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TMI Blog2018 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as the Act) by passing the order u/s 200A of the Act. 4. Facts of the case in brief are that the AO charged the impugned late fees u/s 234E of the Act. 5. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee was that Section 200A of the Act which deals with processing of statements of tax deducted at source had been subsequently amended by the Finance Act, 2015 which came into effect from 01.06.2015 and a new clauses (c) & (d) had been inserted in Section 200A of the Act by bringing the clarification by processing of TDS statement, the fee, if any, shall be computed in accordance with the provisions of Section 234E of the Act. It was contended that prior to the amendment u/s 200A of the Act w.e.f. 01.06.2015, levy of fee u/s 234E during processing of the TDS statement was not tenable. 6. The ld. CIT(A) after considering the submissions, however, did not find merit in the submissions of the assessee and confirmed the order passed by the AO. The reliance was placed on the judgment of the Hon'ble Bombay High Court in the case of Rashmikant Kundalia Vs Union of India reported at (2015) 54 Taxmann.com 200. 7. Now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrection statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such 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 fee, if any, shall be computed in accordance with the provisions of section 234E; (d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid undersection 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; (e) 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 (d); and (f) the amount of refund due to the deductor in pursuance of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Tribunal in the case of Gajanan Constructions (supra), relied upon by the assessee, therefore, we are reproducing hereunder the relevant portion from the aforesaid order for ready reference and analysis:- "This bunch of appeals filed by different assessee are directed against respective orders of CIT(A) relating to different assessment years against respective intimation issued under section 200A(3) of the Income-tax Act, 1961 (in short 'the Act'). 2. Bunch of present appeals relating to different assessee were heard together on different dates and are being disposed of by this consolidated order as the issue raised in all these appeals was similar. 3. It may be pertinent to mention here that there was a delay of 3 days in filing of appeal in ITA No.1337/PN/2015 to ITA No.1339/PN/2015 for which the assessee has filed a condonation petition. After considering the same, the delay in filing of these appeals is condoned and the appeals are admitted for adjudication. 4. The issue arising in all the appeals before us is against intimation issued under section 200A of the Act and / or order passed under section 154 of the Act in charging fees payable under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee is maintainable and whether any fees could be levied under section 234E of the Act prior to 01.06.2015, while issuing intimation under section 200A of the Act. Our attention was drawn to the provisions of section 200(3) of the Act, wherein the duty of person was to file the statement within prescribed time. Reference was made to Rule 31A of the Income Tax Rules, 1962 (in short 'Rules'), which provides the time limit to file the statement of tax deducted at source. He further pointed out that the Act requires quarterly statement to be filed within 15 days of close of the quarter. Thereafter, the learned Authorized Representative for the assessee pointed out that clause (c) to section 200A(1) of the Act was inserted w.e.f. 01.06.2015, under which levy of fees was provided for late filing the quarterly statements of TDS. He further stated that earlier to that, there was no provision of levy of fees. Similarly, amendments were made in section 246A of the Act. The first issue raised by the learned Authorized Representative for the assessee was that where the Assessing Officer had issued the intimation under section 200A of the Act, then the same is appeala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries of cases by different Tribunals and copies of same were filed. 9. Further, it was pointed out that the CIT(A) has wrongly applied the ratio laid down by the Hon'ble High Court of Karnataka in Lakshmi Nirman, Bangalore (P.) Ltd. v. Dy. CIT [2015] 60 taxmann.com 144/234 Taxman 275. He stated that it was not the case of assessee that fees was illegal but since there was no mechanism provided to levy the fees under section 200A of the Act, which was later provided w.e.f. 01.06.2015 as per the amendment, then prior to that date, no fees could be charged from the assessee. Second aspect of the same was that the Assessing Officer had no authority to levy the fees prior to 01.06.2015. He referred to the ratio laid down by the Hon'ble Supreme Court in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1, which had laid down the proposition that in cases where the cost of acquisition of the assets were Nil, then no capital gains has to be computed in the hands of assessee since there was no mechanism to charge capital gains. He further stressed that the Hon'ble Rajasthan High Court in Dundlod Shikshan Sansthan v. Union of India [2015] 235 Taxman 446/63 taxmann.com 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the payment of late fees under section 234E of the Act can be charged under section 200A of the Act, wherein clause (c) was inserted w.e.f. 01.06.2015. He further referred to the Chapter XVIIB of the Act, which provide deduction of tax at source, wherein payer of sum be it is salary, interest or commission, etc. has certain obligations and they have been made responsible, wherein the payments are made or credited to the account of payee, then the duty of the deductor is to deduct tax. Sections 192 to 194LD, 195 to 196D of the Act were various provisions for deducting tax at source. Section 199 of the Act provides credit of tax deducted at source and section 200 of the Act lays down the duties of person responsible to deduct the tax. He further stressed that it was mandatory that after deduction, the deductor shall pay the tax in the account of Treasury, there was no discretion with the deductor vis-avis rate of deduction, at what time and when to be paid. The learned CIT-DR further