2018 (1) TMI 90 - HC - Income Tax

Levy of interest under Section 234E - intimations under Section 200A - Held that - Learned counsels for both the parties have brought to the notice of the Court that the Division Bench of this Court in the case of Fatheraj Singhvi & Ors. Vs. Union of India & Ors, 2016 (9) TMI 964 - KARNATAKA HIGH COURT has held that no such interest can be levied under Section 234E of the Act. Writ petitions are allowed and the impugned Intimations under Section 200A of the Act issued by the Centralized Processing Cell (TDS) by the concerned Deputy Commissioner of Income Tax are set aside. The matters are remanded back to the local Assessing Authority of the petitioners-assessees to pass fresh orders in accordance with law, if at all called for and necessary, after giving an opportunity of hearing to the petitioners-assessees

Summary

Issues:
1. Alleged failure to deduct Tax at Source and levy of interest under Section 234E.
2. Interpretation of the Division Bench judgment regarding the legality of interest under Section 234E.
3. Implementation of the Division Bench judgment by the Respondents.
4. Setting aside of the impugned intimations under Section 200A and remanding the matters back to the local Assessing Authority.

Analysis:

1. The petitioners challenged the impugned intimations under Section 200A of the Income Tax Act, 1961, issued by the Centralized Processing Cell (TDS), alleging their failure to deduct Tax at Source and the levy of interest under Section 234E. This resulted in a demand against the petitioners-assessees.

2. The Division Bench judgment in the case of Fatheraj Singhvi & Ors. Vs. Union of India & Ors. clarified that no interest can be levied under Section 234E of the Act for the period prior to 1.6.2015. The judgment emphasized that the intimation for payment of fees under Section 234E made before this date lacked authority under the law and was deemed illegal and invalid. Consequently, the demand notices under Section 200A for fees under Section 234E were quashed and set aside.

3. The counsel for the petitioners argued that the Division Bench judgment was binding on the Respondents, and since no appeal was made to the Supreme Court against this judgment, it should be implemented. The Revenue's counsel did not dispute this argument.

4. In light of the Division Bench judgment, the High Court allowed the writ petitions, setting aside the impugned intimations under Section 200A. The matters were remanded back to the local Assessing Authority of the petitioners-assessees for fresh orders in accordance with the law and the Division Bench judgment. No costs were awarded in this decision.

This comprehensive analysis of the legal judgment highlights the issues raised, the interpretation of relevant legal provisions, and the implications for the parties involved, ensuring a detailed understanding of the case.