TaxTMI 
TaxTMI 
2025 (7) TMI 513
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....been filed by the assessee explaining the reasons which led to delay in filing the appeals and the same reads as under: "1. I am the Authorized Signatory of the appellant in the abovementioned appeals filed before the Income Tax Appellate Tribunal (ITAT). 2. The appeal pertains to the A.Y. 2017-18. 3. The applicants have filed a detailed appeal against the impugned order dated 04.08.2023 passed by the Ld. CIT (Appeals), NFAC, Delhi, Accordingly, the present appeal ought to have been filed on or before 27.10.2023. However, the appeal will be filed on 11.03.2024. Accordingly, there is a delay of 136 days in filing the present appeals. 4. I hereby declare that the appeal shall be filed beyond the prescribed time limit due to unavoidable circumstances. 5. The reason for the delay is as follows: a. The father of the consultant appointed (CA Aditya Birla, Jalna) to handle my tax matters was diagnosed with pancreatic cancer during the relevant period. b. Despite our best efforts, the consultant's availability was severely impacted due to the need to care for the ailing father. c. Unfortunately, the consultant'....
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....peal. Therefore, there is an unavoidable delay in the matter. 5. There is admittedly a delay in filing the appeal before the Hon'ble Income Tax Appellate Tribunal. The said delay is bonafide and unintentional. 6. If the delay in filing the present appeal is not condoned, it would not render justice to the applicant-appellant. The Honourable Apex Court in the case of Collector of Land Acquisition vs. MST Katiji - 1987 (28) ELT 185 (SC) held that a justifiable liberal approach should be taken in condoning delay as an ordinary litigant does not stand to benefit by filing an appeal late and refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause justice being defeated. 7. Without prejudice, the applicant submits that the impugned order passed by the Ld. CIT (A) is an exparte order. Therefore, the same shall be set aside since it is in violation of the principles of natural justice. To support his contention, the appellant relies upon the decision of the Honourable Supreme Court in the case of Umanath Pandey and Ors. Vs. State of Uttar Pradesh and Ors. MANU/SC/0401/2009 wherein the Honourable Bench ....
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.... before the High Court. Hon'ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the affidavits by these two assessee's and considering the ratio laid down by the Hon'ble Court in the case of Inder Singh (supra), we are of the view that there was 'reasonable cause' which prevented the assessee's in filing the appeals within the stipulated time. We therefore condone the delay of 160 days and 75 days respectively in filing of appeals by both the above captioned assessee's and admit the appeals for adjudication. 7. The bunch of appeals pertaining to Chate Tutorials Pvt. Ltd. are recalled matters in as much as the earlier exparte order dated 04.06.2024 passed by this Tribunal has been recalled vide M.A.Nos.52 to 56/PUN/2024 order dated 31.12.2024. 8. We first take up bunch of appeals in respect of Chate Tutotials Pvt. Ltd. and ITA No. 476/PUN/2024 as the lead case wherein assessee has raised following common grounds of appeal: "1) That the instant demand is out of the purview of sec 200A and made without jurisdiction: ....
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..../- per day before filing the TDS statement. b. Further, sub-section (3) of section 234E of the Act states that it shall be paid before delivering a TDS statement. It means that any late fees should have been deposited just at the time of delivering TDS statement and not later than this. c. That once the TDS statement has been accepted without late fees, then such late fees cannot be recovered later on. In view of the above late fee cannot be recovered later on by way of any notice. d. Similar provisions exist for the interest under section 201(1A). Thus, recovery of interest under section 201(1A) after filing the TDS returns is bad as well. 4) That as per the provisions of sec 201(1) of the Act also a Deductor cannot be treated as an assessee in default and TDS return cannot be treated as defective due to non-payment of late fees U/s 234E. a. It is submitted that, the filer is treated as an assessee in default for non-payment of SA tax and interest along with return U/s 139(1). Moreover, the income tax return is also treated as defective U/s 139(9). On the contrary, section 201(1) only treats the assessee in default if the tax amount is ....
