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TMI Blog2019 (12) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... for Assessment Year [in short referred to as 'AY'] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-60, Mumbai, [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-60/IT-492/CPC(TDS)Rg-2/2013-14 dated 04/06/2018 on following grounds of appeal: - 1. On the facts and circumstances of the case and in law the Commissioner of Income Tax (A) [CIT-A] erred in not appreciating a fact that the Assessing Officer (AO) has levied the late fees without any authority under law. The appellant prays that the late fees levied by the AO be deleted. 2. On the facts and circumstances of the case and in law CIT-A erred in upholding the levy of Fees and dismissing the appeal of the appellant without appreciating a fact that the decision of Hon'ble Karnataka High Court in the case of Shree Ayappa Educational Charitable Trust (Writ Petition 618/2015) was dtd. 12th December, 2017, which is subsequent to the decision of Gujarat High Court dtd. 20th June, 2017 and as per the judicial discipline of our country, it has a binding effect and applicable to appellant. The action of learned CIT-A is against the provision of judicial system of our country and is bad in law. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merated in the impugned order. This decision of Hon'ble Karnataka High Court was stated to be followed in by same court in its subsequent decision dated 12/12/2017 rendered in Writ Petition No. 618/2015 filed by Shree Ayappa Educational Charitable Trust. However, it was also pointed out that there was a conflicting decision by Hon'ble Gujarat High Court in Rajesh Kourani V/s Union of India (297 CTR 502 20/06/2017) wherein it was held that Section 234E was a charging provision creating a charge for levy of fees for defaults in filing of TDS statements and the same could be levied even without a regulatory provision being found in Section 200A for computation of fees. In the above background, it was submitted that in case of conflicting judgement of two non-jurisdictional High Courts, the view favorable to the assessee should be taken in terms of the decision of Hon'ble Supreme Court rendered in CIT V/s Vegetable products Ltd. (1972 88 ITR 192). 2.2 The learned CIT(A), going by the law of stare decisis as explained by Hon'ble Bombay High Court in CIT V/s Thana Electric Supply Ltd. (206 ITR 727) concluded that in case of conflicting decisions of coordinate jurisdiction, the later de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of such taxes deducted at source by him as TDS and for the period in question, the relevant dates for filing of such statement is as follows: (i) 30th June - 15th July of the financial year; (ii) 30th September - 15th October of the financial year; (iii) 31st December - 15th January of the financial year; and (iv) 31st March - 15th May of the following financial year. 9. It may be recorded that Section 200(3) requiring to file formal TDS statement within the aforesaid each quarter was inserted on 1.4.2005 and at the relevant point of time, Section 272A(2)(k) provided for the penalty of ₹ 100/- per day for each day of default in filing TDS statement and such provision also came to be inserted with effect from 1.4.2005. On 1.4.2010, Section 200A was inserted providing for the processing of the TDS statement and the consequent issuance of the intimation to the deductor, the same determined as payable by it or refundable by it. But, the relevant aspect is that, in initial provisions of Section 200A, there was no reference for fee payable under Section 234E. 10. On 1.7.2012, Section 234E providing for levying of fee of ₹ 200/- per day for each day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. (3) Notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub section (3) of section 200 or the proviso to sub-section (3) of section 206C before the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement. (4) The provisions of this section shall apply to a statement referred to in subsection (3) of section 200 or the proviso to sub section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012." 12. On 1.6.2015, clauses (c) to (f) came to be substituted under Section 200A providing that the fee under Section 234E can be computed at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section." 13. When the returns for TDS filed by the respective appellant-petitioners were processed in purported exercise of the power under Section 200A, the amount of fee under Section 234E is computed and determined. The demand is made and the intimation given under Section 200A includes the computation and the determination of the fee payable by the appellant-petitioners. 14. We may now deal with the contentions raised by the learned counsel for the appellants. The first contention for assailing the legality and validity of the intimation under Section 200A was that, the provision of Section 200A(1)(c), (d) and (f) have come into force only with effect from 1.6.2015 and hence, there was no authority or competence or jurisdiction on the part of the concerned Officer or the Department to compute and determine the fee under Section 234E in respect of the assessment year of the earlier period and the return filed for the said respective assessment years namely all assessment years and the returns prior to 1.6.2015. It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proves that after paying TDS with the fee and interest the amount is credited and he had delivered or caused to deliver the statement within one year from the time prescribed for submission of the said statement. To put it in other words, for failure to submit the statements, the penalty provided under Section 271(1)(a) cannot be imposed if the deductor complies with the requirement of subITA section (3) of Section 271H. Hence, it can be said that the fee provided under Section 234E would take out from the rigors of penalty under Section 271H but of course subject to the outer limit of one year as prescribed under sub-section (3) of Section 271H. It can also be said that when the