Kedar Infrastructure Vs ITO (TDS) (ITAT Pune)
A Recovery Letter Cannot Become an Appeal Order Merely by Calling It One in Form 35
Pune ITAT dismisses six appeals against TDS late filing fee demands without deciding whether the fees were valid
A deductor receives a letter asking it to clear an outstanding TDS demand. It downloads a justification report showing how the demand arose and files Form 35, describing the order appealed against as one under section 200A. But what if the section 200A intimation itself is neither attached nor produced during the appeal? That was the central issue before the Pune ITAT in Kedar Infrastructure v. ITO (TDS), ITA Nos. 228 to 233/Pun/2023, decided on 5 April 2023. The common order covered six appeals, with ITA No. 228/PUN/2023 for AY 2014-15 (Form 26Q for Q1) treated as the lead case.
The assessee had filed six appeals concerning demands reflected in its TDS records. In the lead appeal, the justification report showed a late filing fee of ₹7,712 under section 234E. The assessee disputed the demand on two grounds. First, it contended that the order under section 200A and the consequential demand notice had not been served, and that the authorities had not proved such service. Secondly, it argued that a fee under section 234E could not be confirmed through processing under section 200A for the period before 1 June 2015.
The immediate document that prompted the appeal, however, was an AO’s letter dated 12 July 2021 concerning recovery of the outstanding demand. The assessee also placed a justification report downloaded from the TDS system before the CIT(A). Although Form 35 described the order appealed against as one under section 200A, no copy of such an order was enclosed.
What was actually under appeal?
The CIT(A) held that the recovery letter was not an appealable order under section 246A and dismissed the appeal as not maintainable. Before the Tribunal, the question was put directly to the assessee’s authorised representative: had a copy of the section 200A order been filed before the CIT(A)? The representative admitted that it had not. He also admitted that no such order had been filed before the Tribunal. The appeals rested on the AO’s recovery letter and the downloaded justification reports.
The Tribunal upheld the CIT(A)’s conclusion. Section 246A identifies the orders against which an appeal may be filed before the CIT(A). An AO’s letter seeking recovery of an outstanding demand does not become the order that created that demand. Nor does a justification report downloaded from the system become an appealable order merely because it displays the amount claimed. The assessee had identified section 200A in Form 35, but had not placed the corresponding intimation before either appellate authority. The Tribunal expressly held that the recovery letter and justification report did not fall among the appealable orders specified under section 246A.
This distinction controlled all six appeals. The Tribunal first dismissed the lead appeal, ITA No. 228/Pun/2023, and then applied the same reasoning to ITA Nos. 229 to 233/Pun/2023. In each of the remaining appeals too, the authorised representative accepted that the section 200A order had not been filed. All six appeals were dismissed.
The section 234E issue remains undecided
The assessee wanted a decision on whether the late filing fee could be levied for a period before 1 June 2015. The Tribunal expressly declined to decide that issue. In its view, the basic order under section 200A was absent, and the appeals against the recovery letters were not maintainable. It also observed that, once the CIT(A) had dismissed the appeals on maintainability, any observations by the CIT(A) on the merits fell outside the scope of that decision.
The ruling must therefore be read for what it decides. It does not uphold the section 234E fee on merits. Equally, it does not delete the fee. It decides that these particular appeals, brought on the strength of a recovery letter and justification report without the section 200A intimation, could not be used to obtain an appellate ruling on the levy.
The assessee’s complaint about non-service also did not change the result. The Tribunal recorded that complaint, but it was not persuaded to treat the later recovery correspondence as a substitute for the underlying appealable order. The decision leaves open any separate question concerning whether an intimation was issued or served and what remedy may follow from those facts. No such wider finding should be attributed to this order.
Author’s comments
This case highlights a practical difficulty familiar in TDS matters: a demand may be visible on the portal, and a recovery letter may arrive, while the deductor does not have the underlying processing intimation readily available. A justification report can explain the system’s computation, but it cannot by itself establish the identity and contents of the order being challenged.
Before filing Form 35, the first task is therefore to identify which order or intimation raised the demand, obtain its copy, and connect each disputed amount to the relevant TDS statement and period. If the deductor’s position is that the intimation was never served, that point should be supported with the available portal record and correspondence seeking the document. Merely entering “section 200A” in Form 35 did not overcome the absence of the order in this case.
There is also an important limit to the Revenue’s reliance on this ruling. It supports the proposition that a recovery letter and justification report are not, on these facts, substitutes for an appealable section 200A intimation. It is not an authority for the proposition that every pre-June 2015 section 234E demand is valid. The merits of that question were never reached.
For a deductor facing an old TDS demand, the sequence matters. Find the order that raised it, establish the record of its communication, and then frame the challenge to that order. Kedar Infrastructure lost its appeals at that threshold; the Tribunal had no occasion to decide the underlying fee dispute.
