Paras 10, 11, 12]The appeals are allowed insofar as the levy of fee under Section 234E (as contested) is not sustained to the extent it led to declaring the TDS statements invalid.Validity of declaring a TDS statement non est - Powers of the Commissioner (Appeals) under clause (c) of Section 251 - Whether the CIT(A) had power in an appeal under clause (c) of Section 251 to declare a TDS statement filed under Section 200(3) as non est and thereby treat it as invalid. - HELD THAT: - The Tribunal held, following its earlier decision, that the Income-tax Act contains no provision analogous to Section 139(9) (which permits declaration of an income-tax return as invalid) for TDS statements filed under Section 200(3). There is therefore no statutory power to declare a TDS statement non est. Further, clause (c) of Section 251 permits the Commissioner (Appeals) to pass such orders 'in the appeal' but does not empower him to traverse beyond the subject matter of the appeal. The Tribunal explained that the CIT(A)'s power under clause (c) is circumscribed by the scope of the appeal and does not permit enhancement or declaration of invalidity of the TDS statement when the appeal challenges only the levy of fee under Section 234E. The conclusion of the CIT(A) declaring the TDS statements non est was therefore held to be beyond his powers and legally unsustainable. [Paras 11, 12]The CIT(A)'s direction declaring the TDS statements filed under Section 200(3) as non est is invalid and is deleted; the CIT(A) had no power in the appeal to make that declaration.Final Conclusion: All appeals are allowed. The direction of the CIT(A) declaring the TDS statements filed by the assessee as non est is set aside and deleted; the challenged levy/direction insofar as it resulted in declaring the returns invalid is held to be without lawful authority. Issues Involved:1. Validity of levy of fee under Section 234E of the Income-Tax Act, 1961.2. Authority of the Assessing Officer (AO) to levy fee under Section 234E while processing TDS returns filed before 1.6.2015.3. The power of the Commissioner of Income Tax (Appeals) [CIT(A)] to enhance the assessment and declare TDS returns as non est due to non-payment of fees under Section 234E.Issue-wise Detailed Analysis:1. Validity of Levy of Fee under Section 234E:The assessee filed TDS statements for various quarters in Form No. 24Q/26Q for FY 2012-13 to 2014-15 (AY 2013-14 to 2015-16) with delays. Consequently, the AO levied a late fee under Section 234E, which mandates a fee of Rs. 200 per day for delays in filing TDS statements. The assessee challenged this levy before the CIT(A), who ruled in favor of the assessee by citing the Karnataka High Court's decision in Fatehraj Singhvi v. UOI, which held that the amendment allowing the levy of fees under Section 234E through Section 200A was prospective from 1.6.2015.2. Authority of AO to Levy Fee under Section 234E While Processing TDS Returns Filed Before 1.6.2015:The CIT(A) agreed with the assessee's contention that the AO could not levy fees under Section 234E for TDS returns filed before 1.6.2015, as the relevant provisions under Section 200A(1)(c), (d), and (f) came into effect only from that date. Therefore, any computation of fees for delayed filing of TDS returns for periods before 1.6.2015 was invalid.3. Power of CIT(A) to Enhance Assessment and Declare TDS Returns as Non Est:The CIT(A), in exercising his powers of enhancement, proposed that the TDS statements filed by the assessee were non est (invalid) due to non-payment of fees under Section 234E. The assessee argued that there is no provision under Section 200(3) to declare TDS returns as invalid, unlike the provisions under Section 139(9) for income tax returns. The CIT(A) rejected this argument, stating that the provisions of Sections 139 and 200(3) are not comparable and maintained that TDS statements filed without paying the fee are invalid.The Tribunal, however, held that there is no provision in the Act to declare TDS returns as non est. It referenced its earlier decision in Manoj Kumar Jaiswal & others Vs. ACIT, which stated that the CIT(A) does not have the power to declare TDS returns as invalid in appeals against orders under Section 200A. The Tribunal emphasized that the CIT(A)'s powers are limited to the subject matter of the appeal, which, in this case, was the validity of the fee levy under Section 234E and not the validity of the TDS returns.Conclusion:The Tribunal concluded that the CIT(A) overstepped his jurisdiction by declaring the TDS returns as non est and that such a declaration is not supported by the Act. The Tribunal directed that the CIT(A)'s order declaring the TDS returns as invalid be deleted, thus allowing the appeals of the assessee. The Tribunal also upheld that the levy of fees under Section 234E for periods before 1.6.2015 was invalid, aligning with the Karnataka High Court's decision.Final Judgment:All the appeals by the assessee were allowed, and the CIT(A)'s order declaring the TDS returns as non est was held to be invalid. The Tribunal pronounced this judgment on January 22, 2020.