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2019 (5) TMI 626 - AT - Income TaxRectification u/s 154 - Levy of penalty u/s 234E - creating charge for levy of fee for certain defaults in filing statements - fee levied even for the period prior to coming into operation of Section 200A - debatable issue - apparent mistake in the order of the AO levying late fee under Section 234E - HELD THAT - As considered the arguments of both the sides and perused the material placed before us. We entirely agree with the contention of the learned DR that it is a debatable issue because there are contrary decisions one by Hon ble Gujarat High Court in the case of Rajesh Kourani 2017 (7) TMI 458 - GUJARAT HIGH COURT in favour of the Revenue and the other case of Fatheraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT in favour of the assessee. It is a settled law that a debatable issue cannot be rectified under Section 154 of the Act. In view of the above, we uphold the order of learned CIT(A) and dismiss the appeals filed by the assessee. - Appeals of the assessee are dismissed.
Issues:
Appeal against order of CIT(A) for assessment years 2013-14 to 2015-16 - Levy of late fee u/s 234E - Applicability of Section 200A - Rectification petition - Contrary decisions by different High Courts - Whether issue is debatable. Analysis: Issue 1: Rejection of application u/s 154/155 for wrong levy of late fee u/s 234E: The assessee contended that authorities were not justified in rejecting the application for wrong levy of late fee u/s 234E. The argument was centered on the fact that the levy of late fee u/s 234E was not permissible prior to 01.06.2015 when Section 200A came into effect. The assessee relied on a decision by ITAT, Delhi Bench in a similar case and a judgment by the Hon’ble Karnataka High Court. The CIT-DR, however, argued that late fee under Section 234E can be levied even for periods before Section 200A came into operation. Citing a judgment by the Hon’ble Gujarat High Court, the CIT-DR contended that Section 200A is a machinery provision, while Section 234E is a charging provision. The Tribunal held that the issue was debatable due to contradictory decisions by different High Courts and upheld the order of the CIT(A) dismissing the appeals. Issue 2: Applicability of Section 200A and Section 234E: The crux of the matter revolved around whether the late fee under Section 234E could be levied for defaults prior to the enactment of Section 200A. The assessee argued that the penalty cannot be imposed for defaults before 01.06.2015 when Section 200A became effective. In contrast, the Revenue contended that Section 234E could be applied even for periods preceding the operation of Section 200A. This disagreement led to a debate on the interpretation of the provisions, with the Tribunal acknowledging the conflicting decisions by the Hon’ble Gujarat High Court and the Hon’ble Karnataka High Court. The Tribunal concluded that since the issue was debatable, it fell outside the scope of rectification under Section 154. Issue 3: Rectification petition and debatable issue: The case stemmed from a rectification petition filed by the assessee against the levy of late fee under Section 234E. The rejection of the rectification petition led to the appeals before the Tribunal. The CIT-DR highlighted the distinction between Section 200A and Section 234E, emphasizing that the latter could be applied irrespective of the former. The Tribunal, after considering the arguments from both sides and the conflicting judicial decisions, held that the issue was indeed debatable. Consequently, the Tribunal upheld the order of the CIT(A) and dismissed the appeals filed by the assessee. In conclusion, the Tribunal's decision was based on the interpretation of Sections 200A and 234E, the conflicting judgments of different High Courts, and the debatable nature of the issue at hand. The dismissal of the appeals underscored the Tribunal's stance that rectification under Section 154 was not applicable to issues that were subject to conflicting interpretations and deemed debatable in the legal realm.
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