TaxTMI 
TaxTMI 
2017 (11) TMI 671
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....he provision of section 234E, whether vested prior to substitution of clause (c) to section 200A of the Act by the Finance Act, 2015 w.e.f. 01/06/2015 and enabling provision in section 200A for raising demand in respect of levy of fee u/s 234E of the Act. On the other hand, Shri S. S.Rana, ld. CIT-DR, contended that the Ld. First Appellate Authority has relied upon the decision in the case of Rashmikant Kundalia vs UOI (2015) 54 taxman.com 200 (Bom.), Laxminirman Bangalore Pvt. Ltd. vs DCIT (2015) 60 taxman.com 144 (Karnataka) and M/s Dundlod Shishan Sansthan vs UOI (2015) 63 taxman.com 243 (Raj.). The ld. CIT-DR contended that the Jaipur Bench of the Tribunal in the case of M/s Genus Consortium vs DCIT (ITA No.88,89, and 90/JP/2017), order dated 09/03/2017, dismissed the appeal of the assessee. The ld. counsel for the assessee contended that the facts before Hon'ble High Court were different, which are not applicable to the facts of the present appeal and further the Pune Bench of the Tribunal duly considered the decisions rendered by Hon'ble High Courts and thereafter reached to particular conclusion. This factual matrix was not controverted by the Revenue. 2.1. We have consid....
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....d due to, the deductor as required under the said sub-section." We are also reproducing hereunder section 234E of the Act for ready reference:- " Fee for default in furnishing statements. 234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to subsection (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or t....
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.... these appeals, few material facts have to be considered. The assessee was required to deduct tax at source out of payments made on account of salary, interest, etc. for the respective quarters in the accounting period. The Act required the assessee to file quarterly TDS returns intimating the tax deducted at source from various payments made in each of the quarter. The said TDS returns are mandated to be filed within stipulated period. Admittedly, in the present set of appeals, TDS returns were filed belatedly. The Assessing Officer while processing the TDS returns issued intimation to the respective assessee under section 200A of the Act and levied late filing fees under section 234E of the Act. Aggrieved by the said intimation, in some of the cases, the assessee in some cases filed an application under section 154 of the Act also. However, the same were dismissed by the respective Assessing Officers. 6. In appeal, the CIT(A) held that the appeal of assessee was not maintainable, in view of the ratio laid down by the Hon'ble Bombay High Court in Rashmikant Kundalia v. Union of India [2015] 54 taxmann.com 200/229 Taxman 596/373 ITR 268. Further, even on merits, the co....
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.... in respect of applicability of said section for the period prior to 01.06.2015. He further pointed out that firstly, there has to be mechanism to charge fees under section 234E of the Act and prior to insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, there was no mechanism to charge fees by the Assessing Officer. He stressed that where an order has to be passed under section 200A of the Act for charging fees under section 234E of the Act, then the Legislature should provide the machinery for charging the said fees under section 234E of the Act, which was provided w.e.f. 01.06.2015. He further stressed that where the assessee had denied his liability to be assessed, then the right to appeal is provided under section 246A(1)(a) of the Act and where the assessee says that he denies his liability, then the same has to be interpreted liberally. Referring to the decision of Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra), relied upon by the CIT(A), the learned Authorized Representative for the assessee pointed out that it only settled the constitutional validity of section 234E of the Act and hence, the said ratio had to be applied accordin....
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....vy of fees by the Assessing Officer till before the amendment w.e.f. 01.06.2015, there was no merit in charging the said levy. He further pointed out that after the amendment w.e.f. 01.06.2015, the Assessing Officer had power to make adjustments in intimation passed under section 200A of the Act itself. 10. The ld. Counsel for the assessee further pointed out that insertion made w.e.f. 01.06.2015 was prospective in nature and hence, had to be applied from 01.06.2015 itself. He relied on the Memo explaining Finance Bill, 2015 while introducing clause (c) to section 200A(1) of the Act. He further supported the arguments of earlier Counsel that prior to 01.06.2015, where there was no power given under section 200A of the Act to the Assessing Officer to charge the said fees, the present bunch of appeals being filed by different assessee related to the period prior to 01.06.2015 and hence, no fees could be charged under section 234E of the Act. He further pointed out that in CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC), the Hon'ble Supreme Court held that any amendment can be considered retrospective in order to remove the hards....