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....to charge late fee u/s. 234E as well interest payable for delay in deposit of TDS. 10. At the outset, Ld. Counsel for the assessee submitted that the above referred issue has been raised before ld.CIT(A) but it has not been dealt in the impugned order and this being a legal issue has been raised again before this Tribunal. 11. During the course of hearing, Ld. Counsel for the assessee referred to the following written submissions : "Kindly refer subject issue. At the outset, the Appellants thank your honor for a kind and patient hearing held on 11.03.2025. 1. At the further outset, it is clarified that all the 18 appeals mentioned above are against on the identical issue and also have identical grounds. The challenge of the Appellant lies not to the levy of interest, or late fees, but to the power of the Centralised Processing Cell determining the same. The Appellants re-iterate the submissions made during the course of personal hearing. The Appellants re-iterate the grounds of appeal taken before the Ld. Commissioner (Appeals) and the Appellate Tribunal. The same shall be treated as part and parcel of the present submission. The same are not being repeated ....
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....st', 'additional interest' or 'Late fees', then CBDT cannot empower CPC by formulating the scheme to determine such 'interest', 'additional interest' or 'Late fees'. Interest and fees are not a part of 'Tax' 3.1 It is submitted that the term 'Tax' has been defined in the Income Tax Act, 1961 as "means income-tax chargeable under the provisions of this Act" and "includes the fringe benefit tax payable under section 115WA". Thus, the definition of tax is very clear and unambiguous. This definition does not include any interest/penalty/fees to mean as tax. They are separate concepts under the law. 3.2 Reliance is placed on the decisions of: a. Harshad Shantilal Mehta - (1998) 231 ITR 871 (SC) - (2ndPara on Page 16); b. Oryx Finance and Investment Pvt Ltd - [Income Tax Appeal No. 1 of 2015 - Bom HC) - (Para 18, 19 and 21 on Pages 4 and 5); and c. Dinesh T Tailor - [2010-TIOL-311-HC-MUM-IT] - (Para 11 and 12 on Page 21 and 22). These cases have been annexed in the compilation of cases already presented before the bench. The relevant page numbers and paragraph numbers are marked for ease of reference. 3.3 It is addit....
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....n the same section under clause (d) of sub section (1) which starts with the term 'sum payable'. Thus, the conscious use of the words 'tax payable' in sub section (2) to section 200A distinguishes and clearly restricts the power given to the CBDT to formulate a scheme only for the determination of tax/refund and not interest/additional interest/late fees. 4.4 On this juncture, reliance is also placed on the landmark case of 'Deoki Nandan Aggarwal' reported at [(1991) 3 SCR 874-SC]wherein the Hon'ble Apex court has held that words can not be read into the statute when the language is clear and unambiguous. (Para 7.1 at Page 37 of the compilation). 4.5 It is also imperative here to look for the intention of the statute. The memo of Finance Bill, 2015 which most recently amended the sub section (1) of section 200A only intends to amend the manner in which the Late Fees is to be processed while processing the statement of TDS. In the said amendment there is no corresponding amendment to sub section (2) for the determination of the said late fees/interest by CPC. No Vacuum 5. It is submitted that there is no vaccum for the determination of interest, a....
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....on of tax payable and not so for interest, additional interest or late fees. It is the case of the assessee that, in its view, conversely, as the CBDT is not empowered to make the scheme for determination of interest, additional interest or late fees, it cannot empower the CPC by formulating the scheme to determine such 'interest', 'additional interest' or 'late fees'. 1.2 In short, the constitutional validity of the 200A(1)(c) of the Act is being challenged by the assessee Appellant by posing a constitutional challenge to the scheme as per section 200A(2) vis-à-vis the processing done by the CPC u/s 143(1)(a). In turn, the challenge lies to the constitutional validity of the levy of late fees u/s 234E r.w.s 200A(1)(c) by the CPC. 1.3 In short, the constitutional validity of the 200A(1)(c) of the Act is being challenged by the assessee Appellant by posing a constitutional challenge to the scheme as per section 200A(2) vis-à-vis the processing done by the CPC, TDS and would also impact the processing by the CPC u/s 143(1)(a). In turn, the challenge lies to the constitutional validity of the levy of late fees u/s 234E r.w.s 200A(1)(c) by the CPC. ....
