2020 (8) TMI 402 - AT - Income Tax

Fee u/s 234E - intimation u/s 200A(1)(C) - CIT(A) deleted the fee - processing of eTDS statement (s) filed late in contravention to Section 200 for F.Y 2016-17 (Quarter-3) in contrary to Clause (c) to Section 200A(1) inserted by the Finance Act 2015 w.e.f 01.06.2015 - HELD THAT - As per the Revenue s own submission, DCIT, CPC-TDS Ghaziabad holds concurrent jurisdiction with the AO(TDS)-3, Jaipur over the case, as per the provisions of Section 120 read with 124 of the Income Tax Act, 1961. Therefore, even though CPC has its separate and identifiable functions relating to TDS returns, the officers hold concurrent jurisdiction over such TDS matters with that of the Assessing officer, there cannot be any dispute that both administratively and functionally, the CPC of the Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency qua Income Tax department and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the TDS statement has been processed by the CPC and while processing the same, fee u/s 234E has been levied having tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue. Present appeal filed by the Department is dismissed on account of low tax effect given that the matter is not covered by any of the exceptions so specified and the contentions advanced by the ld DR on merits of the case are left open and not adjudicated upon. Appeals filed by the Revenue are dismissed.

Summary

Issues Involved:
1. Deletion of fee levied under Section 234E for late filing of eTDS statements.
2. Validity and applicability of Section 234E.
3. Distinction between fee under Section 234E and penalty.
4. Applicability of CBDT Circular No. 3/2018 exceptions.

Detailed Analysis:

1. Deletion of Fee Levied Under Section 234E:
The Revenue challenged the deletion of a fee levied under Section 234E for the late filing of eTDS statements. The assessee had filed the TDS statement for the 3rd quarter of FY 2016-17 late, and the fee of ?7,800 was levied under Section 200A(1)(c). The CIT(A)-3, Jaipur deleted this fee, prompting the Revenue to appeal.

2. Validity and Applicability of Section 234E:
The Revenue argued that the fee levied under Section 234E is constitutionally valid and mandatory for the late filing of eTDS statements. This position is supported by various judgments, including those from the Rajasthan High Court and the Bombay High Court, which were upheld by the Supreme Court. The CIT(A) did not challenge the constitutional validity of Section 234E but deleted the fee based on the submission that an SLP against the Bombay High Court's decision was admitted.

3. Distinction Between Fee Under Section 234E and Penalty:
The Revenue contended that the fee under Section 234E is not a penalty but a mandatory fee for late filing of eTDS statements. The CIT(A) treated the fee as a penalty, which the Revenue argued was incorrect. According to Section 246A(1), the fee levied under Section 234E is not considered a penalty and is not an adjustment made under Section 200A(1)/206CB(1), thus not appealable.

4. Applicability of CBDT Circular No. 3/2018 Exceptions:
The Revenue argued that the appeal falls under the exceptions of CBDT Circular No. 3/2018, specifically exceptions 10(a) and 10(e). Exception 10(a) pertains to cases where the constitutional validity of a provision is under challenge. However, the Tribunal found that the CIT(A) did not challenge the constitutional validity of Section 234E. Exception 10(e) relates to cases involving information from external law enforcement agencies. The Tribunal determined that the CPC, which processed the TDS statement, is part of the Income Tax Department and not an external law enforcement agency.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue due to low tax effect, as the matters were not covered by the exceptions specified in the CBDT Circular No. 3/2018. The contentions on the merits of the case were left open and not adjudicated upon. The Tribunal's findings in ITA No. 519/JP/2019 applied mutatis mutandis to ITA No. 595/JP/2019, resulting in the dismissal of both appeals.