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....hat statement of tax deducted had to be filed within prescribed time limit". He referred to the proviso to section 200(3) of the Act, which was inserted w.e.f. 01.10.2014, wherein it is provided that correction statement for rectification can also be issued. 12. The learned DR further pointed out that before insertion of levy of fees under section 234E of the Act, there was provision of levy of penalty under section 272A(2)(k) of the Act. This amendment was w.e.f. 01.04.2005, hence where the statement was not filed by the deductor, penal provisions were attracted and the same was with respect to quarterly returns to be filed. The learned DR further pointed out that the provisions of section 200(3) of the Act and penalty under section 272A(2)(k) of the Act were simultaneously introduced. He further referred to the provisions of section 200A of the Act which were introduced w.e.f. 01.04.2010 by the Finance (No.2) Act, 2009 for furnishing of TDS returns. Further, reference was made to sub-clauses under section 200A(1) of the Act, wherein clause (a) refers to the sum deducted and clause (b) refers to the interest, if any; and w.e.f. 01.07.2012, new section was introduced i.e. ....
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....lthough the amendment was w.e.f. 01.06.2015, but the amendment was procedural in nature. He stressed that once charging section is there, where the assessee has been asked to pay the fees, then only thing is that the provisions of section 200A of the Act were added in 2010, provisions of section 234E of the Act were added in 2012, then if by error, it was not there, then by way of insertion of clause (c) to section 200A(1) of the Act, the Assessing Officer is empowered to charge. He further relied on Chennai Bench of Tribunal, wherein it is provided that the Assessing Officer can charge fees under section 234E of the Act. He further contended that by way of an amendment in 2015, the Act has not provided any new levy; the provisions of section 234E of the Act were already there and amendment is only clarificatory. Section 234E of the Act was charging section w.e.f. 01.04.2012 and in case of violation of provisions of the Act, fees was to be levied. Referring to the reliance placed upon by the learned Authorized Representative for the assessee on Vatika Township (P.) Ltd's. case (supra), he pointed out that the issue before the Hon'ble Supreme Court was charging of surcharge ....
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....as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 16. Section 200 of the Act lays down the duty of the person deducting tax, which reads as under:- "200. (1) Any person deducting any sum in accordance with the foregoing provisions of this Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. (2) Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. (2A) In case of an office of the Government, where the sum deducted in accordance with the foregoing provisions of this Chapter or tax referred to in sub-section (1A) of section 192 has been paid to the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, who is responsible for crediting such sum or tax to the credit of the Central Government, shall deliver or cause to be delivered to ....
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....any person as an employer referred to in section 192(1A) of the Act. The onus is upon such person that he shall after paying the tax to the credit of Central Government within prescribed time, prepare such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income tax authority or any person so authorized, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be provided. The duty is upon a person deducting any sum in accordance with various provisions under the Chapter and also upon an employer who is making deduction out of the payments made to the employees, then sub-section (3) requires that the deductor is to prepare a statement for such period as may be prescribed, which is to be delivered to the prescribed authority, in such form and verified and setting forth such particulars as may be prescribed. The said statement is to be delivered within such time as may be prescribed. 18. Rule 31A of the Income Tax Rules, 1962 (in short 'the Rules') provides that every person who is responsible for deduction of tax under Chapter XVIIB shall in accordance w....
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....der clause (c); and (e) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor : Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.-For the purposes of this sub-section, "an incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act. (2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section." 19. Section 200A of the Act lays down the manner in which the statements of tax deducted at source are to be processed ....
