TaxTMI 
TaxTMI 
2018 (5) TMI 1960
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....CIT(A) has erred in confirming the order passed u/s. 200A of the Income Tax Act, 1961 for levying the late fees penalty u/s. 234E of Rs. 56,943/- for the Quarter Second of FY 2012-13 for late furnishing of TDS Statement on Form No. 26Q. 2. The order of the Ld. CIT is against law and facts of the case. 3. The appellant craves the right to add, amend or withdraw any grounds of appeal at the time of hearing. 2. Facts narrated by the revenue authorities are not disputed by both the parties, hence, the same are not repeated here for the sake of brevity. 3. During hearing, Shri Anil Jain, ld. counsel for the assessee, claimed that on identical fact, the issue under hand is covered by the decision of the Division Bench of Delhi Tribunal in the case of Samikaran Learning Private Limited vs. TDS Officer, Delhi ITA Nos. 4050 to 4054/Del/2016 (Ayrs. 2014-15 & 2015-16) decided on 09.11.2017 wherein decision of ITAT, Pune Bench has been discussed in detail in the case of Gajanan Constructions vs DCIT, CPC (TDS), (2016) 73 taxman.com 380 (Pune Trib.). The assessee has challenged the power of the officer to charge/collect fee as per the provision of section 234E, whether v....
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....e statement of tax deducted at source. He further pointed out that the Act requires quarterly statement to be filed within 15 days of close of the quarter. Thereafter, the learned Authorized Representative for the assessee pointed out that clause (c) to section 200A(1) of the Act was inserted w.e.f. 01.06.2015, under which levy of fees was provided for late filing the quarterly statements of TDS. He further stated that earlier to that, there was no provision of levy of fees. Similarly, amendments were made in section 246A of the Act. The first issue raised by the learned Authorized Representative for the assessee was that where the Assessing Officer had issued the intimation under section 200A of the Act, then the same is appealable under which fees had been charged under section 234E of the Act. An application for condoning the delay in filing the appeals was also filed as referred to by the learned Authorized Representative. Referring to the order passed by the CIT(A), the learned Authorized Representative for the assessee pointed out that the order of Assessing Officer was not passed under section 234E of the Act but was passed under section 200A of the Act. The CIT(A) had relie....
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....h was later provided w.e.f. 01.06.2015 as per the amendment, then prior to that date, no fees could be charged from the assessee. Second aspect of the same was that the Assessing Officer had no authority to levy the fees prior to 01.06.2015. He referred to the ratio laid down by the Hon'ble Supreme Court in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1, which had laid down the proposition that in cases where the cost of acquisition of the assets were Nil, then no capital gains has to be computed in the hands of assessee since there was no mechanism to charge capital gains. He further stressed that the Hon'ble Rajasthan High Court in Dundlod Shikshan Sansthan v. Union of India [2015] 235 Taxman 446/63 taxmann.com 243, judgment dated 28.07.2015 had adjudicated the issue relating to whether the fees charged is legal or illegal and had not touched upon the mechanism to levy the fees. In this regard, the learned Authorized Representative for the assessee referred to the ratio laid down by the Hon'ble Bombay High Court in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727, wherein while explaining the principle of obiter dicta it was pointed out that casual r....
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....yee, then the duty of the deductor is to deduct tax. Sections 192 to 194LD, 195 to 196D of the Act were various provisions for deducting tax at source. Section 199 of the Act provides credit of tax deducted at source and section 200 of the Act lays down the duties of person responsible to deduct the tax. He further stressed that it was mandatory that after deduction, the deductor shall pay the tax in the account of Treasury, there was no discretion with the deductor vis-à-vis rate of deduction, at what time and when to be paid. The learned CIT-DR further stated that TDS was one of the modes of recovery which works on the principle of paying as you earn. He further stated that TDS is source of revenue to the Government to carry out various programmes. Once the tax was deducted, then it was not the deductor's money but it was deducted on account of third party, who claims it as part of his tax payment. The obligation on the deductor was to collect the said tax deducted at source and deposit the same and the deductee had all the rights to claim the benefit of such tax deducted by the deductor. Earlier, under the Act, the onus was upon the deductor to issue certificate for c....
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....all' and it is further provided that the amount of fees, shall not exceed the tax deducted at source. Referring to sub-section (3), it was pointed out that the amount of fees is to be deposited before delivering the statement. He stressed that the provisions of section 234E of the Act was charging section wherein the liability was upon the assessee that he shall pay and when the same is to be paid is also specified therein. The Legislature in this regard was clear that defaulter itself would make the compliance. Hence, the question is if as per section 234E(1) of the Act, the assessee is liable to pay late fees and as per sub-section (3), late fees has to be paid before filing the statement and where the provisions of both sub-section (1) and (3) to section 234E of the Act are mandatory, since the word used is, shall, then it is obligatory upon the person to pay the said fees. 13.Referring to the decision of Hon'ble Bombay High Court in Rashmikant Kundalia's case (supra) wherein the constitutional validity was challenged, the learned DR referred to paras 13 to 15 and 18 of the said judgment and pointed out that the right to appeal was the creation of statute an....