Parliament intended to insert the provisions of Section 234E providing for fee simultaneously the utility of such fee was for conferring the privilege to the defaulter-deductor to come out from the rigors of penal provision of Section 271H. Be it recorded that, prior to Section 271H of the Act inserted in the statute book, the enforceability of requirement to file return under Section 200(3) and Section 206C(3) was by virtue of Section 272A(2)(k) of the Act which provided for the penalty of ₹ 100/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6C and 71[statements under sub-section (2A) or sub section (3) of section 200 or the proviso to sub-section (3) or under sub-section (3A) of section 206C] shall not exceed the amount of tax deductible or collectible, as the case may be: Provided further that no penalty shall be levied under this section for the failure referred to in clause (k), if such failure relates to a statement referred to in subsection (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. ** ** **" 18. The aforesaid shows that in the clause (k) if the said failure relates to a statement referred to in sub-section (3) of Section 200 or the sub-section (3) of Section 206C, no penalty shall be imposed for TDS after 01.07.2012. 19. Hence, it can be said that, the mechanism provided for enforceability of Section 200(3) or 206C (3) for filing of the statement by making it penal under Section 272A (2) (k) is done away in view of the insertion of Section 271H providing for penal provision for such failure to submit return. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided under Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the learned counsel for respondent-Revenue that insertion of clause (c) to (f) under Section 200A(1) should be treated as retroactive in character and not prospective. 22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under Section 234E of the Act. At this stage, we may also record that the learned counsels appearing for the appellant had also declared that if the impugned notices under Section 200A are set aside, so far as it relates to computation and intimation for payment of fee under Section 234E, the appellant-petitioners would not press the challenge to the constitutional validity of Section 234E of the Act. But, they submitted that the question of constitutional validity of Section 234E may be kept open to be considered by the Division Bench and the Judgment of the learned Single Judge may not conclude the constitutional validity of Section 234E of the Act. 26. Under these circumstances, we find that no further discussion would be required for examining the constitutional validity of Section 234E of the Act. Save and except to observe that the question of constitutional validity of Section 234E of the Act before the Division Bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. Prior to 01.06.2015, this provision did not contain any reference to the adjustment of fee to be computed in accordance with the provisions of section 234E of the Act. This provision was made only with effect from 01.06.2015. 5. In the petition, the petitioner has raised following threefold grievances: I. That section 234E of the Act is ultra-vires and unconstitutional. II. Rule 31A of the Rules insofar as it prescribes longer period for the Government to file the statements as compared to the other assessees is discriminatory and arbitrary and therefore unconstitutional. III. Prior to 01.06.2015, section 200A did not authorize the Assessing Officer to make adjustment of the fee to be levied under section 234E of the Act. This provision introduced with effect from 01.03.2016 is not retrospective and therefore, for the period between 01.07.2002 i.e. when section 234E was introduced in the Act and 01.06.2015 when proper mechanism was provided under section 200A of the Act for collection of fee, the department could not have charged such fee. 6. Appearing for the petitioner, learned advocate Shri Parth Contractor at the outset, stated that in view of the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment in section 200A, counsel submitted that the charging provision is section 200E of the Act. Section 200A merely provides a mechanism. Such a provision cannot govern the charging provision. Even in absence of amendment in section 200A, the Assessing Officer was always authorized to levy fee in terms of section 200E of the Act. At best, the amendment in the said provision should be seen as clarificatory or providing a mechanism which till then was missing. Counsel referred to the decision of Rajasthan High Court in case of Dundlod Shikshan Sansthan v. Union of India [2015] 63 taxmann.com 243/235 Taxman 446 (Raj.), where, in the context of challenge to the vires to the section 234E of the Act, incidentally this issue also came up for consideration. 10. In order to appreciate the rival contentions, we may take a closer look at the statutory provisions applicable. Section 200 of the Act pertains to duty of the person deducting tax and imposes a duty on a person deducting tax in accordance with the foregoing provisions of chapter-XVII to pay such sum to the credit of the Central Government within the time prescribed. Sub-section (3) of section 200 requires such a person to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to sub-section (3) of section 206C of the Act. As per sub-section (2) of section 271H in case of default to file the statements, the assessee may be liable to penalty of not less than rupees ten thousand but not more than rupees one lakh. Under sub-section (3) of section 271H however, such penalty would be avoided if the assessee proves that he had paid the tax deducted or collected alongwith interest and he had filed the necessary statement within one year from the time prescribed for filing such statements. We may also record that clause (k) of sub-section (2) of section 272A provides for penalty for failure to deliver the statement within the time specified in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C at a rate of rupees one hundred for every date during which the failure continues. However, with effect from 01.07.2012, a proviso was added limiting the effect of this provision upto 01.07.2012. In other words, after 01.07.2012, the penalty provision of section 271H would apply in such cases of defaults. 