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2019 (5) TMI 528 - AT - Income TaxAction of the CIT(A) in treating the return of TDS filed by the assessee as non est - Fee u/s.234E for delayed filing of return of TDS - Fee for default in furnishing statements - CIT(Appeals) accepted the claim of the assessee and held fee u/s. 234E cannot be charged and cancelled the intimation u/s. 200A r.w.s. 154 of the Act in so far as it relates to levy of fee u/s.234E - CIT(A) using power of enhancement declare TDS return non est in law because it was filed beyond the time prescribed u/s. 200(3) - HELD THAT - A return of TDS only evidences payment of taxes which are withheld by a payee who, under the provisions of the Act, is bound to deduct tax at source. Declaring a return of TDS as non est, cannot have the effect of treating the payee as an Assessee in default and expose him to other consequences under the Act as an Assessee in default. Section 234E(3) lays down that the fee to be paid u/s. 234E shall be paid before the return of TDS is filed u/s. 200(3). This provision, in our view, does not confer power on the CIT(A) to declare the return of TDS as non est in law in a case where the return of TDS is filed without payment of fee u/s.234E of the Act. Besides the above, in the present case, the levy of fee u/s. 234E has already been deleted by the CIT(A) and therefore these provisions cannot be of any help to the conclusions of the CIT(Appeals) that the return filed without payment of fee u/s. 234E is invalid and can be declared as non est in law. As far as the power of enhancement under Explanation to section 251(1) which was relied on by the ld. DR is concerned, the Explanation is only with regard to clauses (a), (aa) and (b) of section 251(1) and is not applicable to clause (c). CIT(Appeals) in the cases to which the said clause applies can pass such orders as he thinks fit, but that power is circumscribed by the words in the appeal . Therefore, the CIT(Appeals) cannot travel beyond the subject matter of the appeal, which in the present case is as to, whether fee u/s. 234E can be levied or not; and not the question, whether the return of TDS filed by the assessee is non est in law? We are, therefore, of the view that the CIT(Appeals) had no power in the appeal in the present case to declare the return of TDS filed by the assessee as non est in law. In that view of the matter, we are of the view that the conclusion of the CIT(Appeals) holding that return of TDS filed by the assessee is non est in law is not valid in the eyes of law and the said direction is directed to be deleted and the order of the CIT(A) to this extent is held to be bad in law. - Decided in favour of assessee.
Issues Involved:
1. Validity of levy of fee under Section 234E for delayed filing of TDS returns. 2. Authority of CIT(A) to declare TDS returns filed by the assessee as non est. 3. Scope of enhancement powers of CIT(A) under Section 251(1)(c). Detailed Analysis: 1. Validity of Levy of Fee under Section 234E: The assessee filed TDS returns late, and the Assessing Officer (AO) levied a late fee under Section 234E of the Income-Tax Act, 1961. The assessee appealed, arguing that Section 234E, inserted by the Finance Act, 2012, came into effect from 1.7.2012, but the authority to levy such a fee during the processing of TDS returns under Section 200A(1)(c) came into effect only from 1.6.2015. The CIT(A) agreed with the assessee, referencing the Karnataka High Court's decision in Fatehraj Singhvi v. UOI, which held that the levy of fees under Section 234E could not be applied retrospectively for periods before 1.6.2015. Consequently, the CIT(A) canceled the intimation regarding the levy of fees under Section 234E. 2. Authority of CIT(A) to Declare TDS Returns as Non Est: Despite accepting the assessee's argument regarding the levy of fees, the CIT(A) proposed that the TDS returns filed by the assessee were non est (invalid) as they were filed beyond the prescribed time without paying the fee under Section 234E. The assessee contended that there is no provision in the Act to declare TDS returns as non est, unlike the provisions under Section 139(9) for income tax returns. The CIT(A) rejected this argument, stating that the provisions of Section 234E necessitate the payment of fees before filing the TDS return, thus rendering any return filed without such payment invalid. 3. Scope of Enhancement Powers of CIT(A) under Section 251(1)(c): The assessee argued that the CIT(A) exceeded his powers by declaring the TDS returns non est, as the issue before the CIT(A) was solely the validity of the levy of fees under Section 234E. The Tribunal noted that under Section 251(1)(c), the CIT(A) can pass orders as he thinks fit "in the appeal," meaning he cannot travel beyond the subject matter of the appeal. Since the appeal was about the levy of fees under Section 234E, the CIT(A) had no authority to declare the TDS returns as non est. The Tribunal emphasized that there is no provision in the Act for declaring TDS returns as invalid, reinforcing that the CIT(A)'s action was beyond his jurisdiction. Conclusion: The Tribunal concluded that the CIT(A) erred in declaring the TDS returns as non est. It held that the CIT(A) did not have the power to declare the returns invalid under the scope of the appeal, which was limited to the levy of fees under Section 234E. Consequently, the Tribunal directed the deletion of the CIT(A)'s conclusion regarding the non est status of the TDS returns and allowed the appeals by the assessees. Outcome: All appeals by the assessees were allowed, and the Tribunal pronounced this judgment on March 22, 2019.
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