TaxTMI 
TaxTMI 
2022 (8) TMI 1304
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....ee was liable to be dismissed. 3. Aggrieved the assessee filed appeal before the Tribunal. 4. None attended on behalf of the assessee nor any adjournment application has been filed. 5. The written submission of the ld. DR is as under: "The above mentioned appeals are listed for hearing on 19.07.2022. The common issue which is under consideration in all the above mentioned appeals, is levy of fees u/s 234E of I.T. Act. The order levying penalty has been passed by respective TDS authorities and upheld by Ld. CIT(A). Accordingly, the appellants are in appeal before Hon'ble Tribunal. On this issue Hon'ble ITAT has passed a combined order dt. 29.11.2019 read with corrigendum dt. 11.12.2019 in 3 ITAs [ITA No. 5380/Del/2017, AY 2016-17; No. 5989/Del/2017, AY 2013-14 & 5990/Del/2017, AY 2013-14] with lead case being ITA No. 5380/Del/2017 in the case of Sh. Udit Jain. In its order dt. 29.11.2019, Hon'ble ITAT has allowed appeals of the assessee holding that fees u/s 234E is not leviable before 01.06.2015 i.e. the date when clause (c) was inserted in section 200A(I) for the computation of said fees at the time of processing. In its order Hon'ble ITAT has relied upon the dec....
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....f the initial lease consideration as advance rent. The assessee here relied on the "consistency" rule enunciated in Radhasoami Satsang (supra). The Supreme Court observed, in that case that: "Where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was no change it was in support of the assessee - we don't think the question should have been reopened and contrary to what have been decided by the Commissioner of income tax in the earlier proceedings, a different and contradictory stand should have been taken." This court notices that there cannot be a wide application of rule of consistency. In Radhasoami Satsang itself, the Supreme Court acknowledged that there is no res-judicata as regards assessment orders, and assessments for one year may not bind the officer for the next year. This....
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.... sub-section (I) 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 sub-section (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 tax collected at source, as the case may be, on or after the 1st day of July, 2012.]" 5. Kind attention of the Tribunal is also drawn to the Memorandum to the Finance Bill, 2012 which elaborates the rationale / explanatory notes with respect to amendments being brought in the provisions of the 1. T. Act. The rationale for such amendments in TDS/TCS related provisions have been provided under the heading "E. Rationalization of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) Provisions" which comprise of 6 paras. Para (111) relates to insertion of section 234E in the statute & relevant to the issue under consideration. The same are reproduced as under: "E. Rationalization of Tax Deduction at Source (TDS) and Tax Collecti....
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....o Rs. 1,00,000 shall also be levied for not furnishing TDS statement within the prescribed time. In view of the levy of fee for late furnishing of TDS statement, it is also proposed to provide that no penalty shall be levied for delay in furnishing of TDS statement if the TDS statement is furnished within one year of the prescribed due date after payment of tax deducted along with applicable interest and fee. In order to discourage the deductors to furnish incorrect information in TDS statement, it is proposed to provide that a penalty ranging from Rs. 10,000 to Rs. 1,00,000 shall be levied for furnishing incorrect information in the TDS statement. Consequential amendment is proposed in section 273B so that no penalty shall be levied if the deductor proves that there was a reasonable cause for the failure. Consequential amendment is also proposed in section 272A to provide that no penalty under this section shall be levied for late filing of TDS statement in respect of tax deducted on or after 1st July, 2012. Amendments on the similar lines for levy of fee and penalty for delay in furnishing of TCS statement and furnishing of incorrect informatio....
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.... determination under clause (d) 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- (d) 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 subsection (1), the Board may make a scheme for centralized 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.] " 7. Kind attention of the Tribunal is also drawn to the Memorandum to the Finance Bill, 2015 which elaborates the rationale for insertion of clause (c) in section 200A(I) in the statute. Para (I) ....
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....nt in respect of TCS statement which has been furnished. It is, therefore, proposed to amend the provisions of section 206C of the Act so as to allow the collector to furnish TCS correction statement. Currently, there does not exist any provision in the Act to enable processing of the TCS statement filed by the collector as available for processing of TDS statement. As the mechanism of TCS statement is similar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act. Under the existing provisions of the Act, after processing of TDS statement, an 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 demand under section 156 of the Act. As the intimation generated after the proposed processing....
