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TMI Blog2020 (9) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. Provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. 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 - intimation issued by the AO u/s 200A 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. The case of the assessee before us was that all or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of TDS statements filed for the period prior to 01.06.2015, late fees charged under section 234E of the Act could not be levied in the intimation issued under section 200A of the Act. The second aspect of the issue raised is against the order of the CIT(A) in holding that where the intimation has been issued by the Assessing Officer before 01.06.2015 , no fee can be charged under section 234E of the Act, but said fee can be charged vide rectification order passed under section 154 of the Act issued after 01.06.2015. 4. The CIT(A) relying on the decision of the Hon ble Rajasthan High Court in the case of Dunlod Shikshan Sansthan vs UOI in [2015] 63 taxamann.com 243(Raj.) and Hon ble Gujarat High Court in the case of Rajesh Kourani vs Union of India [2017] 83 taxmann.com 137 (Guj.) upheld the order of the Assessing Officer. 5. The Ld. Counsel for the assessee pointed out that the present appeals are against the late fees charged under section 234E of the Act for various quarters relating to different assessment years for default in not filing TDS returns in time. He stressed that no fee can be levied under section 234E of the Act for the periods prior to 01.06.2015, when the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Bill, 2015 which elaborates the rationale for insertion of clause (c) in section 200A(1) in the statute (Para 7 of the written submission) it is absolutely clear that this is merely an enabling section to compute/process the TDS statement. Section 234 E is the charging section requiring voluntary payment of fee by the defaulting deductors as per its sub-section (3) as even in the absence of section 200A of the Act with introduction of section 234E, it was always open for the revenue to charge the fees in terms of section 234 E of the Act from the date of its introduction in the statute i.e. 01.07.2012. It may be noted that section 234E creates an automatic charge on the deductors who have defaulted on this count who are required to pay the fee u/s 234E voluntarily before delivering such belated TDS/TCS returns /statements in accordance with sub-section (3) of sec. 234E. By amendment [introduction of clause 200A(l)(c)] this adjustment was brought within the fold of section 200A of the IT Act so that the fee u/s 234E can be computed at the time of processing issue of intimation in the event of non-payment of fee before delivering such belated TDS/TCS statements by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, has escaped the eyes of Hon ble High Courts and therefore there can t be any doubt that there is any iota of ambiguity with respect to the period of default for which the fee u/s 234E is chargeable. In view of the same and categorical findings of Hon ble High Courts, the fee u/s 234E is undoubtedly leviable for the defaults of period in filing TDS/TCS statements/returns, even for the period prior to 01.06.2015 independent to the provisions of Sec.200A(l) of the Act. The same have not been considered by Hon ble ITAT. 9. The Ld. AR for the assessee on the other hand stressed that the issue has been considered by the Karnataka High Court in Fateh Raj Singhvi Ors. vs UOI (supra) which has been taken note of by the Tribunal in the case of Udit Jain vs ACIT (supra) and other appeals decided by benches of Delhi Tribunal. 10. We have heard the rival contention and perused the record. The issue which is arising in the present set of appeals is against the chargeability of late filing fee in terms of section 234E of the Act. The issue which is raised by different assessee before us is whether where the return for the TDS deduction was filed under respective sections of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI BK vs DCIT (supra). The Tribunal had also taken note of the decision of Hon ble Gujarat High Court in Rajesh Kourani vs Union of India (supra) and applying the proposition that where there was difference of opinion between Hon ble High Courts on a particular issue and in the absence of any decision rendered by the Jurisdictional High Court, then the decision in favour of the assessee needs to be followed as held by Hon ble Supreme Court in Vegetables Products Ltd. [1973] 88 ITR 192(SC). The relevant findings of the Tribunal are as under:- 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 Act while issuing intimation under section 200A of the Act, in the first bunch of appeals. The second bunch of appeals in the case of Junagade Healthcare Pvt. Ltd. is against order of Assessing Officer passed under section 154 of the Act rejecting rectification application moved by assessee against intimation issued levying late filing fees charged under section 234E of the Act. The case of assessee before us is that the issue is squarely covered by various ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen, 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 is also required to be considered and examined. Not only that, but, if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects will be required to be considered before one considers regulatory mechanism or provision for regulating the mode and the manner of recovery an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amendment had come into effect. The CIT(A) has overlooked the fact that notices under section 200A of the Act were issued for computing and charging late filing fees under section 234E of the Act for the period of tax deducted prior to 1st day of June, 2015. The same cannot be charged by issue of notices after 1st day of June, 2015 even wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal 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 order passed under section 154 of the Act, hence the time period of appeals filed by assessee before the CIT(A) have to be computed from the date of order passed under section 154 of the Act and not from the date of issue of intimation. Thus, there is no merit in the order of CIT(A) in dismissing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 41,87,500/- aggregating to ₹ 3,35,00,000/-, the assessee' contention has been that it was not required to deduct TDS, because the payments made to each seller was less than the prescribed limit of ₹ 50 lacs and therefore, provision of section 194IA was not applicable. The demand has been raised by the department u/s 200 in terms of failure to comply with Section 200A, which deals with the processing of statement of tax deducted at source u/s 200. First of all, sub section 3 of section 200 provides that the person deducting any sum in accordance with provision of chapter XVII shall after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statement for such period as may be prescribed. Provision of section 200A provides that where the statement of tax deduction at source has been made by the person deducting any sum u/s 200, then such statement shall be processed in the manner given therein. Clause (c) of section 200A has been substituted by the Finance Act 2015 w.e.f. 1.6.2015 which reads as under:- (c) the fee, if any, shall be computed in accordance with the provisions of section 234E; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the statute under Section 200A prior to 1.6.2015 for computation of any fee under Section 234E nor the determination thereof, the demand or the intimation for the previous period or previous year prior to 1.6.2015 could not have been made. 7. Thus, we hold that no fee was leviable to the assessee u/s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay. Accordingly, the demand on account of 234E is cancelled. 