2019 (11) TMI 707 - AT - Income Tax

Levying fees under section 234E - A.O. passed the intimation u/s 154 levying the late fees under section 234E - assessee contended before the Ld. CIT(A) that A.O. has erred in making intimation under section 154 without any intimation under sub-section (1) of Section 200A in respect of TDS return - HELD THAT - No justification to sustain the Orders of the authorities below. Amendment to Section 200A of the I.T. Act in which sub-clause (c) have been inserted in the Section w.e.f. 01.06.2015 which includes that while processing of the statement of tax deducted at source the fee, if any, shall be computed in accordance with the provisions of Section 234E. Further, no order of intimation under section 200A(1) have been brought on record and virtually the A.O. has shown his inability in giving any factual position in this regard. Therefore, contention of assessee is justified that no intimation under section 200A(1) have been issued in the present case. Therefore, there is no question of making any rectification in any of the orders. Since rectification under section 154 could be made in some order already existing, therefore, in the absence of any Order or intimation under section 200A(1) of the I.T. Act, no amendment under section 154 could be done by the authorities below. Section 154(3) provides that an amendment which has the effect of enhancing the assessment or reducing refund or otherwise including liability of assessee or the deductor or the collector, shall not be made under this Section unless the authority concerned has given notice to assessee or deductor or collector or of its intimation to do so and he shall allow the assessee or the deductor or the collector a reasonable opportunity of being heard. In the present case, the intimation u/s 154 have been issued automatically without giving any opportunity of being heard to the assessee. Therefore, there is violation of principles of natural justice as well as violation of Section 154(3)

Summary

Issues:
Appeals challenging the Order of the Ld. CIT(A) confirming the action of the A.O. in levying fees under section 234E of the I.T. Act, 1961, bypassing the intimation under section 154 of the I.T. Act, 1961, in the absence of any intimation issued under section 200A of the I.T. Act, 1961.

Analysis:
The Assessee filed appeals against the Orders of the Ld. CIT(A) confirming the A.O.'s decision to levy fees under section 234E of the I.T. Act, 1961, without issuing an intimation under section 200A. The Assessee argued that the A.O. erred in passing the intimation under section 154 without the necessary intimation under section 200A. The Ld. CIT(A) based the decision on the delay in filing the TDS statement as per the intimation under section 154. The Ld. CIT(A) dismissed the appeal, citing the constitutional validity of Section 234E and referring to relevant case law.

The Assessee contended that no order under section 200A(1) was passed, and the intimation under section 154 was issued without providing an opportunity to be heard. The Assessee cited relevant case law to support their argument that the A.O. was not empowered to charge late fees under section 234E for the period before 01.06.2015. The Assessee relied on decisions by ITAT Delhi and Pune Benches to support their claim that the intimation under section 200A was beyond the scope of adjustment and was not valid.

The Tribunal considered the Assessee's submissions and found no justification to uphold the Orders of the authorities below. Referring to decisions by ITAT Delhi and Pune Benches, the Tribunal noted that the Amendment to Section 200A of the I.T. Act, effective from 01.06.2015, allowed for the computation of fees under section 234E during the processing of TDS statements. Since no intimation under section 200A(1) was presented, and the A.O. failed to provide any factual position, the Tribunal concluded that no rectification under section 154 could be made. The Tribunal found a violation of principles of natural justice and Section 154(3) of the I.T. Act due to the automatic issuance of intimation under section 154 without providing an opportunity to be heard. Consequently, the Tribunal quashed the impugned orders and allowed all the Assessee's appeals.