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.... being salary income) to a non-resident, not being a company, or to a foreign company, shall deduct tax at the rates in force..................[This para has been truncated as not relevant] These amendments will take effect from 1st June, 2015." 8. Kind attention of Tribunal is also drawn to the provisions of Section 271H of the Act which was simultaneously inserted with the provisions of section 234E w.e.f. 01.07.2012 by the Finance Act, 2012. The applicability & interpretation of the provisions of sec. 271H have been discussed by various High Courts in its order while examining the validity of provisions of Sec.271H. The Section reads as under: "Penalty for failure to furnish statements, etc. 271H. (1) Without prejudice to the provisions of the Act, the Assessing Officer may direct that a person shall pay by way of penalty, if, he- (a) 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; or (b) furnishes incorrect information in the statement which is required to be delivered or caused to be delivered under subsecti....
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....as) ] iv) Dunlod Shikshan Sansthan vs. UOI [2015] 63 taxmann.com 243 (Raj)] v) Rashmikant Kundalia vs. UOI [2015] 54 taxmann.com 200 (Bombay) vi) Lakshminirman Bangalore Pvt. Ltd. vs. DCIT [2015] 60 taxmann.com 144 (Karnataka) vii) Sree Narayana Guru Smaraka Sangam Upper Primary School vs. UOI [2017] 77 taxmann.com 244 (Kerala) viii) Dr. Amrit Lai Mangal vs. UOI [2015] 62 taxmann.com 310 (P&H) 10. A harmonious and conjoint reading of provisions of section 234E & Memorandum to Finance Bill, 2012, Section 271H, section 200 A(1)(c), Memorandum to Finance Bill, 2015 and the case-laws on this issue makes following points unambiguously clear that: 10.1 The fee payable u/s 234E is a charging provision and the AO has no discretion at all whereas section 200A is a machinery provision enabling for processing of TDS statements, computation of adjustments, fees and generation of intimation etc. Hon'ble ITAT has not appreciated this obvious difference in its order dt. 29.11.2019, referred supra. 10.2 As apparent from the heading of the section 200A as well as the Memorandum to the- Finance Bill, 2015 which elaborates the ra....
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....ble ITAT. 10.4 Section 200A speaks about the processing of TDS return/statements and thus the provisions starts only after the filing of such TDS returns/statements, whether in time or delayed, whereas section 234E seeks to levy the fees for the period of delay in filing such TDS returns and statements. Therefore, it may be seen that the charging provisions of section 234E precedes the operation of the machinery provisions of section 200A. Hon'ble ITAT has not appreciated this obvious difference in its order dt. 29.11.2019, referred supra. 10.5 The fee payable u/s 243E is compensatory in nature to the department for the services provided for regularization of the delay in tiling of a TDS return/statement & is not penal in nature since the Income Tax Department has to expend extra effort & resources for processing delayed TDS returns or statements and also the additional burden of interest to be paid on refunds payable to the assessee on whose account tax deduction has been made. [As held in para 27 by Hon'ble Delhi High Court in the case of Biswajit Das vs. UOI, [2019] 103 taxmann.com 290 (Delhi)] Hon'ble Delhi High Court that the fee imposed u/s 234E of the Act i....
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....bility) were in effect much earlier from the date of insertion of 200A(3) which is merely a mechanical provision providing for computation, such amendment in procedural section should be considered as clarificatory in nature. 10.9 In the case of Rashmikant Kundalia, Hon'ble Bombay High Court has held in para 14 as under: "We find that the Legislature took note of the fact that a substantial number of deductors were not furnishing their TDS return/statements within the prescribed time frame which was absolutely essential. This led to an additional work burden upon the Department due to the fault of the deductor by not furnishing the information in time and which he was statutorily bound to furnish. It is in this light, and to compensate for the additional work burden forced upon the Department, that a fee was sought to be levied under section 234E of the Act. Looking at this from this perspective, we are clearly of the view that section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the Department has to provide due to the late filing of the TDS statements." 10.9 In the case of Qatalys Software Techn....
