2020 (3) TMI 1493 - AT - Income Tax

Fees under Section 234E valid only from June 1, 2015; delete charges for earlier delays, verify each case

District Prosecution Officer, Dewas & Ujjain Versus ACIT (TDS) -CPC Ghaziabad

ITAT held that fees under section 234E, as levied by the CPC and confirmed by the appellate authority, are valid but apply only from 1.6.2015 onward. The ... Levy of fees u/s. 234E - Intimation u/s. 200A - delay in filing of the TDS quarterly returns - revenue authorities have levied the late fees for default in furnishing the statement in the processing of statement of tax deducted at source prepared u/s 200A - whether the Revenue authorities were justified in levying the late fees u/s 234E of the Act while processing the statement of tax deducted at source u/s 200A of the Act after the amendment was brought in w.e.f. 01.06.2015 in the provisions of section 200A? HELD THAT:- The common fact in all these cases is that the date of filing TDS return as well as date of Centralized Processing Centre (In short `CPC’) order is after 01.06.2015. We observe that recently in the case of Shri Uttam Chand Gangwal [2019 (1) TMI 1355 - ITAT JAIPUR] adjudicated the similar issue of levy of fee u/s 234E of the Act in the case where TDS return and the CPC order was passed after 01.06.2015. We are of the considered view that though levy of fee u/s 234E have been validly levied by the CPC which was confirmed by Ld. CIT (A) however the same should have been levied for the period commencing from 1.6.2015. We therefore direct the revenue authorities to make necessary verification in each of the case so as to look into the fact that in case if any fee u/s 234E is levied for the delay in filing return for the period before 01.06.2015, the same is directed to be deleted and the remaining fee levied for the default committed from 01.06.2015 onwards needs to be confirmed. ISSUES PRESENTED AND CONSIDERED 1. Whether Revenue authorities were justified in levying fee under section 234E of the Act while processing statements of tax deducted at source under section 200A of the Act after amendment to section 200A w.e.f. 01.06.2015. 2. If section 234E may be levied when the TDS return pertains to a period prior to 01.06.2015 but was filed and/or processed after 01.06.2015, what is the temporal scope of fee levy (i.e., whether fee can be levied for delay prior to 01.06.2015 and/or only for delay from 01.06.2015 to actual filing). ISSUE-WISE DETAILED ANALYSIS - Issue 1: Jurisdiction to levy fee u/s 234E in orders processed u/s 200A after 01.06.2015 Legal framework: Section 234E levies fee for default in furnishing statement of tax deducted at source where statements are not delivered within the time prescribed in section 200(3) (or proviso to section 206C(3)). Section 200A (as amended w.e.f. 01.06.2015) confers power on the assessing officer/CPC to process TDS statements and issue intimations; the amendment thus affected the temporal reach of authorities to act on TDS statements. Precedent Treatment: A Coordinate Bench decision (referred to in the record) addressing an identical factual matrix held that where filing and processing of the TDS return occur after 01.06.2015, the AO/CPC acquired jurisdiction to levy fee under section 234E and may levy fee for the period during which default continued after 01.06.2015. The Tribunal in the present matters followed that Coordinate Bench decision. Interpretation and reasoning: The Court construed the amendment to section 200A as conferring prospective jurisdiction on the AO/CPC from 01.06.2015. Where both filing of the return and processing by the CPC occur after 01.06.2015, there exists a continuing default post-amendment and the AO is competent to levy fee u/s 234E. The Court rejected the contention that post-amendment levy should not apply to returns pertaining to periods before 01.06.2015 if the return and processing occur after that date. Ratio vs. Obiter: Ratio - The Tribunal's holding that the authority vested by the amendment to section 200A operates prospectively and that fee under section 234E may be validly levied where return filing/processing occurs after 01.06.2015 is treated as binding within these proceedings. Obiter - Observations regarding policy or equitable absolution of assessees filing late for periods prior to amendment are ancillary to the core ratio. Conclusion: Revenue authorities were justified in levying fee under section 234E when the TDS return and CPC processing occurred after 01.06.2015, because the AO had acquired jurisdiction under the amended section 200A to levy such fee. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Temporal scope of fee levy for returns relating to periods before 01.06.2015 but filed/processed after 01.06.2015 Legal framework: The prospective operation of jurisdiction conferred by the amendment to section 200A requires delimiting the period for which section 234E fee may be levied; section 234E prescribes fee in respect of default in furnishing TDS statements within prescribed time. Precedent Treatment: The Coordinate Bench decision held that although the quarterly return may relate to a period prior to 01.06.2015, where the return is filed and processed after 01.06.2015 there is a continuing default and the AO may levy fee under section 234E for the period from 01.06.2015 until actual filing; fee for the period of delay prior to 01.06.2015 cannot be levied because jurisdiction to levy such fee is prospective. Interpretation and reasoning: The Tribunal reasoned that to read the statute otherwise would create an anomalous result permitting absolution for delays that continued beyond 01.06.2015 merely because the underlying period ended before the amendment. The correct approach, consistent with the prospective acquisition of jurisdiction, is to permit levy of fee only for that portion of delay occurring on or after 01.06.2015. Thus, any fee attributable to delay prior to 01.06.2015 should be deleted, while fee attributable to delay from 01.06.2015 to filing date may be sustained. Ratio vs. Obiter: Ratio - The Tribunal's directive that fee under section 234E can only be levied for the period of default commencing 01.06.2015 and not for periods of delay prior to that date is a central holding. Obiter - The explanation of continuous default and equitable considerations beyond statutory text are ancillary remarks supporting the ratio. Conclusion: Where a TDS return pertains to a period before 01.06.2015 but is filed and processed after that date, fee under section 234E may be levied only for the period of default from 01.06.2015 until actual filing; any fee levied for delay falling before 01.06.2015 must be deleted. APPLICATION AND DIRECTION Following the Coordinate Bench, the Tribunal directs revenue authorities to verify each case and delete any portion of section 234E fee attributable to delay prior to 01.06.2015, and to confirm the portion of fee attributable to delay from 01.06.2015 up to the date of actual filing. The appeals were allowed on this limited basis (statistical disposal).