14. Section 200A(1) of the Act prior to 01.06.2015 provided as under: Section 200A(1) "Processing of statements of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Processing of statements of tax deducted at source. 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 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 under section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 31st March 15th May of the financial year immediately following the financial year in which the deduction is made. 15th May of the financial year immediately following the financial year in which the deduction is made." This rule thus, while laying down the last date by which such statements should be filed, draws two categories; in case of deductor is an office of government and in case of a deductor is a person other than the office of the government. Consistently, the office of the government is granted 15 days extra time as compared to the other deductors. For example, the statement for the date of the quarter ending on 30th June, an ordinary deductor would have to file a statement latest by 15th July of the same year, whereas for the Government office, the last date for filing such statement would be 31st July of the said year. This 15 days extra time is a consistent feature in all four quarters. The short question is, did the legislature discriminate in doing so? It is well settled that Article 14 does not prohibit reasonable classification but frowns upon class legislation. In the affidavit in reply filed, the respondents have pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed for the first time charging of a fee for every day of default in filing of statement under sub-section (3) of section 200 or any proviso to sub-section (3) of section 206C. This provision was apparently added for making the compliance of deduction and collection of tax at source, depositing it with Government revenue and filing of the statements more stringent. 18. In this context, we may notice that section 200A which pertains to processing of statements of tax deducted at source provides for the procedure once a statement of deduction of tax at source is filed by the person responsible to do so and authorizes the Assessing Officer to make certain adjustments which are prima-facie or arithmetical in nature. The officer would then send an intimation of a statement to the assessee. Prior to 01.06.2015, this provision did not include any reference to the fee payable under section 234E of the Act. By recasting sub-section (1), the new clause-c permits the authority to compute the fee, if any, payable by the assessee under section 234E of the Act and by virtue of clause-d, adjust the said sum against the amount paid under the various provisions of the Act. 19. In pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 200A of the Act, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act. The Karnataka High Court in case of Fatheraj Singhvi (supra) held that section 200A was not merely a regulatory provision, but was conferring substantive power on the authority. The Court was also of the opinion that section 234E of the Act was in the nature of privilege to the defaulter if he fails to pay fees then he would be rid of rigor of the penal provision of section 271H of the Act. With both these propositions, with respect, we are unable to concur. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E of the Act. Further the fee under section 234E of the Act is not in lieu of the penalty of section 271H of the Act. Both are independent levies. Section 271H only provides that such penalty would not be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it will be an exercise in futility to examine the real controversy before us with a view to decide the issue, as in that case in view of the Calcutta decision whatever may be our decision on the question of law referred to us, we would be bound to follow the decision of the Calcutta High Court and answer the question accordingly. This submission, in our opinion, is not tenable as it goes counter not only to the powers of this court to hear the reference and decide the questions of law raised therein and to deliver its judgment thereon but also to the doctrine of binding precedent known as stare decisis. We shall deal with the reasons for the same at some length a little later. We have also carefully gone through the decisions of this court referred to by counsel for the assessee in support of his above contention. In our opinion, the observations in those decisions have not been properly appreciated. They have been too widely interpreted. There appears to be a misconception about the nature thereof and their binding effect. We shall also refer to those decisions and the relevant observations therein and discuss their nature. Before doing that, it may be expedient to briefly stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation Act, it was observed that there was nothing in the said Act or any other law which exalts the ratio of those decisions to the status of a binding law nor could the ratio decidendi of those decisions be perpetuated by invoking the doctrine of stare decisis. The doctrine of stare decisis cannot be stretched that far as to make the decision of one High Court a binding precedent for the other. This doctrine is applicable only to different Benches of the same High Court. It is also well-settled that though there is no specific provision making the law declared by the High Court binding on subordinate courts, it is implicit in the power of supervision conferred on a superior Tribunal that the Tribunals subject to its supervision would confirm to the law laid down by it. It is in that view of the matter that the Supreme Court in East India Commercial Co, Ltd. v. Collector of Customs, AIR 1962 SC 1893 (at page 1905) declared : "We, therefore, hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and they cannot ignore it. ..." This position has been