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....of Hon'ble Gujarat High Court, though considered by Hon'ble ITAT in its order dt. 29.11.2019, has not been appreciated by Hon'ble Tribunal in right perspective when read in conjunction with the provisions, explanatory notes and orders of various other High Courts wherein the validity of provisions of sec.234E has been upheld. 10.11 The issue of legality of intimations / orders passed u/s 200A levying fee u/s 234E for late filing of TDS/TCS returns / statements, prior to the amendments made by Finance Act'2015 w.e.f. 01.06.2015, was considered by Hon'ble Rajasthan High Court also in the case of Dunlod Shikshan Sansthan vs. UOI reported in [2015] 63 taxmann.com 243 (Raj)]. Para-8 of the order is relevant & the same is reproduced as under:- "8. In the present case, the fee was levied under section 200for late filing of the returns, prior to the amendments made by the Finance Act, 2015 with effect from 1.6.2015 in Sections 200A, 246A and 272A providing for computation and appeal. We do not find that even prior to these amendments the imposition of fee was illegal. We do not in exercise of the power under Article 226 of the Constitution of India find any valid reasons ....
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....OI [2016] 289 CTR 602 (Kar). In the case of Fateh Raj Singhji vs UOI Hon'ble Karnataka High Court has held in para-22 of its order that "It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision is to be read as having prospective effect and not retrospective effect. Under the circumstances we find that substitution made by clause (c) to (f) of sub-section (1) of sec. 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly the demand u/s 200A for computation and intimation for the payment of fee u/s 234E could not be made in purported exercise of powers under section 200A by the respondent for the respective assessment year prior to 01.06.2015.........." 10.14.2 Further in para 25 of its order Hon'ble High Court has observed that "As such, as recorded earlier, it is on account of the intimation received under section 200A for making computation and demand of fees under section 234E, the same has necessitated the appellant to challenge the constitutional validity of section 234E.................." ....
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.... 234E is chargeable. In view of the same and categorical findings of Hon'ble High Courts, the fee u/s 234E is undoubtedly leviable for the defaults of period in filing TDS/TCS statements/returns, even for the period prior to 01.06.2015 independent to the provisions of Sec. 200A(1) of the Act. The same have not been considered by Hon'ble ITAT. 11. Without prejudice to the submissions above, following submissions are also made:- Since the fee u/s 234E was levied in rectification order, passed after insertion of clause (c) to sec.200A(1), the same is valid. If the assessee takes a reference to the regular order passed before the amendment in sec. 200A(1) then the appeal is belated before the Ld. CIT(A). Condonation of delay was not sought by the assessee, so on this count, the appeal before CIT(A) was not maintainable in all cases & Ld. CIT(A) has observed that the appeals deserve to be dismissed. In cases at S. No.7, 13, 15, 7 16. even the regular orders were passed after insertion of clause (c) in sec.200A(1)." 6. We have gone through the submission of the ld. DR. The efforts of the ld. DR, Sh. M. Barnwal are duly appreciated for his detailed analysis and refere....
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....tion 200A of the Act provides that where the statement of tax deduction at source has been made by the person deducting any sum u/s 200 of the Act, then such statement shall be processed in the manner given therein. Clause (c) of section 200A of the Act has been substituted by the Finance Act 2015 w.e.f. 1.6.2015 which reads as under:- "(c)the fee, if any, shall be computed in accordance with the provisions of section 234E;" 6. Fee for default u/ s 234E of the Act provides that, when a person fails to deliver or cause to be delivered a statement within the time prescribed u/s 200(3) of the Act, then that person shall be liable to pay fee in the manner provided therein. Thus, fee u/s 234E of the Act is leviable if the statement is not filed as prescribed u/s 200(3) of the Act which in turn provides that the statement to be filed after the payment of tax to the prescribed authority. The relevant rule 31A (4A) provides that for filing of the 'challan cum statement' within seven days from the date of deduction. Now here in this case the demand has been raised purely on the ground that statement has not been furnished for the tax deduction at source. The releva....