stated that TDS was one of the modes of recovery which works on the principle of paying as you earn. He further stated that TDS is source of revenue to the Government to carry out various progra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 272A(1) of the Act, no penalty is to be levied. He stressed that after such an amendment, the provisions of section 234E of the Act were compulsorily applicable. The learned DR further pointed out that penalty for non-furnishing of statement under section 200(3) of the Act is provided under section 271H of the Act, where the word used is 'may'. However, under section 234E of the Act, for levy of fees, the word used is 'shall' and it is further provided that the amount of fees, shall not exceed the tax deducted at source. Referring to sub-section (3), it was pointed out that the amount of fees is to be deposited before delivering the statement. He stressed that the provisions of section 234E of the Act was charging section wherein the liability was upon the assessee that he shall pay and when the same is to be paid is also specified therein. The Legislature in this regard was clear that defaulter itself would make the compliance. Hence, the question is if as per section 234E(1) of the Act, the assessee is liable to pay late fees and as per sub-section (3), late fees has to be paid before filing the statement and where the provisions of both subsection (1) and (3) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence retrospective in nature. He further placed reliance on the ratio laid down by the Hon'ble Supreme Court in Govinddas v. ITO [1976] 103 ITR 123. 14. The learned Authorized Representative for the assessee in rejoinder pointed out that Memo explaining the Finance Bill clearly says that the amendment was w.e.f. 01.06.2015 and it was proposed to amend the provisions of section 200A of the Act. He further stated that under the provisions of section 45 of the Act, where the cost of acquisition was Nil, no capital gains was leviable but after the amendment, it is so provided that capital gains would be chargeable in some cases where the cost of acquisition was Nil and hence, it is the statute which empowers the authorities to levy fees, charges or taxes. In the absence of such power, there is no merit in levy of fees under section 234E of the Act. 15. We have heard the rival contentions and perused the record. The issue arising in this bunch of appeals is against levy of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this subsection in such form and verified in such manner as may be specified by the authority." 17. Under section 200(1) of the Act, it is provided that any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Under section 200(2) of the Act, any person being an 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 sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng other than Government, are provided. The sub-rule (3) of Rule 31A of the Rules further provides that the statement referred to in subrule (1) may be furnished in any of the following manners i.e. by way of furnishing the statement in paper form or furnishing the statement electronically under digital signature or after verification. Initially, such statement had to be furnished in paper form and later by way of amendment, the procedure for furnishing the statement electronically was provided. Once the statement has been so submitted by the deductor of tax deducted at source, then processing of statement is as per the provisions of section 200A of the Act. The said section was inserted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. The said section 200A of the Act reads as under:- "200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount 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." 20. As per newly substituted clause (c) w.e.f. 01.06.2015, the fees, if any, is to be computed in accordance with the provisions of section 234E of the Act. However, under the earlier clause (c), there was no such provision. 21. Section 234E(1) of the Act provides that where a person fails to deliver or cause to be delivered, a statement within time prescribed in section 200(3) of the Act or the proviso to section 206C(3) of the Act, he shall be liable to pay, by way of fees, sum of Rs. 200/- for every day during which the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of sums deductible in addition to the amount of tax deducted at source, which is to be paid to the account of Treasury by the deductor. In case of any default, interest is to be charged against such deductor and the same is to be computed as per provisions of section 200A(1)(b) of the Act. Further, in addition to both these amounts, clause (c) to section 200A of the Act provides fees to be levied which shall be computed in accordance with the provisions of section 234E of the Act. The said provision to charge fees by the prescribed authority has been substituted for earlier provisions by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to the said substitution though the provisions of section 234E of the Act for payment of fees for default in furnishing the statement were inserted by the Finance Act, 2012 w.e.f. 01.07.2012, the prescribed authority did not have the power to charge the said fees, while processing the quarterly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.e.f. 01.06.2015. Once the power has been given, under which any levy has to be imposed upon taxpayer, then such power comes into effect from the date of substitution and cannot be applied retrospectively. The said exercise of power has been provided by the statute to be from 01.06.2015 and hence, is to be applied prospectively. There is no merit in the claim of Revenue that even without insertion of clause (c) under section 200A(1) of the Act, it was incumbent upon the assessee to pay fees, in case there is default in furnishing the statement of tax deducted at source. Admittedly, the onus was upon the assessee to prepare statements and deliver the same within prescribed time before the prescribed authority, but the power to collect the fees by the prescribed authority vested in such authority only by way of substitution of clause (c) to section 200A(1) of the Act by the Finance Act, 2015 w.e.f. 01.06.2015. Prior to said substitution 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 aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the deductor was required to furnish periodical