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TMI Blog2022 (8) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... e in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the revenue to charge the fee in terms of section 234E. By amendment, this adjustment was brought within the fold of section 200A. This would have one direct effect. An order passed under section 200A is rectifiable under section 154 and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A, 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 re-casted clause (c), this situation also would be obviated. Even prior to 1- 6-2015, it was always open for the revenue to calculate fee in terms of section 234E. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E. It is settled position under legal hierarchy that decision of Hon'ble jurisdictional High Court is having binding precedent, in absence of any decision of Hon'ble Apex Court. Thus, all the submissions which is raised by Ld. AR fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and as also on law learned DCIT, CPC TDS has erred in giving effect to the levy of late fee in the course of intimation under section 200A of the Act. (3) On the facts and in the circumstances of the case and as also on subject the learned DCIT,CPC TDS should have initiated separate proceedings under section 234E. 3. Brief facts of the case are that the assessee was liable to deduct tax at source (TDS) on making certain payments as per Chapter XVII of Income Tax Act. The assessee deducted such tax at source and filed statement of TDS. However, there was certain delay in furnishing / filing the statement of TDS of various quarters. The Central Processing Centre (CPC) Ghaziabad, while processing such statement levied late fee of Rs.70,200/- and interest of Rs.22,460/- thereupon for 2nd Quarter of A.Y. 2013-14, vide intimation dated 29th December 2013. Similar late fee charges and interest levied for other different quarterly returns. 4. Aggrieved by the levy of late fee charges the assessee filed appeal before Ld. CIT(A) The Ld. CIT(A) while dismissing all the appeals held that the Hon ble Gujarat High Court in Rajesh Kourani Vs UOI (supra) held that section 234E is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is supported by decision of Constitutional Bench of Hon'ble Apex Court in the case of J.K.Synthetix Ltd. vs. Commercial Tax Officer (1994) 119 CTR 0222 (SC). In case of W.Ramand Electric Distribution Co. Ltd. vs. State of Madras AIR 1961 1 SC 1753 (SC). The Hon'ble Apex Court held that penal statute are generally considered as prospective. Those penal statutes which creates offence or which have the effect of increasing penalties for existing offences will only be prospective by reason of constitutional restriction imposed by Article 20 of the Constitution. Further in Maruram vs. UOI AIR 1980 SC 2147 it has been held that when the Act creates new offence, it will being into its fold only those offenders who committed all ingredients of the offence after the Act came into operation. In Pyare Lal vs. M.D. J K Industries AIR 1989 SC 184 it was held that, it is the basic principle of natural justice that no one can be penalized on the ground of conduct, which was not penal on the day, it was committed. Thus, on the basis of aforesaid submission the Ld. AR of the assessee that the decision of Hon'ble Karnataka High Court in Fatheraj Singhvi (supra) is the correct interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Bombay High Court in case of Rashmikant Kundalia v. Union of India [2015] 373 ITR 268/229 Taxman 596/54 taxmann.com 200, he has instructions not to press the challenge to constitutionality of section 234E of the Act. He however made detailed submissions with respect to the other two grievances of the petitioner. Regarding rule 31A of the Rules, he pointed out that the legislature has prescribed different time limits for filing statements for the Government and the rest of the assessees. The special concession to the Government agencies was wholly unnecessary and not based on any rational. The same difficulties and complexities which are faced by Government agencies would also be faced by the individual assessees. 7. With respect to the amendment in sub-section (1) of section 200A, counsel submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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 prepare such statements for the prescribed periods and to file the same within the prescribed time. Section 200C of the Act makes similar provision for the person responsible for the collection of tax at source to deposit the same with the Government revenue and to file a statement within the prescribed time. 11. Section 200A of the Act pertains to processing of statements of tax deducted at source. We would notice the provisions of this section prior to 01.06.2015 and the changes made therein by virtue of Finance Act, 2015, with effect from 01.06.2015. Further, we would take note of provisions of section 234E of the Act. For the time being, we may notice that section 200A provides for a mechanism for processing a statement filed under section 200 of the Act and enables the Assessing Officer to make s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring 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 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 sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34E; (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 the amount of refund due to, him under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) 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 the purposes of this sub-section, an incorrect claim apparent from any information in the statement shall mean a claim, on the basis of an entry, in the statement- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws 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 out that multiple agencies are involved in every transaction in the Government offices and the same therefore cannot be compared with the private individuals or business houses. We do not found that the extra time of 15 days for the Government to file a return of deduction of tax at source is in any manner either unreasonable or discriminatory. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 plain terms, section 200A of the Act is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, as noted earlier, arithmetical or prima-facie in nature. With effect from 01.06.2015, this provision specifically provides for computing the fee payable under section 234E of the Act. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 levy if certain conditions are fulfilled. One of the conditions is that the tax with fee and interest is paid. The additional condition being that the statement is filed latest within one year from the due date. 21. Counsel for the petitioner however, referred to the decision of Supreme Court in case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the revenue to charge the fee in terms of section 234E. By amendment, this adjustment was brought within the fold of section 200A. This would have one direct effect. An order passed under section 200A is rectifiable under section 154 and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A, 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 re-casted clause (c), this situation also would be obviated. Even prior to 1- 6-2015, it was always open for the revenue to calculate fee in terms of section 234E. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E. 11. In our humble view the Hon'ble jurisdictional High Court has clearly took a contrary view, with the decision of Hon'ble Karnataka High Court. It is settled position under legal hierarchy that decision of Hon'ble jurisdictio ..... 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