FULL TEXT OF THE ORDER OF ITAT, PUNE BENCH
These six appeals filed by the one Assessee are directed against the separate orders of ld.Commissioner of Income Tax(Appeals)[NFAC], Delhi, all dated 16.02.2023. These six appeals were heard together and decided by common order as the issue involved is same in both the quantum appeals. Therefore, for the sake of convenience we take the appeal in ITA No.228/PUN/2023 as the “lead” case. The Assessee in ITA No.228/PUN/2023has raised the following grounds of appeal:
“1. On the basis of facts and circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals) of National Faceless Appeal Centre, Delhi had not considered the ‘Justification Report’ as downloaded from TDS CPC, in the absence of service of order u/s 200A s well as demand notice. The lower authorities could not prove service of order and consequential demand notice.
2. Without prejudice to Ground No 1 above on the basis of facts and circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals) of National Faceless Appeal Centre, Delhi, has erred in confirming the fine of Rs 7,712/- u/s 234E for the period prior to 01st June, 2015.”
Brief facts of the case :
2. The relevant paragraph of the order of the Ld.Commissioner of Income Tax (NFAC) is reproduced here as under :
“It is seen from the Form-35 that the appellant mentioned the order appealed against as 200A. However, no such order was enclosed to Form-35. A letter of ITO (TDS-2) Pune vide PN/ITO(TDS-2)/Outstanding demand/2021-22/1912, dated 12.07.2021 DIN ITBA/COM/F/17/2021-22/1034314162(1) and justification report were filed, which happens to be a recovery of outstanding demand u/s.234E and the justification report shows the demand of Rs.7712 raised on account of short payment on account of late filing fee. On the basis of recovery outstanding demand letter, the appellant filed this appeal. The letter is not an appealable order as per provisions of Section 246A of the Act. Therefore, the appeal is treated as infructuous and dismissed.”
Findings and Analysis:
3. In this case the assessee has filed an appeal before the Ld.CIT(A) against “a letter” issued by the Assessing Officer(AO) with reference to recovery of demand. We specifically asked the ld.AR, whether assessee had filed copy of order under section 200A before the ld.CIT(A). The ld.AR admitted that assessee had filed an appeal against letter of the AO and justification report, downloaded from the systems. The ld.AR also admitted before us that he has not filed any copy of order under section 200A either before the ld.CIT(A) or before the Hon’ble ITAT. The ld.AR admitted that he has merely filed copy of the justification report downloaded from the Income Tax Systems. Thus, in this case, it is an admitted fact that assessee has filed an appeal before the ld.CIT(A) against a letter issued by AO regarding recovery. Section 246A of the Income Tax Act specifies the orders against which appeal can be filed before the ld.CIT(A). Recovery Letter issued by the AO or the justification report does not form appealable orders mentioned under section 246A of the Act. Therefore, we agree with the ld.CIT(A) that appeal of the assessee was not maintainable and it was an infructuous appeal. In these facts and circumstances of the case, the order of the ld.CIT(A) dismissing the appeal of the assessee as infructuous, not maintainable is upheld. Since the ld.CIT(A) has dismissed the appeal of the assessee as not maintainable, the ld.CIT(A)’s observations regarding merits of the case are outside the scope of the order. We do not intend to comment on the merits of the case.
3. Accordingly, Ground No.1 of the assessee is dismissed.
Ground No.2 :
4. Ground No.2 is regarding the merits of the case. No order under section 200A has been filed before us. No order under section 200A was filed before the ld.CIT(A). In the absence of basic document i.e. order under section 200A, we cannot comment on the merits of the case. Therefore, Ground No.2 is dismissed as not maintainable.
5. Ground No.3 is general in nature and needs no adjudication, hence, ground no.3 is dismissed.
6. In the result, appeal of the assessee in ITA No.228/PUN/2023 is dismissed.
ITA No’s: 229 to 233/PUN/2023 (05 Appeals) :
7. The ld.AR has admitted that order under section 200A has not been filed before ld.CIT(A) and the Hon’ble ITAT in ITA No’s.229 to 233/PUN/2023. The ld.AR admitted that assessee filed appeal before the ld.CIT(A) against the recovery letter of the AO, in ITA No’s.229 to 233/PUN/2023. Since we have already decided the appeal of the Assessee in ITA No’s.228/PUN/2023 and we note that similar facts are involved in these appeal of the assessee, hence, our observations made in ITA No’s.228/PUN/2023 for A.Y.2014-15 – 26Q for Q1 shall apply mutatis mutandis to these five appeals also. Accordingly, grounds of appeal raised by the assessee are dismissed.
8. In the result, appeals of the Assessee in ITA No’s.229 to 233/PUN/2023 are Dismissed.
9. To sum up, all the Six Appeals filed by the Assessee are Dismissed.
Order pronounced in the open Court on 5th April, 2023.
