Case Law Details
ITO Vs Ajmer Vidhyut Vitran Nigam Ltd (ITAT Jaipur)
Exception 10(e) to the aforesaid CBDT Circular relates to cases where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI). In the instant case, the assessee has filed his TDS statement on TRACES which is an IT platform managed and run by the Tax Department and thereafter, the said statement has been processed centrally by Central Processing Centre which is again manned by the personnel of the Tax department and finally, intimation u/s 200A(1)(C) of the said processing has been issued duly signed by DCIT, CPC-TDS Ghaziabad. As per the Revenue’s own submission, DCIT, CPC-TDS Ghaziabad holds concurrent jurisdiction with the Assessing Officer(TDS)-3, Jaipur over the case, as per the provisions of Section 120 read with 124 of the Income Tax Act, 1961. Therefore, even though CPC has its separate and identifiable functions relating to TDS returns, the officers hold concurrent jurisdiction over such TDS matters with that of the Assessing officer, there cannot be any dispute that both administratively and functionally, the CPC of the Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency qua Income Tax department and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the TDS statement has been processed by the CPC and while processing the same, fee u/s 234E has been levied having tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue.
FULL TEXT OF THE ITAT JUDGEMENT
These are two appeals filed by the Revenue against the orders of ld. CIT(A)-3, Jaipur dated 30.01.2019 and 06.02.2019 for A.Y 2016-17 & 201516 respectively. Both the appeals were taken up together and are being disposed off by this consolidated order.
2. None appeared on behalf of the assessee nor was any adjournment application filed. Given that the appeal was filed by the Revenue way back in April 2019 and the matter has been adjourned from time to time, it was decided to hear both the appeals after taking into considerations the contentions advanced by the ld DR and other material available on record.
ITA No. 519/JP/2019
3. In ITA No. 519/JP/2019 for A.Y 2017-18, the Revenue has taken the following grounds of appeal which read as under:-
“1. Whether in the facts and circumstances of the case and in the law, the ld. CIT(A)-3 Jaipur has erred in deleting fee levied u/s 234E of the Income Tax Act 1961 on processing of eTDS statement (s) filed late in contravention to Section 200 for F.Y 2016-17 (Quarter-3) in contrary to Clause (c) to Section 200A(1) inserted by the Finance Act 2015 w.e.f 01.06.2015?
2. Whether under the facts and circumstances of the case and the law, the application of provisions of Section 234E by the Assessing Officer (TDS) and/or CPC-TDS authority for levy of fee mandatorily on processing of eTDS statement(s) including correction statement(s) filed late by the assessee deductor after 01.06.2015 is invalid and ultra vires even on insertion of Clause (c) to Section 200A(1) of the Income Tax Act 1961 by the Finance Act 2015?
3. Whether in the facts of the case and in the law, the fee levied u/s 234E is distinguishable of a penalty as referred to in Chapter –XXI and whether it is an adjustment making in eTDS statement appealable u/s 246A of the Income Tax Act 1961? ”
4. During the course of hearing, the ld DR submitted that the assessee deductor has filed on TRACES online the TDS statement in Form-24Q for 3rd quarter of F.Y 2016-17 on 11.03.2017 during the F.Y. 2016-17. The TDS statement was processed with defaults on 17.03.2017 in compliance of provisions of Section 200A and accordingly, intimation of processing with default and levy of fee of Rs.7,800/- u/s 200A(1)(c) of the Income Tax Act, 1961 was communicated to the assessee as per the law.
5. It was further submitted that being aggrieved by the levy of fee u/s 200A(1)(c), for the late filing of TDS statement for the 3rd quarter of F.Y. 2016-17, the assessee deductor filed appeal before the ld. CIT (A)-3, Jaipur who vide order dated 30.01.2019 in Appeal No. 70/JPR/17-18 has allowed the appeal and deleted the fee of Rs.7,800/- levied by the DCIT, CPC-TDS, Ghaziabad holding concurrent jurisdiction with the Assessing Officer(TDS)-3, Jaipur over the case, as per the provisions of Section 120 read with 124 of the Income Tax Act, 1961.
