Brief of the case:
The only issue arises for consideration is with regard to levy of fee under Section 234E of the Income-tax Act, 1961 while processing the statement furnished by the assessees under Section 200A of the Act which was held as unsustainable in the eye of law by the tribunal.
Facts of the case:
- Assessee filed statement of tax deducted at source u/s 200A of the Income-tax Act.
- While processing the statement AO levied certain amount as penal fee u/s 234E.
- CIT (A) confirmed addition made by AO.
Contention of the revenue:
- Section 234E of the Act provides for payment of fee, if the assessee fails to deliver the statement as prescribed in Section 200(3) of the Act. Therefore, the Assessing Officer has every authority to levy fee either by a separate order or while processing the statement under Section 200A of the Act.
Contention of the assessee:
- Under Section 200A of the Act, the statement filed by the assessee has to be processed in the manner in which it was laid down. There is no provision to levy fee by the AO prescribed under the section.
- The Parliament by way of amendment to Section 200A of the Act via Finance Act, 2015 w.e.f. 01.06.2015 empowered the AO to levy fee under Section 234E of the Act while processing under Section 200A of the Act.
- Therefore, prior to 01.06.2015, the Assessing Officer had no authority to levy any fee under Section 234E of the Act. Reliance was placed on the decision of ITAT Amritsar Bench in I.T.A. No.90/Asr/2015 dated 09.06.2015, where it was held that prior to 01.06.2015, there was no enabling provision in Section 200A for raising a demand in respect of levy of fee under Section 234E of the Act.
- AO is not empowered to levy any fee as provision is made for assessee to pay fee voluntarily.
Held by the court:
- The Assessing Officer cannot make any adjustment other than the one prescribed above in Section 200A of the Act.
- It is obvious that prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act.
- The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fee under Section 234E of the Act with effect from 01.06.2015.
- The fee levied by the Assessing Officer u/s 234E of the Act while processing the statement of tax deducted at source is beyond the scope of adjustment provided under Section 200A of the Act. Therefore, such adjustment cannot stand in the eye of law.
Comments by the author:
The section 234 E was held as constitutionally valid by Hon’ble Bombay HC in Mr. Rasmikant Kundalia Vs. UOI in WP No. 771/2014 on 09.02.2015 but it does not mean that AO can work beyond the power entrusted in the section. He has to work what is prescribed in the language of the section.