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2019 (6) TMI 241 - AT - Income TaxFee for default in furnishing statements - fine levied u/s 234E - whether no appeal is maintainable against an order passed under section 234E? - HELD THAT - The learned CIT(A), while holding that these orders were passed independently u/s 234E and therefore no appeal is maintainable, failed to take note the amendment carried out in Section 200A(1) with effect from 1st June 2015. It is pertinent to note that Section 200 casts a duty upon the person deducting tax to deposit the same with the Central Government. Sub-section (3) requires to submit statement of such deduction in prescribed form within prescribed time limit as provided under Rule 31AA of the Income-tax Rules, 1962. Such statements are to be processed u/s 200A and, while carrying out this exercise of processing, the Assessing Officer can levy fine as per Section 234E . A procedure has been provided for processing the statement of deduction of tax u/s 200A. It is a machinery provision and the Assessing Officer is required to follow the procedure contemplated under this section. In the absence of this procedure, a fine could be levied u/s 234E because it was a charging section; but, once a procedure has been provided by the legislature, then it does not give discretion to the Assessing Officer whether he is exercising such powers u/s 234E or he is exercising the powers while processing the statements. It is true that in the present case statements were not filed, but this fact came to the notice of the Assessing Officer while passing the order u/s 206C(6)/206C(7). He processed that fact from the date on which statements ought to be filed by the assessee. Once a procedure has been provided, then it is to be construed that the order has been passed by the Assessing Officer after following the procedures. Merely by mentioning Section 234E in the title of the order, it would not become an order passed u/s 234E in isolation - more particularly when subsequent development shows that these orders are patently invalid and not sustainable, because their foundation holding the assessee in-default and calculating fine from the date of default has been extinguished after the orders of the CIT(A) passed against the orders passed u/s 206C(6)/206C(7). CIT(A) has held that the assessees were not liable to collect TCS. In that situation, subsequent orders passed u/s 234E r.w.s. 200A would become without any jurisdiction and invalid. Orders of the CIT(A) against the orders of the Assessing Officer u/s 206C(6)/206C(7) have been placed in the cases of Rakesh B. Laddha, Jayesh K. Dangariya and Parag M. Parsana. In the case of Vishal Enterprise, no such order has been placed. Therefore, taking cognizance of the orders of the CIT(A) in these three cases, we quash the impugned order passed by the Assessing Officer in their cases on 17.03.2007. So far as the order passed in the case of Vishal Enterprise is concerned, we remit this issue to the file of the Assessing Officer. In case the assessee produces the order of higher appellate authority holding that no tax was required to be collected, then learned Assessing Officer shall rectify his order.
Issues Involved:
1. Maintainability of appeal against an order passed under section 234E of the Income Tax Act. 2. Requirement for the assessee to collect Tax Collected at Source (TCS) and submit Form No. 27EQ. 3. Validity of orders passed under sections 206C(6) and 206C(7) of the Income Tax Act. 4. Impact of subsequent orders by CIT(A) on the validity of penalties levied under section 234E. Issue-wise Detailed Analysis: 1. Maintainability of Appeal Against an Order Passed Under Section 234E: The primary grievance of the assessees was that the CIT(A) erred in confirming the fine levied by the AO under section 234E by holding that no appeal is maintainable against an order passed under this section. The CIT(A) concluded that the order under section 234E for late filing of quarterly statements in Form 27EQ for the period prior to 01/06/2015 is not appealable as per section 246A of the IT Act. This conclusion was based on the judgment of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. Union of India, which held that section 200A, as amended from 01/06/2015, allows for the computation of fees under section 234E and makes such orders appealable under section 246A. However, prior to this amendment, no such provision existed, rendering separate orders under section 234E non-appealable. 2. Requirement for the Assessee to Collect TCS and Submit Form No. 27EQ: The AO determined that the assessees, engaged in the sale of scrap, failed to collect TCS as required under section 206C and also failed to submit Form No. 27EQ within the prescribed time. For instance, in the case of M/s. Vishal Enterprise, scrap worth ?22.68 crores was sold without collecting TCS of ?22.68 lakhs, and Form No. 27EQ was not submitted. Similar defaults were observed in other cases, leading to orders under sections 206C(6) and 206C(7) deeming the assessees as assessee-in-default. 3. Validity of Orders Passed Under Sections 206C(6) and 206C(7): During the pendency of appeals against these orders, the AO also levied fines under section 234E for delays in submitting Form No. 27EQ. The CIT(A) later found that the assessees had collected Form No. 27C from the purchasers, indicating the scrap was for manufacturing use, thus exempting the assessees from collecting TCS. Consequently, the CIT(A) deleted the demands raised under sections 206C(6) and 206C(7), as the forms were submitted belatedly but before assessment proceedings. 4. Impact of Subsequent Orders by CIT(A) on the Validity of Penalties Levied Under Section 234E: The Tribunal noted that the subsequent orders of the CIT(A) deleting the TCS demands invalidated the foundation of the penalties levied under section 234E. If no TCS was required to be collected, the non-filing of Form No. 27EQ was a procedural formality. The Tribunal observed that the orders passed under section 234E were dependent on the default of the assessee for TCS collection. With the CIT(A) holding that no TCS was required, the penalties under section 234E became unsustainable. Conclusion: The Tribunal quashed the impugned orders under section 234E for the assessees Rakesh B. Laddha, Jayesh K. Dangariya, and Parag M. Parsana, based on the CIT(A)'s findings that no TCS was required. For Vishal Enterprise, the issue was remitted to the AO to re-adjudicate based on the production of higher appellate authority's order confirming no TCS was required. The appeals were allowed for statistical purposes, with the Tribunal emphasizing the procedural and jurisdictional lapses in the AO's orders under section 234E.
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