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.... deductor out of the account of deductee, then the onus is upon the deductor under section 200 of the Act to prepare a statement in such form and verified in such manner which is prescribed under the Act in which the particulars of tax deduction at source are to be provided and the said statement is to be delivered or cause to be delivered within such time as may be prescribed. Rule 31A of the Rules provided the time limit for the furnishing of statement for tax deduction at source on quarterly basis. Section 234E of the Act levies fees for default in furnishing the statements of tax deducted at source. Such fees is to be paid before delivering or causing to be delivered a statement in accordance with section 200(3) of the Act or proviso to section 206C(3) of the Act. In other words, in case the assessee has defaulted in not delivering the statement or causing to deliver the statement within time prescribed, then he is liable to pay the fees which is so prescribed under the Act and such fees shall not exceed the amount of tax deductible or collectable at source but the same has to be paid along with statement which is to be delivered under the provisions of section 200(3) of the Ac....
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....owered to charge fees under section 234E of the Act. The case of Revenue on the other hand, was that it was the duty of deductor while furnishing the statement under section 200(3) of the Act to deposit the fees referred to in section 234E(1) of the Act. The learned DR stressed that fees referred to in sub-section (1) had to be paid while delivering or causing to deliver the statement in accordance with provisions of section 200(3) of the Act or the proviso to section 206C(3) of the Act. However, various regulations and the statutory provisions in this regard point out that undoubtedly, the responsibility of the deductor was to deposit the tax deducted at source in time and if not so, then with interest and consequently, where the tax was not paid in time and interest was not paid in time and then, where the statement of tax deducted at source could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees under section 234E of the Act. However, in case any default occurs due to the non-payment of fees by the assessee in this regard, then the provisions which has to be considered is section 200A(1)(c) of the Act. The power to charg....
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....arge interest. However, prior to 01.06.2015, the Assessing Officer does not have the power to charge fees under section 234E of the Act while processing TDS returns. In the absence of enabling provisions, levy of fees could not be effected in the course of intimation issued under section 200A of the Act prior to 01.06.2015. 25. The Amritsar Bench of Tribunal in Sibia Health Care (P.) Ltd. v. Dy. CIT [2016] 65 taxmann.com 105 had held that the adjustment in respect of levy of fees under section 234E of the Act was indeed beyond the scope of permissible adjustments contemplated under section 200A of the Act. Such a levy could not be effected in the course of intimation under section 200A of the Act and in the absence of any other provisions enabling the demand in respect of this levy having been pointed out, no such levy could be effected. The said proposition has been applied in various decisions of different Benches of Tribunal. Reference was made to the decisions of Chennai Bench of Tribunal in G. Indirani' case (supra), Ahmedabad Bench of Tribunal in Globe Ecologistics Ltd. v. Dy. CIT in ITA Nos.2689- 2691/Ahd/2015, ITA No. 2692/Ahd/2015, relating to assessment year ....
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.... the ground that section does not empower the Assessing Officer to condone the delay in late filing the income tax returns or that no appeal is provided from arbitrary order passed under section 234E of the Act. The Hon'ble High Court held that the right to appeal was not a matter of right but was creature of statute and if the Legislature deems fit not to provide remedy of appeal, so be it. The Hon'ble High Court further held that a person can always approach the court in extraordinary equitable jurisdiction under Article 226/227 of the Constitution as the case may be. The Hon'ble High Court therefore, observed that simply because no remedy of appeal was provided for the provisions of section 234E of the Act, the same cannot be said to be onerous and section 234E of the Act was held to be constitutionally valid. The constitutional validity of provisions of section 234E of the Act has also been upheld by the Hon'ble Rajasthan High Court in Dundlod Shikshan Sansthan' case (supra). 27. In view of the abovesaid ratio laid down by the Hon'ble Bombay High Court, the case of the learned DR before us was that there is no merit in the present set of appeals....
