2015 (6) TMI 1005 - AT - Income Tax

Fee for default in furnishing statements u/s 234E in the intimation u/s 200A - levy of fees u/s 234E appealability before the learned CIT(A) - Held that - Late filing of the returns or statements of tax deducted or collected at source is regularised upon payment of the fee as set out in section 234E. This is nothing but a privilege and a special service to the deductor allowing him to file the returns or statements of tax deducted or collected at source beyond the time prescribed by the Act or the Rules. The fee sought to be levied under section 234E is not in the guise of a tax that is sought to be levied on the deductor. The provisions of section 234E are not onerous on the ground that the section does not empower the Assessing Officer to condone the delay in late filing of the returns or statements of tax deducted or collected at source or that no appeal is provided for from an arbitrary order passed under section 234E. It must be noted that a right of appeal is not a matter of right but is a creature of the statute and if the Legislature deems it fit not to provide a remedy of appeal so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach the court in its extraordinary equitable jurisdiction under article 226/227 of the Constitution of India and in that perspective the Hon ble High Court held the provision as intra vires the Constitution of India. The learned AR was made clear during the appellate proceedings that the levy of fees for default in furnishing the statement u/s 234E of the Act is not appealable as per the provisions of section 246A of the Act wherein the orders appealable before the learned CIT(A) have been enumerated. Considering all these aspects we hold that the levy of fees u/s 234E of the Act was not appealable before the learned CIT(A). TLevy of fee is not punitive in nature. It is levied for special service provided by the Department for late filing of statement. The Assessing Officer has no power to condone the delay in late filing of the statement of tax. In view of these facts the appeal of the assessee is not maintainable hence the same is dismissed. - Decided against assessee

Summary

Issues Involved:
1. Legality of levying fees under section 234E for late filing of TDS statements.
2. Applicability of section 200A for processing TDS statements for the purpose of charging fees under section 234E.
3. Definition of the "responsible person" under section 204 in relation to section 234E.
4. Constitutional validity of section 234E.
5. Appealability of the order under section 200A for levying fees under section 234E.

Detailed Analysis:

1. Legality of levying fees under section 234E for late filing of TDS statements:
The assessee contended that the processing under section 200A does not cover the processing of quarterly TDS statements for the purpose of charging fees under section 234E. The CIT(A) dismissed this contention, stating that section 200A empowers the AO to rectify any mistake, including the imposition of fees for late filing of TDS statements as prescribed under section 234E. The fee is automatically levied for the default in filing the quarterly TDS statements from the due date to the actual filing date.

2. Applicability of section 200A for processing TDS statements for the purpose of charging fees under section 234E:
The appellant argued that section 200A does not permit the levy of late fees under section 234E. The CIT(A) clarified that section 200A allows the AO to rectify any discrepancies, including late fees for TDS statements. The fee is calculated from the due date of filing the TDS statement, not from the date of depositing the taxes, to ensure compliance with section 200(3) and rule 31A(2).

3. Definition of the "responsible person" under section 204 in relation to section 234E:
The appellant claimed that the person responsible for paying the fee is not specified under section 204. The CIT(A) found this argument misplaced, stating that the "responsible person" for deducting tax and filing TDS statements under section 200(3) is covered under section 204. Hence, the fee under section 234E is applicable to the responsible person as defined.

4. Constitutional validity of section 234E:
The appellant challenged the constitutional validity of section 234E, arguing that it is unconstitutional as the deductor is already penalized by way of interest under section 201(1A). The CIT(A) did not adjudicate this issue, stating it was beyond their jurisdiction. The ITAT referred to the Bombay High Court's decision in Rashmikant Kundalia vs. Union of India, which upheld the constitutional validity of section 234E, stating it is intra vires and not punitive but compensatory for the additional work burden on the department due to late filing.

5. Appealability of the order under section 200A for levying fees under section 234E:
The assessee argued that the order under section 200A does not permit the levy of late fees under section 234E and is thus invalid. The ITAT clarified that the levy of fees under section 234E is not appealable under section 246A, which lists appealable orders. The Bombay High Court's ruling emphasized that the fee is for special service provided by the department and is not punitive. Therefore, the appeal against the levy of fees under section 234E was not maintainable, leading to the dismissal of the appeal.

Conclusion:
The ITAT upheld the CIT(A)'s decision, confirming the levy of fees under section 234E for the late filing of TDS statements. The appeal was dismissed on the grounds that the levy of fees is automatic, compensatory, and not punitive, and the provisions are constitutionally valid. The order was pronounced in the open court on 11th June 2015.