2023 (3) TMI 405 - AT - Income Tax

Rectification of mistake u/s 154 - Levy of interest u/s 234E - Processing of statements of tax deducted at source u/s 200A - Scope of amendment to section 200A(1) of the Act by insertion of clause (c) thereto by Finance Act, 2015 w.e.f. 01.06.2015 - HELD THAT - Appeals in the instant case arise not out of Intimations under section 200A(1) r/w s. 234E of the Act, but u/s. 154 of the Act, denying the assessee s claim for cancelling such levy. As also the fact that there is a conflict of judicial opinion in the matter, with contrary decisions as in Fatheraj Singhvi v. UoI 2016 (9) TMI 964 - KARNATAKA HIGH COURT so that the matter cannot be regarded as a mistake of law per se, justifying rectification u/s. 154 of the Act. Reference in this context may also be made to the decision in CIT v. Aruna Luthra 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT We are, therefore, not in agreement with the ld. CIT(A), who has distinguished the former decision as well as in Laxmndas Bhatia Hingwala Pvt. Ltd 2010 (12) TMI 105 - DELHI HIGH COURT cited before him by the assessee, as being in respect of the power u/s. 254(2) of the Act. His reliance for the purpose on the decision in the case of CIT v. South Indian Bank Ltd. 2000 (12) TMI 6 - SUPREME COURT and CIT v. Hero Cycles Ltd. 1997 (8) TMI 6 - SUPREME COURT , is misplaced. The same stand pursued to find as ousting debatable issues from the purview of s. 154. The decision by the Hon ble jurisdictional High Court is binding within it s territorial jurisdiction, settling the issue for that jurisdiction. Any order inconsistent therewith is thus to be necessarily regarded as mistaken. It would have been a different matter if only the decisions by the Hon ble Karnataka and Gujarat High Courts were available. Rather, in such a case, the latter having considered the former, it is the latter that would prevail. We, therefore, find the orders by the Revenue authorities as not sustainable in law, i.e., for the State of Kerala. We, accordingly, have no hesitation in allowing assessee s appeals inasmuch the processing is for a period prior to 01/6/2015. Appeals filed by the assessee are allowed.

Summary

Issues:
Applicability of interest under section 234E of the Income Tax Act in relation to TDS returns for different quarters of the financial year 2013-14 and Qtr.1 of fy 2014-15.

Analysis:

Issue 1: Applicability of interest under section 234E:
The judgment deals with 39 appeals by the Assessee, a Regional Rural Bank, regarding the applicability of interest under section 234E of the Income Tax Act in relation to TDS returns for specific quarters. The amendment to section 200A(1) of the Act by the Finance Act, 2015, enabled the processing of levy of fees under section 234E. The levy under section 234E(1) pertains to the delayed filing of TDS returns by deductors and is calculated on a per day basis, capped at the TDS under reference. The Hon'ble Kerala High Court clarified that the amendment to section 200A(1) is prospective, effective from 01.6.2015, allowing the assessing authority to validly determine the levy under section 234E from that date onwards. The judgment emphasizes that there is no vested right in procedure and legislative intention is crucial in interpretation.

Issue 2: Retroactive effect of the amendment:
The judgment further clarifies that the amendment to section 200A(1) applies even to intimations issued after 01.06.2015, concerning periods before that date, without a retroactive effect. The decision in Olari Little Flower Kuries (P.) Ltd. v. UoI affirms this stance. The judgment references various legal precedents to support the interpretation that the amendment confers a substantive power on the assessing officer and does not have a retroactive effect.

Issue 3: Conflict of judicial opinion and rectification under section 154:
The judgment acknowledges a conflict of judicial opinion on the matter, citing contrary decisions in different High Courts. It highlights the binding nature of decisions by the Hon'ble jurisdictional High Court, emphasizing that orders inconsistent with such decisions must be rectified. The judgment refers to legal precedents to assert that rectification under section 154 can be made for mistakes of fact or law, even if the original decision predates the binding decision by the High Court. The judgment concludes that the orders by the Revenue authorities are not sustainable in law for the State of Kerala, allowing the Assessee's appeals for the processing period before 01.6.2015.

In conclusion, the judgment provides a detailed analysis of the issues surrounding the applicability of interest under section 234E of the Income Tax Act, emphasizing the prospective nature of the amendment to section 200A(1) and the significance of legal precedents in interpreting tax laws and procedural matters.