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....rate the mechanism for computation of fees payable under section 234E of the Act. The Finance Bill further refers to the existing provisions of the Act i.e. after processing of TDS statement, intimation is generated specifying the amount payable or refundable. This intimation generated after processing of TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. The Finance Bill further provided that intimation generated after the proposed processing of TCS statement shall be at par with the intimation generated after processing of TDS statement and also provided that failure to pay tax specified in the intimation shall attract levy of interest as per provisions of section 220(2) of the Act. Further, amendments were also made in respect of the scheme of payment of TDS/TCS by the Government, deductor/collector which are not relevant for deciding the issue in the present appeal and hence, the same are not being referred to. The Finance Bill further provided that the amendment would take effect from 01.06.2015. 28. The perusal of Memo explaining....
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.... the constitutional validity of said section introduced by the Finance Act, 2015 w.e.f. 01.06.2015 but was not abreast of the applicability of the said section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. In such scenario, we find no merit in the plea of learned CIT-DR that the Hon'ble Bombay High Court in Rashmikant Kundalia' case (supra) has laid down the proposition that fees under section 234E of the Act is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A of the Act prior to 01.06.2015. 30. Another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) of the Act is clarificatory or is prospective in nature and is not applicable to the pending assessments. Undoubtedly, the provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements/returns were filed belatedly to pay the fees as per said section. However, in cases, wh....
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....e Act and in order to cover up that, the amendment was made by way of insertion of clause (c) to section 200A of the Act. In such scenario, it cannot be said that insertion made by section 200A(1)(c) of the Act is retrospective in nature, where the Legislature was aware that the fees could be charged under section 234E of the Act as per Finance Act, 2012 and also the provisions of section 200A of the Act were inserted by Finance (No. 2) Act, 2009, under which the machinery was provided for the Assessing Officer to process the TDS statements filed by the assessee. The insertion categorically being made w.e.f. 01.06.2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns/statements prior to 01.06.2015. 32. We further find that in recent judgment dated 26.08.2016, the Hon'ble Karnataka High Court in Writ Appeal Nos. 2663-2674/2015(T-IT) in Fatheraj Singhvi v. Union of India [2016] 73 taxmann.com 252 has quashed the intimation issued under section 200A of the Act levying the fees for delayed filing the TDS statements under section 234E of the Act. The Hon'ble High Court notes that the Finance Act, 2015 had made....
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....rned DR on the said proposition laid down by the Chennai Bench of Tribunal and we dismiss the same. 35. Another reliance placed upon by the learned DR was in respect of amendment being retrospective or prospective and reliance was placed on the ratio laid down by Hon'ble Delhi High Court in Naresh Kumar's case (supra). However, in view of our decision in the paras hereinabove, where power is being enshrined upon the Assessing Officer to levy or charge while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of taxpayer. The Hon'ble Delhi High Court was considering the application of amendment to section 40(a)(ia) of the Act by the Finance Act, 2010, under which certain relaxations were given to the application of said section and it was held that the same applies retrospectively to earlier years. However, in the present set of appeals, the issue is against the provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns/statements and such power is to be applied prospectively. In any case, the Parliament itself....
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....notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A of the Act. The CIT(A) has rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued under section 200A of the Act. Further, the CIT(A) has also decided the issue on merits and the assessee is in appeal before us on both these grounds. Vis-à-vis the first issue of maintainability of appeal against the intimation issued under section 200A of the Act, we hold that such intimation issued by the Assessing Officer after processing the TDS returns is appealable. The demand raised by way of charging of fees under section 234E of the Act is under section 156 of the Act and any demand raised under section 156 of the Act is appealable under section 246A(1)(a) and (c) of the Act. Accordingly, we reverse the findings of CIT(A) in this regard. We find support from the similar proposition being laid down by Mumbai Bench of Tribunal in bunch o....