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....ly intended to amend the manner in which the late fees were to be processed while processing the statement of TDS and that the said amendment there was no corresponding amendment to sub-section (2) for the determination of the said late fees/interest by the CPC. 1.7 Finally, in view of the above submission, it is the case of the assessee Appellant that the determination of interest, additional interest and late fees u/s 234E can be done only by the jurisdictional TDS officers and not the CPC. To sum up, it is the case of the assessee Appellant that : (i) There is no constitutional validity to the determination of interest, additional interest and late fees u/s 234E by the CPC. (ii) That, the late fees u/s 234E is not the same thing as 'tax' and cannot be included therein and accordingly the computation mechanism as envisaged u/s 200A fails with respect to the computation of the same by the CPC. 2. The Case of the Revenue : The constitutional validity of section 234E of the Act has already been upheld by various High Courts and has been followed by the Hon'ble Pune Bench of the ITAT in several cases. The Hon'ble Pune Bench of the....
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....he said levy. It is not the case of the assessee that the Hon'ble Pune ITAT has not done so. It needs to be mentioned that the decision in the case of Rajesh Kourani vs UoI[2017] 83 taxmann.com 137 (Gujarat), it was held by the Hon'ble Gujarat High Court that : "Section 234E is a charging provision creating a charge for levying fee for certain defaults in filing statements, and fee prescribed under section 234E could be levied even without a regulatory provision being found in section 200A for computation of fee". 2.2 In Rajesh Kourani vs UoI (supra), the Hon'ble High Court has held that section 200A is not a charging section but a machinery section. The catch-note of the said decision is reproduced for reference herein under : Section 234E, read with section 200A, of the Income-tax Act, 1961 - Deduction of tax at source - Fees for default in furnishing statements (Scope of provision) - Whether section 200A is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, arithmetical or prima facie in nature and does not create any charge in any manner - Held, yes - Whether with effect fro....
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.... for immediate correction, reconciliation and matching of TDS payments. Banks, being the most important Tax Deductors now have the facility to file correction statements online to minimize the difficulties faced by Tax Deductees in claiming credit of Tax Deducted at source. This facility to a large extent, ameliorates the problem faced by Tax Payers of mismatch in credit of Tax deducted and claimed in the Return of Income. A toll free Call Centre (Toll Free No.1800 103 0344) is also functional for the convenience of deductors/ deductees. Instant communication by way of E-mail ([email protected]) and SMS alerts are other unique features of the CPC(TDS). In this background, it is the AC/DC, CPC(TDS) who processes statements and issues the intimations accordingly. Perhaps, the entire understanding of the assessee Appellant is that, it is the CPC which processes the ROI is the CPC which processes the TDS statements, which is not the case in reality. As can be seen, the CPC, TDS facilitates the amelioration of the difficulties of the taxpayers in line with the legislative intention in bringing section 234E onto the statute. The interpretation proposed by the assessee Appe....
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....onal High Court, while dealing with the constitutional validity of section 234E of the Act in RashmikantKundalia vs UoI[2015] 54 taxmann.com 200 (Bombay)has dealt with the various aspects surrounding the levy of the said fee and the processing of the TDS statements submitted by the tax deductor. The relevant paras are reproduced herein under and they throw light as to how the jurisdictional High Court looks at the gamut of sections connected to the levy of the said fee u/s 234E and how the court needs to look at economic and regulatory legislations. The said paras need to be considered carefully and their proper appreciation while dealing with the proposition of the assessee Appellant would clearly expose the fallacy lying therein. Relevant paras : Section 200 deals with the duty of a person deducting tax. On a perusal of section 200, it is clear that subsection (3) thereof, inter alia stipulates that any person responsible for deducting any sum by way of tax, on or after 1-4-2005 in accordance with the foregoing provisions of Chapter XVII or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the ta....
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....ax administration is eroded; (iii) the late payment of refund affects the Government financially as the Government has to pay interest for delay in granting the refunds; and (iv) the delay in receipt of refunds results into a cash flow crunch, especially for business entities.[Para 13] 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. Looking at this from this perspective, section 234E 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.[Para 14] Due to late submission of TDS statements the department is burdened with extra work which is otherwise not required if the TDS statements were furn....
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....ubt. Before declaring a statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates the provisions of the Constitution of India. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. The court must therefore make every effort to uphold the constitutional validity of a statute, even if it requires giving the statutory provision a strained meaning, or a narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional. [Para 19] It is equally well settled that a statute relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion etc. As regards economic and other regulatory legislation it is imperative that the court exercises judicial restraint and grants greater latitude to the legislature whilst judging the constitutional validity of such a statute. This is for the simple reason that the court does not consists of economic and administ....