6. It was submitted by the ld DR that the order of the ld. CIT (A)-3, Jaipur is not acceptable to the Department in view of the facts of the case and provisions of Section 200(A)(1)(c) which was amended by the Finance Act, 2015 w.e.f. 01.06.2015. It was submitted that from the reading of the said provisions of the Act, it is clear that the levy of fee shall be computed in accordance with provisions of Section 234E and no intimation under Sub-Section (1) to Section 200A shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. It is also clear that the provision of fee is mandatory in nature levied on processing of the late filing of eTDS statement(s) under Section 200A(1)(c) of the Act after amendment w.e.f. 01.06.2015 by the Finance Act, 2015. It is evident that there is no dispute on the fact that the assessee deductor has filed TDS statement for quarter-3 of F.Y. 2016-17 delayed on 11.03.2017 and the same was processed with default of delay on 17.03.2017 with levy of fee u/s 234E which was communicated to the assessee within the prescribed time as provided under the proviso to Section 200A(1)(c) of the Act. It is also evident that after Section 234E w.e.f. 01.07.2012, the assessee deductor who fails to deliver or cause to be delivered a TDS statement(s) within the time prescribed in the provisions of Section 200(3)/206C(3) of the Act, shall be liable to pay, by way of fee, a sum of Rs. 200/- for everyday during which the failure continues. It is also evident that aggrieved by the provision of Section 234E, the constitutional validity and applicability of the Section has been challenged before the various Hon’ble High Courts and finally before the Hon’ble Supreme Court who have held the provisions of Section 234E as constitutionally valid and applicable for the late filing of TDS statement(s).
7. It was submitted by the ld DR that contrary to the above provisions of the Act, the ld. CIT (A) has deleted the fee u/s 234E read with 200A(1)(c) by treating the fee as penalty and an adjustment made in the TDS statement(s). As per the provisions of Section 246A(1), fee levied u/s 234E, is neither a penalty as referred to in Chapter- XXI nor an adjustment made u/s 200A(1)/206CB(1), is provided as an appealable order and thus, the order of the ld. CIT (A) is not acceptable and it is against the provisions of Section 200A(1)(c) of the Act.
8. It was submitted by the ld DR that considering the facts of the case and fee levied u/s 234E, it is submitted that the ld. CIT(A) has erred in deleting the fee levied for late filing of e-TDS statement (quarter-3) of F.Y 2016-17 in contravention to the provisions of Section 200A(1)(c) which is mandatory in nature and constitutionally valid. As per the provisions of the Act, the assessee deductor was required to pay fee for late filing of eTDS statement computed in terms of Section 234E alongwith filing of eTDS statement and the fee levied for the failure of the assessee deductor on this account as communicated on processing of the eTDS statement is constitutionally valid. This view is further supported by the judgement in the case of (i) M/s Dundlod Shikshan Sansthan & others v/s UOI & others (D.B. Civil Writ Petition No. 8672/2014) vide order dated 28.07.2015 of the Hon’ble Rajasthan High Court, Jaipur and in the case of Rashmikant Kundalia and another v/s UOI (Writ Petition No. 771/2014) vide order dated 06.02.2015 of Hon’ble Bombay High Court and further the Hon’ble Supreme Court of India held the application of fee u/s 234E as constitutional valid and accordingly Writ petition were dismissed.
9. It was submitted by the ld DR that as per law and in view of the above judgments, the fee u/s 234E read with Section 200A(1)(c) is not a penalty as referred to in the Chapter-XXI of the Act and which is distinguishable of the penalty is mandatory in nature and the same is not provided as appealable u/s 246A(1). Thus the fee u/s 234E levied on processing of the eTDS statement filed for the period after insertion of Clause(c) of Section 200A(1) is intra vires and it is covered by the exception 10(a) as well as 10(e) of the Board Circular No. 3/2018 dated 11.07.2018 although the tax effect is below the prescribed monetary limit.
10. It was accordingly submitted by the ld DR that in view of the above facts and circumstances of the case and the law and further relying upon above judgments, it is submitted that the order of the ld. CIT (A) is bad and illegal in the law and it is prayed that the order may kindly be quashed or annulled and set aside for the sake of justice on the grounds and questions of law.
11. We have heard the ld DR and purused the material available on record. The ld DR has raised various contentions in support of merit of levy of fee u/s 234E which has been deleted by the ld CIT(A). However, before examining the said contentions, we find that the quantum of fee levied u/s 234E is Rs 7800/- which is below the prescribed threshold for filing appeals by the Revenue.