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....t under the provisions of section 45 of the Act, where the cost of acquisition was Nil, no capital gains was leviable but after the amendment, it is so provided that capital gains would be chargeable in some cases where the cost of acquisition was Niland hence, it is the statute which empowers the authorities to levy fees, charges or taxes. In the absence of such power, there is no merit in levy of fees under section 234E of the Act. 15. We have heard the rival contentions and perused the record. The issue arising in this bunch of appeals is against levy of fees under section 234E of the Act. In order to adjudicate the issue, first reference is being made to the relevant provisions of the Act. Under Chapter XVII headed collection and 'recovery of taxes' and under 'clause B', deduction at source, the statute lays down the duty of the payer of certain amounts to deduct tax at source under sections 192 to 194LD, 195 to 196D of the Act. Under section 198 of the Act, it is provided that the tax deducted at source shall for the purpose of computing the income of assessee be deemed to be income received. Under section 199 of the Act, it is further provided that any de....
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....at the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority." 17. Under section 200(1) of the Act, it is provided that any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Under section 200(2) of the Act, any person being an employer, as referred to in sub-section (1A) of section 192 of the Act shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. Under sub-section (2A) of the Act, it is provided that where the sum has been deducted in accordance with foregoing provisions of the Chapter, by the office of the Government, then duty is upon the Treasury Officer or the Drawing & Disbursing Officer or any other person, to deliver or cause to be delivered to the prescribed income tax authorities, or to the person authorized by such authority, s....
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....furnished in paper form and later by way of amendment, the procedure for furnishing the statement electronically was provided. Once the statement has been so submitted by the deductor of tax deducted at source, then processing of statement is as per the provisions of section 200A of the Act. The said section was inserted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. The said section 200A of the Act reads as under:- "200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:- (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement; (c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount ....
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.... 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." 20.As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. 21. Section 234E(1) of the Act provides that where a person fails to deliver or cause to be delivered, a statement within time prescribed in section 200(3) of the Act or the proviso to section 206C(3) of the Act, he shall be liable to pay, by way of fees, sum of Rs. 200/- for every day during which the failure continues. The said provisions were inserted by the Finance Act, 2012 w.e.f. 01.07.2012. Under sub-section (2), it is further provided that the amount of fees referred to in sub-section (1) shall not exceed the amount of tax deductible or collectable, as the case may be. Sub-section (3) further lays down that the amount of fees referred to in subsection (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section 200(3) of the Act or the proviso to ....
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....visions of section 200A(1)(b) of the Act. Further, in addition to both these amounts, clause (c) to section 200A of the Act provides fees to be levied which shall be computed in accordance with the provisions of section 234E of the Act. The said provision to charge fees by the prescribed authority has been substituted for earlier provisions by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to the said substitution though the provisions of section 234E of the Act for payment of fees for default in furnishing the statement were inserted by the Finance Act, 2012 w.e.f. 01.07.2012, the prescribed authority did not have the power to charge the said fees, while processing the quarterly statements/returns under section 200A of the Act. 23. Now, looking at various provisions of the Act, the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the Assessing Officer which processing the intimation under section 200A of the Act could charge late fee under the provisions of section 234E of the Act. The assessee claims that the Assessing Officer at best co....
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....ided by the statute to be from 01.06.2015 and hence, is to be applied prospectively. There is no merit in the claim of Revenue that even without insertion of clause (c) under section 200A(1) of the Act, it was incumbent upon the assessee to pay fees, in case there is default in furnishing the statement of tax deducted at source. Admittedly, the onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to said substitution the Assessing Officer had no authority to charge the fees under section 234E of the Act while issuing intimation under section 200A of the Act. Before exercising the authority of charging any sum from any deductor or the assessee, the prescribed authority should have necessary power vested in it and before vesting of such power, no order can be passed by the prescribed authority in charging of such fees under section 234E of the Act, while exercising jurisdiction under section 200A of the Act....