8. Similarly interest u/s 220(2) cannot be levied when fee u/s 234E itself is not leviable. In so far as charging of interest u/s 201(IA), the same cannot be charged as admittedly no order u/s 201(1) has been passed holding the assessee to be assessee in default and, therefore, such an interest is also deleted. 12. We may also refer to the decision of the Pune Bench of the Tribunal in the case of Maharashtra Cricket Association vs DCIT (Supra), wherein reference was made to the reliance placed by the Revenue on the decision of the Hon ble Bombay High Court in the case of Rashmikant Kundalai vs Union of India (Supra) and it was observed as under:- 27. While decidi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be it. The Hon ble High Court further held that a person can always approach the court in extraordinary equitable jurisdiction under Article 226/227 of the Constitution as the case may be. The Hon ble High Court therefore, observed that simply because no remedy of appeal was provided for the provisions of section 234E of the Act, the same cannot be said to be onerous and section 234E of the Act was held to be constitutionally valid. The constitutional validity of provisions of section 234E of the Act has also been upheld by the Hon ble Rajasthan High Court in M/s. Dundlod Shikshan Sansthan Anr. Vs. Union of India and Ors (supra). 13. The Tribunal further observed as under:- 28. In view of the above said ratio laid down by the Hon ble Bombay High Court, the case of the learned CIT-DR before us was that there is no merit in the present set of appeals filed by the assessee as the Hon ble High court has laid down that no appeal is provided from an order passed under section 234E of the Act and the same merits to be dismissed at the outset. In this regard, he has raised two issues that (a) the appeal filed by the assessee is not maintainable and also (b) there is no merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (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. The Finance Bill further provided that intimation generated after the proposed processing of TCS statement shall be at par with the intimation generated after processing of TDS statement and also provided that failure to pay tax specified in the intimation shall attract levy of interest as per provisions of section 220(2) of the Act. Further, amendments were also made in respect of the scheme of payment of TDS / TCS by the Government, deductor / collector which are not relevant for deciding the issue in the present appeal and hence, the same are not being referred to. The Finance Bill further provided that the amendment would take effect from 01.06.2015. 29. The perusal of Memo explaining the provision relating to insertion of clause (c) to section 200A of the Act clarifies the intention of Legislature in inserting the said provision. The provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the provision was made for levy of fees for late furnishing TDS / TCS sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the plea of learned CIT-DR that the Hon ble Bombay High Court in Rashmikant Kundalia Vs. Union of India (supra) has laid down the proposition that fees under section 234E of the Act is chargeable in the case of present set of appeals, where the Assessing Officer had issued the intimation under section 200A of the Act prior to 01.06.2015. 14. Another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) of the Act is clarificatory or is prospective in nature and is not applicable to the pending assessments. Undoubtedly, the provisions of section 234E of the Act were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements / returns were filed belatedly to pay the fees as per said section. However, in cases, where the assessee has failed to deposit the said fees, then in order to enable the Assessing Officer to collect the said fees chargeable under section 234E of the Act, it is incumbent upon the Legislature to provide mechanism for the Assessing Officer to charge and collect such fees. In the absence of enabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 234E of the Act as per Finance Act, 2012 and also the provisions of section 200A of the Act were inserted by Finance (No.2) Act, 2009, under which the machinery was provided for the Assessing Officer to process the TDS statements filed by the assessee. The insertion categorically being made w.e.f. 01.06.2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns / statements prior to 01.06.2015. 16. We also find support from the decision of the Hon ble Karnataka High Court in Writ Appeal Nos.2663-2674/2015(T-IT) Ors in Sri Fatheraj Singhvi Ors Vs. Union of India Ors, wherein the Hon ble Court had quashed the intimation issued under section 200A of the Act levying the fees for delayed filing of the TDS statements under section 234E of the Act. The Hon ble High Court notes that the Finance Act, 2015 had made amendments to section 200A of the Act enabling the Assessing Officer to make adjustments while levying fees under section 234E of the Act was applicable w.e.f. 01.06.2015 and has held that it has prospective effect. Accordingly, the Ho n ble High Court held that intimation raising demand prior to 01.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for exemption from levy of late filing fee is liable to be dismissed. As such the appeal of the appellant is dismissed. 20. The CIT(A) has observed that the AO has no power to levy the fees under section 234E of the Act while processing the TDS returns for the period prior to 01.06.2015 where the original intimation was issued prior to 01.06.2015. He further goes on to say that the AO though has power to levy such fees while passing the order under section 154 of the Act. The case of the assessee before us was that all original intimation/orders were issued by the AO before 01.06.2015. He pointed out that for the Assessment Year 2013-14, the orders were issued in year 2014 and for the balance appeals, orders were issued before June 2015. However, in all the cases, the AO has passed order under section 154 of the Act which are all dated 05.01.2019. Admittedly, the Revenue is not in appeal against the first finding of the CIT(A) that AO has no power to levy the fees for the period while processing the TDS returns before 01.06.2015. Once, the AO has no power to levy any late filing fee for the return processed prior to 01.06.2015, then no such power can be exercised by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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