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....of fee payable under sub-section (1) to section 234E. Importantly, sub-section (4) to section 234E provides that the above provisions would apply to statement referred to in sub-section (3) to section 200 which is to delivered or cause to delivered on or after 1- 7-2012. [Para 7.1] That, with the above overview of section 234 E and on considering both the above views, it appears that the opinion expressed by the Gujarat High Court in Rajesh Kourani v. UOI [2017] 297 CTR 502 that section 234E by itself creates a liability and the liability to pay the late fee is not dependent on section 200A(1)(c) which only prescribes the recovery mechanism reflects the true intent and purpose of section 234E. Section 234E which provides for late fee is the substantive provision and the levy is not dependent on section 200A(1)(c) which only prescribes a recovery mechanism. A reading of section 234E would make it clear that it gets attracted, the moment there is a failure on the part of a person to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to subsection (3) of section 206C. The person committing the above breach/....
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....ld be derived from its overall context and purpose, rather than relying solely on isolated phrases or words. The interpretation proposed by the assessee appellant shall make the whole scheme unworkable, thereby going against the legislative intention for its inception and accordingly requires to be rejected. 3. In view of the above, in whichever way one looks at it, the proposition put forth by the assessee Appellant requires to be rejected and the order of the DCIT, CPC (TDS) and the CIT (A) requires to be upheld. It is prayed accordingly." 13. We have heard the rival contentions and perused the record placed before us. We have also gone through the written submissions and case laws relied upon by both the parties. The interesting issue raised before us revolves around the words "tax payable or refund due" appearing in sub-section (2) of section 200A of the Act, however for the sake of completeness, section 200A(1) and 200A(2) are reproduced below : "Processing of statements of tax deducted at source (and other statements). 200A. (1) Where a statement of tax deduction at source 246 for a correction statement] has been made by a person deducti....
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.... jurisdiction to process the statement of TDS u/s. 200A(1) of the Act and along with the amount of tax deducted at sources, if any, unpaid by the assessee, ld. Assessing Officer can also charge the interest for late deposit and levy fee u/s. 234E for late filing of the return and carry out other exercise referred in section 200A(1) of the Act. However, in the instant case returns have been processed by the Centralised Processing Cell which has been set up by the Board under the powers provided in sub-clause (2) of section 200A of the Act referred (supra). Now the bone of contention raised by ld. Counsel for the assessee is for the words "tax payable or refund due". Ld. Counsel for the assessee stated that board has the power to make a scheme for Centralised processing of statement of tax deducted at source u/s. 200A(2) of the Act only to the extent of determining the "tax payable or refund due". He further submitted that levy of late fee u/s. 234E as well as interest chargeable on late deposit of TDS do not come under the category of tax and therefore since sub-section (2) of section 200A only talks about "tax payable or refund due" the power with the Board to frame the scheme for ....
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.... to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under Chapter XVII of the Act; (c) "authorised agency" means the person authorised by the Director General to receive the statement of tax deducted at source or correction statement of tax deducted at source; (d) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963); (e) "Cell" means the Centralised Processing Cell having jurisdiction over such statements of tax deducted at source as may be specified by the Board; (f) "Commissioner" means the Commissioner of Income-tax in charge of the Centralised Processing Cell; (g) "correction statement of tax deducted at source" means the statement furnished for rectifying any mistake or to add, delete or update the information furnished in the statement of tax deducted at source furnished under sub-section (3) of section 200 of the Act; (h) "deductor" means a person deducting tax in accordance with the provisions of Chapter XVII of the Act; (i) "Director General" means the Director General of Income-tax (S....
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....increasing the liability of the deductor, an intimation to this effect shall be sent to the deductor electronically by the Cell and the reply of the deductor shall be furnished in the form and manner specified by the Director General. (4) Where an amendment has the effect of reducing a refund already made or increasing the liability of the deductor, the order under section 154 of the Act passed by an Income-tax authority of the Cell shall be deemed to be a notice of demand under section 156 of the Act. 7. Adjustment against outstanding tax demand.- Where a refund arises from the processing of a statement under this scheme, the provisions of section 245 of the Act shall, so far as may be, apply. 8. Appeal.- (1) Where a statement of tax deducted at source is processed at the Cell, the appeal proceedings relating to the processing of the statement shall lie with the Commissioner of Income-tax (Appeals) having jurisdiction over the Assessing Officer who has jurisdiction over the deductor and any reference to Commissioner of Income-tax (Appeals) in any communication from the Cell shall mean such jurisdictional Commissioner of Income-tax (Appeals). ....