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....t. It was further observed by the Hon'ble High Court that under the Income-tax Act, where there is an obligation on the Income-tax Department to process the income-tax returns within specified period from the date of filing, the returns could not be accurately processed of such person on whose behalf tax has been deducted i.e. deductee, until information of such deductions is furnished by the deductor within the prescribed time. Since the substantial number of deductors were not filing their TDS returns/statements within prescribed time frame, then it lead to an additional work burden upon the Department due to the fault of the deductor and in this light and to compensate for additional work burden forced upon the Department, fees was sought to be levied under section 234E of the Act. The Hon'ble High Court held that looking at this from this perspective, section 234E of the Act was not punitive in nature but a fee which was a fixed charge for the extra service which the Department had to provide due to the late filing of TDS statements. It was further held by the Hon'ble High Court that late filing of TDS returns/statements was regularized by payment of fees as set out....
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....eduction at source statement containing the details of deduction of tax made during the quarter by the prescribed due dates. Similar responsibility is on a person required to collect tax of certain specified receipts under section 206C of the Act. In order to provide effective deterrence against the delay in furnishing TDS/TCS statements, the Finance Act, 2012 nserted section 234E of the Act to provide for levy of fees on late furnishing of TDS/TCS statements. The Memo further took note of the fact that the Finance (No. 2) Act, 2009 inserted section200A in the Act, which provided for furnishing of TDS statements for determining the amount payable or refundable to the deductor. It further took note that however, as section 234E of the Act was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. It was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A ....
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.... section 234E of the Act was introduced, it provided that the per son was responsible for furnishing the TDS returns/statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge/levy the fee under section 234E of the Act while processing the TDS returns/statements filed by a person did not exist when section 234E of the Act was inserted by the Finance Act, 2012. The power to charge fees under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A(1)....
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....d have held that of the various rules guiding how a legislation has to be interpreted, one established rule is that unless contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. Idea behind the rule is that current law should govern current activities. The Memo explaining the Finance Bill, 2015 very clearly also recognizes that and refers to the current provisions of subsection (3) to section 200 of the Act, under which the deductor is to furnish TDS statements. However, as section 234E of the Act was inserted after insertion of section 200A in the Act, the existing provisions of section 200A of the Act did not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. In this regard, it was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. In other words, the Assessing Officer is empowered to charge fees payable under section 234E of the Act in the intimation issued after insertion of clause (c) to section....
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....DS statements/returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. 34. Before parting we may refer to reliance placed upon by the learned DR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani's case (supra) on another aspect wherein it was held that before 01.06.2015, whether the Assessing Officer had authority to pass a separate order under section 234E of the Act levying fees for delay in filing the TDS statements under section 200(3) of the Act; the Tribunal held 'yes' that the assessing authority had such power and after 01.06.2015, the Assessing Officer was within his limit to levy fees under section 234E of the Act even while processing the TDS state....
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....), who had held that no appeal is maintainable against the order of Assessing Officer passed while processing the TDS returns/statements and charging of fees under section 234E of the Act. Without going into various aspects of the issue, we make reference to the Memorandum explaining the Finance Bill, 2015, under which the heading was rationalization of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). The said memorandum categorically recognized that under the existing provisions of the Act, after processing of TDS statements, an intimation is generated specifying the amount payable or refundable. It was further noted that this intimation generated after processing 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. Under the amendment, similar position was given to the processing of TCS statements. In other words, the Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is g....
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....Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed. 37. In the result, all the appeals filed by different assessees for Different quarters relating to different years are allowed." 2.3. If the observation made in the assessment order, impugned orders, orders of the Tribunal, material facts available on record along with the arguments from both sides, kept in juxtaposition and analyzed, we find that before us, the assessee has raised a question prior to 01/06/2015, there was no enabling provision in section 200A for raising the demand in respect of levy of fee u/s 234E of the Act. We find that the coordinate Bench of Pune in the case of Gajanan Constructions (supra) has made an elaborate discussion on the issue and decided in favour of the assessee. It is also noted that while coming to a particular conclusion, the Pune Bench of the Tribunal duly considered the decisions relied upon by the Ld. CIT-DR such as from Hon'ble ....
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.... of the ld. representatives from both sides at the conclusion of the hearing on 9/11/2017." 3.2 After perusing the aforesaid finding of the Tribunal as well as relevant provisions of law on the issue in dispute, I am of the view that as per newly substituted clause (c) w.e.f. 01.6.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. The amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements/returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. I further find that the coordinate Bench of Pune in the case of Gajanan Constructions (supra) has made an elaborate discussion on the issue and decided in favour of the assessee. It is also noted that while coming to a particular conclusion, the Pune Bench of the Tribunal duly considered the decisions relied upon by the Ld. CIT-DR such as from Hon'ble Bombay High Court in Rasmikant Kundalia (in para-6), Hon'ble Karnataka High Court in Laxmi Nirman, Banga....