very aptly summed up by the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; A case is only an authority for what it actually decides and not what may come to follow logically from it. Judgments of courts are not to be construed as statutes (see Amar Nath Om Parkash v. State of Punjab, AIR 1985 SC 218; [1985] 1 SCC 345). While following precedents, the court should keep in mind the following observations in Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai [1976] 49 FJR 15, 32 ; AIR 1976 SC 1455 (at pages 1467-68) : "It is trite, going by Anglophonic principles, that a ruling of a superior court is binding law. It is not of scriptural sanctity but is of ratiowise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decision, exalting the doctrine of precedents into a prison-house of bigotry, regardless of varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the record. Whatever be the position of a subordinate court's casual observations, generalisations and subsilentio determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment." It is thus clear that it is only the ratio decidendi of a case which can be binding-not obiter dictum. Obiter, at best, may have some persuasive efficacy. From the foregoing discussion, the following propositions emerge : (a) The law declared by the Supreme Court being binding on all courts in India, the decisions of the Supreme Court are binding on all courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence through out the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows : (i) A single judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are binding on all courts in the country by virtue of article 141 of the Constitution. However, upon perusal, we note that the observation that decision in later point of time has to be followed has been made in the context of decisions rendered by different benches of same High Court and the said observation do not apply in case of conflicting decisions of two nonjurisdictional High Court. 3.6 Proceeding further, we find that Pune bench of Tribunal in its recent decision tiled as Medical Superintendent Rural Hospital, DOBI, BK V/s DCIT (100 Taxmnan.com 78 25/10/2018), faced with similar factual matrix, chose to follow the favorable decision rendered by Hon'ble Karnataka High Court by drawing analogy from the decision of Hon'ble Supreme Court rendered in CIT V/s Vegetable products Ltd. (1972 88 ITR 192) for the conclusion that in case of two reasonable constructions of taxing statutes, the one that favors the assessee must be adopted. The relevant findings of co-ordinate bench were as follows: - 11. We have heard the rival contentions and perused the record. The issue arising in the present bunch of appeals is against levy of late filing fees under section 234E of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable for the period of respective assessment years prior to 01.06.2015. The relevant findings of the Hon'ble High Court are in paras 21 and 22, which read as under:- "21. However, if Section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under Section 200A which has been brought about with effect from 1.6.2015 cannot be said as only by way of a regulatory mode or a regulatory mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a regulatory mechanism by insertion of any provision made in the statute book, may have a retroactive character but, whether such provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also be a aspect which may be required to be considered before such provisions is held to be retroactive in nature. Further, when any provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee independently simultaneously mode and the manner of its enforceability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r computation and intimation for payment of fees under section 234E of the Act as they relate for the period of tax deducted at source prior to 01.06.2015 were being set aside. 15. In other words, the Hon'ble High Court of Karnataka explained the position of charging of late filing fees under section 234E of the Act and the mechanism provided for computation of fees and failure for payment of fees under section 200A of the Act which was brought on Statute w.e.f. 01.06.2015. The said amendment was held to be prospective in nature and hence, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 were not maintainable and were set aside by the Hon'ble High Court. In view of said proposition being laid down by the Hon'ble High Court of Karnataka (supra), there is no merit in observations of CIT(A) that in the present case, where the returns of TDS were filed for each of the quarters after 1st day of June, 2015 and even the order charging late filing fees was passed after June, 2015, then the same are maintainable, since the amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f provisions of section 234E of the Act and had held them to be ultra vires but had not decided the second issue of amendment brought to section 200A of the Act w.e.f. 01.06.2015. In view thereof, respectfully following the ratio laid down by the Hon'ble High Court of Karnataka and Pune Bench of Tribunal in series of cases, we delete the late filing fees charged under section 234E of the Act for the TDS returns for the period prior to 01.06.2015. 18. Further before parting, we may also refer to the order of CIT(A) in the case of Junagade Healthcare Pvt. Ltd., where the CIT(A) had dismissed appeals of assessee being delayed for period of December, 2013 and July, 2014. The CIT(A) while computing delay had taken the date of intimation under section 200A of the Act as the basis, whereas the assessee had filed appeals before CIT(A) against the order passed under section 154 of the Act. The CIT(A) had noted that rectification application was filed in February, 2018 which was rejected by CPC on the same day. The CIT(A) was of the view that there was no merit in condonation of delay, wherein appeals were filed beyond the period prescribed. The assessee had filed appeals against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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