TaxTMI 
TaxTMI 
2022 (10) TMI 1214
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....returns for Quarter-2 to Quarter-4 of financial year 2014-15. The Ld. CIT (A) has confirmed the same on the ground that the that intimation was issued on 10-10-2015 which fall after 01-06-2015 and therefore, CPC was empowered to make such an adjustment while processing the TDS returns. Aggrieved, the assessee is in further appeal before us. 4. We find that this issue has been decided by us in assessee's favor in our decision titled as Evergreen Harvest Agro Products P. Ltd. vs. ITO (ITA Nos.185 to 194/Chny/2022 order dt. 12.05.2022) as under: - 5.1 Upon careful consideration, we find that the provisions of Section 234E, as inserted by Finance Act 2012 w.e.f. 01/07/2012, envisages levy of fees @Rs.200/- for every day of default on the part of the assessee to deliver the statement of TDS within the time prescribed u/s 200(3) or Section 206C(3). Section 200A deal with processing of statements of tax deducted at source. A clause (c) has been inserted into this Section by Finance Act, 2015 with effect from 01/06/2015 which provide that the fees, if any, shall be computed in accordance with the provisions of Section 234E. 5.2 The case of the assessee is that since the amendment to ....
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....iling TDS statement was inserted. Section 234E for ready reference is reproduced and the same reads as under: "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 subsection (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 sub-section (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in subsection (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 J....
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....urn and the intimation could be issued specifying the same payable by the deductor as fee under Section 234E of the Act. Section 200A would also be relevant in the present matter. Hence, the same for ready reference is reproduced as under: "Processing of statements of tax deducted at source. 200A. (1) Where a statement of tax deduction at source 69[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 fee, if any, shall be computed in accordance with the provisions of section 234E; (d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount p....
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....erred by the statute under Section 200A prior to 1.6.2015 for computation of any fee under Section 234E nor the determination thereof, the demand or the intimation for the previous period or previous year prior to 1.6.2015 could not have been made. 15. Whereas, the learned counsel appearing for the respondent-Department made two fold submissions; 16. One was that, by virtue of Section 234E, the liability to pay fee had already accrued since there was failure to submit return either under Section 200(3) of the Act or under Section 206C (3) of the Act. Section 234E can be said as a charging Section generating the liability to pay the fee therefore, irrespective of a fact or the aspect that sub-sections (1c), (1d), 1(e) & (1f) were inserted by way of substitution in Section 200A, when the fee was payable the aforesaid insertion of the aforesaid clause and Section 200A (1) (c), (d), (e) and (f) would not result into nullifying the liability to pay fee under Section 234E of the Act. Hence, in his submission, it cannot be said that the demand or the intimation by way of computation of the fee under Section 234E is invalid or unwarranted or is without jurisdiction. 17. The examin....
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....nts. But, when Section 234E was inserted with effect from 1.7.2012 simultaneously, a second proviso was added under Section 272A(2) with effect from 1.7.2012 as under: "Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. 272A. (1)** ** ** (2) If any person fails- (a) to comply with a notice issued under sub-section (6) of section 94; or (b) to give the notice of discontinuance of his business or profession as required by sub-section (3) of section 176; or (c) to furnish in due time any of the returns, statements or particulars mentioned in section 133 or section 206 or section 206C or section 285B; or (d) to allow inspection of any register referred to in section 134 or of any entry in such register or to allow copies of such register or of any entry therein to be taken; or (e) to furnish the return of income which he is required to furnish under sub-section (4A) or sub-section (4C) of section 139 or to furnish it within the time allowed and in the manner required under those sub-sections; or (f) to deliver or cause to be delivered in due time a copy of the declaration mentioned in ....
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....on 234E, Section 271H and the aforesaid proviso to Section 272A(2), it can be said that, the fee provided under Section 234E is contemplated to give a privilege to the defaulter to come out from the rigors of penalty provision under Section 271H (1) (a) if he pays the fee within one year and complies with the requirement of sub-section (3) of Section 271H. 20. In view of the aforesaid observations and discussion, two aspects may transpire one, for Section 234E providing for fee and given privilege to the defaulter if he pays the fee and hence, when a privilege is given for a particular purpose which in the present case is to come out from rigors of penal provision of Section 271H(1)(a), it cannot be said that the provisions of fee since creates a counter benefit or reciprocal benefit in favour of the defaulter in the rigors of the penal provision, the provisions of Section 234E would meet with the test of quid pro quo. 21. However, if Section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under Section 200A which has been brou....
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....tion for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest. 23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid. 24. If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessit....