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....application; (e) the manner of verification of rectification application; (f) receipt and processing of rectification applications in the Cell; (g) the mode and format of the acknowledgment to be issued by the Cell for the receipt of any document; (h) the mode of authentication of any document or information submitted to the Cell, including authentication by digital signature or electronic signature; (i) validation of any software used for electronic filing of correction statement of tax deducted at source or rectification application; (j) provision of web portal facility including login facility, tracking status of correction statement of tax deducted at source or statement of tax deducted at source, display of relevant details of tax deduction or refunds to the taxpayer or deductor, as the case may be, and facility of download of relevant information; (k) call centre to answer queries and provide taxpayer services, including outbound calls to a deductor requesting for clarification to facilitate the processing of the statement of tax deducted at source filed; (l) provision of grievance redressal mechanism in ....
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....in the Centre for any reasons, the Commissioner shall arrange to transmit such return to the Assessing Officer having jurisdiction for processing." 19. Now section 143(1A) provides for determining the tax payable or refund due, but in the scheme of Centralised processing of returns 2011 at clause 8(1)(a) use the words "the sum payable to or the amount of refund due". It means that in section 143(1A) the words mentioned is determining the "tax payable" but in the scheme it is mentioned "the sum payable to". Therefore, in the income-tax returns processed by CPC interest is also charged. Now in the scheme for processing of TDS returns by CPC, Point No.5 relates to processing of statements. It only talks about the manner specified in sub-section (1) of section 200A and it has not used the words either "tax payable or sum payable". 20. In sofaras the income-tax returns processed by CPC are concerned, in the scheme itself, the words mentioned are "the sum payable to". Therefore, the sum includes tax as well as interest but in the case of TDS returns processed by CPC, firstly in the scheme it did not use the words either "tax payable or refund due" but only refers to sub-section (1)....
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....gislature whilst judging the constitutional validity of such a statute. This is for the simple reason that the court does not consists of economic and administrative experts and has no expertise in these matters. [Para 20]" 22. Now taking guidance from the above observations of the Hon'ble Jurisdictional High Court and also going through the provisions of section 200A in totality, we find that so far as subsection (1) of section 200A of the Act there is no dispute as it provides the mechanism for processing the TDS returns/statements. Sub-section (2) of section 200A gives the powers to Board to make a Scheme for Centralised Processing of statements. For online processing the statements of TDS by CPC the intent is that the work which the Assessing Officers were previously carrying out to process the TDS returns having jurisdiction over the particular Circle/Ward can be carried out by the Centralised Processing Cell in a more fast and effective manner and for such ease of processing the TDS statements subsection (2) of section 200A gives the power to the Board to frame the Scheme for Centralised Processing of statements. 23. Now in sub-section (2) of section 200A along with men....
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....alised processing as provided under section 200A(1). However, section 200A(2) only provides for the scheme to be formulated for centralized processing of returns limited to the determination of the tax payable or refund due. The said delegation of power under the scheme is not for determining late fees, or interest on TDS. The present demand is based on Justification reports issued by such TDS-CPC. b. There is a clear distinction between the terms 'tax' and 'Interest'/'penalty' or 'late fees'. Tax can not be interpreted to mean and include interest and/or penalty. Thus, the literal reading of S. 200A(2) gives out that the said scheme empowering the centralized processing cell for processing of TDS Returns is only for the purpose of determining the amount of tax or refund thereof. c. Hence, it is a settled position in law that, in the absence of the enabling mechanism, the levy fails. See: 1. Fatehraj Singhvi vs Union of India reported in 73 taxmann.com 252 2. Vivek J Thar Vs ITO (ITAT Mumbai) Appeal Number: ITA No. 1476/Mum/2022 3. Sun Dye Chem v. The Assistant Commissioner (ST), Tirupur 2020-TIOL-1858-HC-MAD ....