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TMI Blog2017 (3) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 1-3-2017 - Shri Jason P. Boaz, Accountant Member and Shri Sanjay Garg, Judicial Member Appellant by: Shri Kapil D. Talreja Ms. Hema Bhanushali Respondent by: Shri Saurabh Kumar Rai ORDER Per Bench These appeals by the assessees are directed against the orders of the CIT(A)-I, Thane dated 21.03.2016 for A.Y. 2013-14. Since common issues are involved, these appeals were heard together and are being disposed off by way of a common order for the sake of convenience. 2. Order on petition for condonation of delay in filing these appeals 2.1 Admittedly, there was a delay of 17 days in filing these three appeals in the case of M/s. Asian Pipes Profiles Pvt. Ltd. (ITA Nos. 4740 4741/Mum/2016) and M/s. Disha Distributors (ITA No. 4742/Mum/ 2016). The assessees have filed separate petitions for condonation of the aforesaid delay in filing these three appeals. We have heard both the parties and perused the material on record. The Hon'ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji Others (1987) (167 ITR 471) (SC), while laying down the principles for considering matters of condonation of delay in filing appeals, has stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 6. In view of the above submissions order U/s 200A of the Act imposing late fees U/s 234E has to be cancelled and quashed. 7. The department vide its press release dated 12th May 2016 made know that 'The Income Declaration Scheme 2016 The Direct Tax Dispute Resolution Scheme 2016' ( Scheme for short) came into force with effect from 1st June, 2016, having retrospect effect. The Scheme was beneficial to the class of Assessee who had Arrears of Tax, which in short means Amount of tax, interest or penalty determined under the IT Act or WT Act, in respect of which appeal is pending before the CIT(A) or CWT(A) as on 29.02.2016. The pending appeal could be against an assessment order or a penalty order as on 29th February, 2016. Now the matter as it stands that whether the Assessee be given benefit of the Scheme to settle the dues with the framework of the Scheme. 8. The appellant craves, leave to add, alter, amend, modify or substitute any or all the above grounds of the appeal, including arising consequential to the points raised during the appeal proceedings till the final disposal of appeal, which are without prejudice to one another. 9. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees under section 234E of the Act. In order to adjudicate the issue, first reference is being made to the relevant provisions of the Act. Under Chapter XVII headed collection and recovery of taxes and under clause B , deduction at source, the statute lays down the duty of the payer of certain amounts to deduct tax at source under sections 192 to 194LD, 195 to 196D of the Act. Under section 198 of the Act, it is provided that the tax deducted at source shall for the purpose of computing the income of assessee be deemed to be income received. Under section 199 of the Act, it is further provided that any deduction made in accordance with the provisions of Chapter and paid to the Central Government shall be treated as payment of tax on behalf of the person from whose income the deduction was made. The sum referred to in sub-section (1A) of section 192 of the Act and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 16. Section 200 of the Act lays down the duty of the person deducting tax, which reads as under:- 200. (1) Any person deducting any sum in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n employer, as referred to in sub-section (1A) of section 192 of the Act shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. Under subsection (2A) of the Act, it is provided that where the sum has been deducted in accordance with foregoing provisions of the Chapter, by the office of the Government, then duty is upon the Treasury Officer or the Drawing Disbursing Officer or any other person, to deliver or cause to be delivered to the prescribed income tax authorities, or to the person authorized by such authority, statement in such form, verified in such manner, setting forth such particulars within such time as may be prescribed. Under section 200(3) of the Act, similar responsibility is on any person deducting any sum on or after first day of April, 2005 in accordance with foregoing provisions of the Chapter, including any person as an employer referred to in section 192(1A) of the Act. The onus is upon such person that he shall after paying the tax to the credit of Central Government within prescribed time, prepare such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h statement shall be processed in the following manner, namely:- (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement; (c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and (e) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor : Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.-For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e failure continues. The said provisions were inserted by the Finance Act, 2012 w.e.f. 01.07.2012. Under sub- section (2), it is further provided that the amount of fees referred to in sub-section (1) shall not exceed the amount of tax deductible or collectable, as the case may be. Sub-section (3) further lays down that the amount of fees referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section 200(3) of the Act or the proviso to section 206C(3) of the Act. The provisions of said section have been made applicable to a statement to be delivered or cause to be delivered on or after the first day of July, 2012. 22. Reading the above said provisions of the Act, it transpires that where tax has been deducted at source by a deductor out of the account of deductee, then the onus is upon the deductor under section 200 of the Act to prepare a statement in such form and verified in such manner which is prescribed under the Act in which the particulars of tax deduction at source are to be provided and the said statement is to be delivered or cause to be delivered within such time as may be prescribed. Rule 31A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y statements / returns under section 200A of the Act. 23. Now, looking at various provisions of the Act, the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the Assessing Officer which processing the intimation under section 200A of the Act could charge late fee under the provisions of section 234E of the Act. The assessee claims that the Assessing Officer at best could charge the difference in tax deducted and not paid in Treasury from the deductor and / or any interest payable on such deduction of tax at source. However, till substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015, the Assessing Officer was not empowered to charge fees under section 234E of the Act. The case of Revenue on the other hand, was that it was the duty of deductor while furnishing the statement under section 200(3) of the Act to deposit the fees referred to in section 234E(1) of the Act. The learned CIT-DR stressed that fees referred to in sub-section (1) had to be paid while delivering or causing to deliver the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said substation, the Assessing Officer had no authority to charge the fees under section 234E of the Act while issuing intimation under section 200A of the Act. Before exercising the authority of charging any sum from any deductor or the assessee, the prescribed authority should have necessary power vested in it and before vesting of such power, no order can be passed by the prescribed authority in charging of such fees under section 234E of the Act, while exercising jurisdiction under section 200A of the Act. Thus, in the absence of enabling provisions, under which the prescribed authority is empowered to charge the fees, the Assessing Officer while processing the returns filed by the deductor in respect of tax deducted at source can raise the demand on account of taxes, if any, not deposited and charge interest. However, prior to 01.06.2015, the Assessing Officer does not have the power to charge fees under section 234E of the Act while processing TDS returns. In the absence of enabling provisions, levy of fees could not be effected in the course of intimation issued under section 200A of the Act prior to 01.06.2015. 