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..... 27. In view of the aforesaid observations and discussion, the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. It is clarified that the present judgment would not be interpreted to mean that even if the payment of the fees under Section 234E already made as per demand/intimation under Section 200A of the Act for the TDS for the period prior to 01.04.2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect accordingly. It is further observed that the question of constitutional validity of Section 234E shall remain open to be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge. 28. The appeals are partly allowed to the aforesaid extent. 5.3 On the other hand, the case of the revenue would derive strength from the contrary decision of Hon'ble Gujarat High Court rendered in Rajesh Kourani V/s Union of India (297 CTR 502 20/06/2017) wherein the Hon'ble court has declined to concur with the aforesaid adjudication of Hon'ble Karnataka High ....
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.... Union of India [2015] 373 ITR 268/229 Taxman 596/54 taxmann.com 200, he has instructions not to press the challenge to constitutionality of section 234E of the Act. He however made detailed submissions with respect to the other two grievances of the petitioner. Regarding rule 31A of the Rules, he pointed out that the legislature has prescribed different time limits for filing statements for the Government and the rest of the assessees. The special concession to the Government agencies was wholly unnecessary and not based on any rational. The same difficulties and complexities which are faced by Government agencies would also be faced by the individual assessees. 7. With respect to the amendment in sub-section (1) of section 200A, counsel submitted that prior to such amendment, there was no mechanism provided under the Act for collection of fee under section 234E of the Act. The Assessing Officer therefore could not have adjusted such fee in terms of section 200A of the Act. Counsel drew our attention to an intimation sent by the Assessing Officer, purported to be under section 200A of the Act, in which, he had adjusted a sum of Rs.33,123/- by way of late filing fee under sectio....
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....le the same within the prescribed time. Section 200C of the Act makes similar provision for the person responsible for the collection of tax at source to deposit the same with the Government revenue and to file a statement within the prescribed time. 11. Section 200A of the Act pertains to processing of statements of tax deducted at source. We would notice the provisions of this section prior to 01.06.2015 and the changes made therein by virtue of Finance Act, 2015, with effect from 01.06.2015. Further, we would take note of provisions of section 234E of the Act. For the time being, we may notice that section 200A provides for a mechanism for processing a statement filed under section 200 of the Act and enables the Assessing Officer to make some adjustments and to intimate the final outcome to the assessee. 12. Section 234E which pertains to fee for default in furnishing the statements was introduced for the first time by the Finance Act, 2012, with effect from 01.07.2015. Section 234E reads as under: "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 wi....
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.... 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 computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and (e) amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor: (f) the amount of refund due to the deductor in purs....
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....ue to the deductor in pursuance of the 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- (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." 15. In view of such statutory provisions, we may consider the petitioner's two challenges. Coming to the question of discriminatory nature of rule 31A of the Rules, it can be seen that sub-rule (1) of rule ....
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.... the private individuals or business houses. We do not found that the extra time of 15 days for the Government to file a return of deduction of tax at source is in any manner either unreasonable or discriminatory. If the legislature found it appropriate to grant slightly longer period to the government agencies looking to the complex nature of transactions involved, the volume and turnover of such transactions and filtering necessary statements required at many stages, in our opinion, the same was perfectly legitimate. Looking to the differences between the Government agencies and private assessees in the context of providing the last date for filing the statements, do not form a homogeneous class which cannot be further bifurcated. 16. We now come to the petitioner's central challenge viz. of non permissibility to levy fee under section 234E of the Act till section 200A of the Act was amended with effect from 01.06.2015. We have noticed the relevant statutory provisions. The picture that emerges is that prior to 01.07.2012, the Act contained a single provision in section 272A providing for penalty in case of default in filing the statements in terms of section 200 or provis....
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....adjustments, which are, as noted earlier, arithmetical or prima-facie in nature. With effect from 01.06.2015, this provision specifically provides for computing the fee payable under section 234E of the Act. On the other hand, section 234E is a charging provision creating a charge for levying fee for certain defaults in filing the statements. Under no circumstances a machinery provision can override or overrule a charging provision. We are unable to see that section 200A of the Act creates any charge in any manner. It only provides a mechanism for processing a statement for tax deduction and the method in which the same would be done. When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements. 20. Even in absence of section 200A of the Act with introduction of section 234E, it was alway....
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....tatement is filed latest within one year from the due date. 21. Counsel for the petitioner however, referred to the decision of Supreme Court in case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1 (SC), to contend that when a machinery provision is not provided, the levy itself would fail. The decision of Supreme Court in case of B C Srinivasa Setty (supra) was rendered in entirely different background. Issue involved was of charging capital gain on transfer of a capital asset. In case on hand, the asset was in the nature of goodwill. The Supreme Court referring to various provisions concerning charging and computing capital gain observed that none of these provisions suggest that they include an asset in the acquisition of which no cost can be conceived. In such a case, the asset is sold and the consideration is brought to tax, what is charged is a capital value of the asset and not any profit or gain. This decision therefore would not apply in the present case. 22. In the result, petition fails and is dismissed. 5.4 We find that a view favorable to the assessee has been taken by Hon'ble High Court of Kerala in recent decision titled as United Metals V/s ITO....