quarterly statements containing the details of deduction of tax made during the quarter, by the prescribed due date and the delay in furnishing such TDS returns would have cascading effect. It was further observed by the Hon'ble High Court that under the Income-tax Act, where there is an obligation on the Income-tax Department to process the income-tax returns within specified period from the date of filing, the returns could not be accurately processed of such person on whose behalf tax has been deducted i.e. deductee, until information of such deductions is furnished by the deductor within the prescribed time. Since the substantial number of deductors were not filing their TDS returns/statements within prescribed time frame, then it lead to an additional work burden upon the Department due to the fault of the deductor and in this light and to compensate for 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 cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Bill, 2015 while introducing the said clause (c) to section 200A(1) of the Act. The Finance Bill took note of the provisions of Chapter XVIIB, under which the person deducting tax i.e. deductor was required to file quarterly tax deduction at source statement containing the details of deduction of tax made during the quarter by the prescribed due dates. Similar responsibility is on a person required to collect tax of certain specified receipts under section 206C of the Act. In order to provide effective deterrence against the delay in furnishing TDS/TCS statements, the Finance Act, 2012 inserted section 234E of the Act to provide for levy of fees on late furnishing of TDS/TCS statements. The Memo further took note of the fact that the Finance (No. 2) Act, 2009 inserted section 200A in the Act, which provided for furnishing of TDS statements for determining the amount payable or refundable to the deductor. 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 proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 234E of the Act were not on statute when the Finance (No. 2) Act, 2009 was passed, no provision was made for determining the fees payable under section 234E of the Act at the time of processing the TDS statements. So, when section 234E of the Act was introduced, it provided that the person was responsible for furnishing the TDS returns/statements within stipulated period and in default, fees would be charged on such person. The said section itself provided that fees shall not exceed the amount of tax deducted at source or collected at source. It was further provided that the person responsible for furnishing the statements shall pay the said amount while furnishing the statements under section 200(3) of the Act. However, power enabling the Assessing Officer to charge/levy the fee under section 234E of the Act while processing the TDS returns/statements filed by a person did not exist when 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catory in nature and hence, applicable for pending assessments. 31. The Hon'ble Supreme Court in Vatika Township (P.) Ltd's. case (supra) has explained the general principle concerning retrospectivity and have held that "of the various rules guiding how a legislation has to be interpreted, one established rule is that unless contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. Idea behind the rule is that current law should govern current activities". The Memo explaining the Finance Bill, 2015 very clearly also recognizes that and refers to the current provisions of sub-section (3) to section 200 of the Act, under which the deductor is to furnish TDS statements. However, as section 234E of the Act was inserted after insertion of section 200A in the Act, the existing provisions of section 200A of the Act did not provide for 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 234E of the Act has been upheld. 33. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements/returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. 34. Before parting we may refer to reliance placed upon by the learned DR on the ratio laid down by Chennai Bench of Tribunal in G. Indirani's case (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 &# ..... 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. Both the learned Authorized Representatives have raised varied arguments in respect of said issue and the learned DR has referred to the order of CIT(A), who had held that no appeal is maintainable against the order of Assessing Officer passed while processing the TDS returns/statements and charging of fees under section 234E of the Act. Without going into various aspects of the issue, we make reference to the Memorandum explaining the Finance Bill, 2015, under which the heading was rationalization of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). The said memorandum categorically recognized that under the existing provisions of the Act, after processing of TDS statements, an intimation is generated specifying the amount payable or refundable. It was further noted that this intimation generated after processing TDS statement is (i) subject to rectification 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 Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of charging fees under section 234E of the Act by the Assessing Officer while processing returns/statements in the paras hereinabove and in view thereof, we hold that the Assessing Officer is not empowered to charge the fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015, we allow the claim of assessee on both the aspects. The grounds of appeal raised by the assessee are thus, allowed. 37. In the result, all the appeals filed by different assessees for different quarters relating to different years are allowed." 2.3. If the observation made in the assessment order, impugned orders, orders of the Tribunal, material facts available on record along with the arguments from both sides, kept in juxtaposition and analyzed, we find that before us, the assessee has raised a question prior to 01/06/2015, there was no enabling provision in section 200A for raising the demand in respect of levy of fee u/s 234E of the Act. We find that the coordinate Bench of Pune in the case of Gajanan Constructions (supra) has made an elaborate discussion on the issue and decided in favour of the assessee. It is also noted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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