25. The Amritsar Bench of Tribunal in Sibia Healthcare (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r additional work burden forced upon the Department, fees was sought to be levied under section 234E of the Act. The Hon ble High Court held that looking at this from this perspective, section 234E of the Act was not punitive in nature but a fee which was a fixed charge for the extra service which the Department had to provide due to the late filing of TDS statements. It was further held by the Hon ble High Court that late filing of TDS returns / statements was regularized by payment of fees as set out in section 234E of the Act. Therefore, the findings of Hon ble High Court were thus, that the fees sought to be levied under section 234E of the Act was not in the guise of tax sought to be levied on the deductor. The provisions of section 234E of the Act were held to be not onerous on the ground that section does not empower the Assessing Officer to condone the delay in late filing the income tax returns or that no appeal is provided from arbitrary order passed under section 234E of the Act. The Hon ble High Court held that the right to appeal was not a matter of right but was creature of statute and if the Legislature deems fit not to provide remedy of appeal, so be it. The Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It further took note that however, as section 234E of the Act was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fees payable under section 234E of the Act at the time of processing of TDS statements. It was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. The Memo explaining the Finance Bill, 2015 very categorically held that currently there does not exist any provision in the Act to enable the processing of TCS returns and hence, a proposal was made to insert a provision in this regard and also the post provision shall incorporate the mechanism for computation of fees payable under section 234E of the Act. The Finance Bill further refers to the existing provisions of the Act i.e. after processing of TDS statement, intimation is generated specifying the amount payable or refundable. This intimation generated after processing of TDS statement is (i) subject to rectification under section 154 of the Act; (ii) appealabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 234E of the Act was inserted by the Finance Act, 2012. The power to charge fees under the provisions of section 234E of the Act while processing the TDS statements, was dwelled upon by the Legislature by way of insertion of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Accordingly, we hold that where the Assessing Officer has processed the TDS statements filed by the deductor, which admittedly, were filed belatedly but before insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015, then in such cases, the Assessing Officer is not empowered to charge fees under section 234E of the Act while processing the TDS returns filed by the deductor. 29. The Hon ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) has upheld the constitutional validity of said section introduced by the Finance Act, 2015 w.e.f. 01.06.2015 but was not abreast of the applicability of the said section 234E of the Act by the Assessing Officer while processing TDS statement filed by the deductor prior to 01.06.2015. In such scenario, we find no merit in the plea of learned CIT-DR that the Hon ble Bombay High Court in Rashmikant K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of fees payable under section 234E of the Act at the time of processing of TDS statements. In this regard, it was thus, proposed to amend the provisions of section 200A of the Act so as to enable the computation of fees payable under section 234E of the Act at the time of processing of TDS statements under section 200A of the Act. In other words, the Assessing Officer is empowered to charge fees payable under section 234E of the Act in the intimation issued after insertion of clause (c) to section 200A(1) of the Act w.e.f. 01.06.2015. The Legislature itself recognized that under the existing provisions of section 200A of the Act i.e. prior to 01.06.2015, the Assessing Officer at the time of processing the TDS statements did not have power to charge fees under section 234E of the Act and in order to cover up that, the amendment was made by way of insertion of clause (c) to section 200A of the Act. In such scenario, it cannot be said that insertion made by section 200A(1)(c) of the Act is retrospective in nature, where the Legislature was aware that the fees could be charged under section 234E of the Act as per Finance Act, 2012 and also the provisions of section 200A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (supra) on another aspect wherein it was held that before 01.06.2015, whether the Assessing Officer had authority to pass a separate order under section 234E of the Act levying fees for delay in filing the TDS statements under section 200(3) of the Act; the Tribunal held yes that the assessing authority had such power and after 01.06.2015, the Assessing Officer was within his limit to levy fees under section 234E of the Act even while processing the TDS statements under section 200A of the Act. In view of the present set of facts, where the Assessing Officer had charged fees under section 234E of the Act while processing the statements under section 200A of the Act before 01.06.2015, there is no merit in the reliance placed upon by the learned CIT-DR on the said proposition laid down by the Chennai Bench of Tribunal and we dismiss the same. 35. Another reliance placed upon by the learned CIT-DR was in respect of amendment being retrospective or prospective and reliance was placed on the ratio laid down by Hon ble Delhi High Court in CIT Vs. Naresh Kumar (supra). However, in view of our decision in the paras hereinabove, where power is being enshrined upon the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 154 of the Act; (ii) appealable under section 246A of the Act; and (iii) deemed as notice of payment under section 156 of the Act. Under the amendment, similar position was given to the processing of TCS statements. In other words, the Legislature recognizes that a deductor who has filed his statement of tax deducted at source, which in turn, has been processed by the Assessing Officer and intimation is generated under which, if any amount is found to be payable, then such intimation generated after processing of TDS returns is subject to rectification under section 154 of the Act and / or is also appealable under section 246A of the Act, since the demand issued by the Assessing Officer is deemed to be a notice of payment under section 156 of the Act. Since the intimation in question issued by the Assessing Officer was appealable order under section 246A(1)(a) of the Act, therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued under section 200A of the Act. The CIT(A) has rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued under section 200A of the Act. ..... 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