12. In this regard, we refer to the contention advanced by the ld DR that the appeal filed by the Revenue is covered by the exception 10(a) of the Board Circular No. 3/2018 dated 11.07.2018 and Para 10 of the said circular as amended vide CBDT communication dated 20th August, 2018 (f No. 279/Misc. 142/2007-ITJ(Pt) which reads as under:-
“2. The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court have been revised by Board’s Circular No. 3 o f 2018 dated 11.07.2018.
3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under:-
“10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.
(a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or
(b) Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) Where Revenue Audit objection in case has been accepted by Department, or
(d) Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financia l assets)/undisclosed foreign bank account.
(e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligence (DGGI).
(f) Cases where prosecution has been filed by the Department and is pending in the Court. ”
13. Para 10(a) of the aforesaid Circular as amended provides that where the Constitutional validity of the provisions of an Act or Rule is under challenge, the adverse judgments relating to the said matter should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.
14. In the present case, we find that the ld CIT(A) has nowhere stated in his order that provisions of section 234E are not constitutional valid and hence, he is deleting the fee u/s 234E of the Act. He has merely referred to the submission of the assessee where the latter has stated that an SLP has been admitted against the decision of the Hon’ble Bombay High Court in case of Rashmikant Kundalia and others vs Union of India and others where it was held that the provisions of section 234E are constitutionally valid and in view of the fact that the SLP has been admitted, no recovery of fees can be executed. Infact, it is not even the submission of the assessee before the ld CIT(A) that the fee is not constitutionally valid. Therefore, it cannot be inferred that he has acceded to the contention of the assessee that such provisions are not constitutionally valid. Whether a particular provision is within the four corners of the Constitution is a matter which falls in the exclusive domain and jurisdiction of the Courts and the ld CIT(A) doesn’t have any authority and jurisdiction to hold any provisions as constitutionally not valid. In the present case, we are of the considered view that he has not breached his authority and jurisdiction in this regard while passing the impugned order. The Revenue may have other grievances against his order passed by the ld CIT(A) deleting the fee u/s 234E on merits of the case, however, as far as Para 10(a) of the CBDT Circular no. 3 of 2018 as amended is concerned, the exception carved out therein is not applicable in the present case.
15. Now, coming to the second exception 10(e) which has been referred by the ld DR. The ld DR has contended that fee u/s 234E has been levied basis the information and processing of TDS statement by Central Processing Centre, which is an external agency and therefore, the said exception is applicable in the instant case.
16. We find that exception 10(e) to the aforesaid CBDT Circular relates to cases where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI). In the instant case, the assessee has filed his TDS statement on TRACES which is an IT platform managed and run by the Tax Department and thereafter, the said statement has been processed centrally by Central Processing Centre which is again manned by the personnel of the Tax department and finally, intimation u/s 200A(1)(C) of the said processing has been issued duly signed by DCIT, CPC-TDS Ghaziabad. As per the Revenue’s own submission, DCIT, CPC-TDS Ghaziabad holds concurrent jurisdiction with the Assessing Officer(TDS)-3, Jaipur over the case, as per the provisions of Section 120 read with 124 of the Income Tax Act, 1961. Therefore, even though CPC has its separate and identifiable functions relating to TDS returns, the officers hold concurrent jurisdiction over such TDS matters with that of the Assessing officer, there cannot be any dispute that both administratively and functionally, the CPC of the Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency qua Income Tax department and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the TDS statement has been processed by the CPC and while processing the same, fee u/s 234E has been levied having tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue.
17. In light of the same, the present appeal filed by the Department is dismissed on account of low tax effect given that the matter is not covered by any of the exceptions so specified and the contentions advanced by the ld DR on merits of the case are left open and not adjudicated upon.
18. In ITA No. 595/JP/2019, the tax effect involved is Rs 10,600/- and since facts and circumstances of the case are exactly identical to facts and circumstances of the case in ITA No. 519/JP/2019, our findings and directions contained therein shall apply mutatis mutandis to this appeal. In the result, the appeal of the Revenue is dismissed on account of low tax effect given that the matter is not covered by any of the exceptions so specified.
In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open Court on 14/08/2020.
