Case Law Details
Thomas Abraham Vs ITO (ITAT Bangalore)
Held that late fee u/s 234E for delayed filing of return of TDS not leviable while processing a return of TDS for the assessment years prior to 1.6.2015.
Facts-
The Assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.26Q for different quarterly years in FY 2012-13 to 2014-15. The statement was processed by CPC TDS, Bengaluru. There was a delay in filing the TDS statement and the Ld.AO by intimation u/s. 200A of the Act levied late fee u/s. 234E of the Act.
Conclusion-
Hon’ble Karnataka High Court, in the case of Fatehraj Singhvi V. UOI, has held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have been made for tax deducted at source for the assessment years prior to 1.6.2015.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
Present appeals was filed by the assessee against separate orders dated 25/03/2022 u/s. 250 passed by the National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Years 2013-14 to 2015-16.
2. All issue raised in the present appeals are in respect of levy of interest u/s. 234E for filing TDS returns belatedly.
2.1 The Assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.26Q for different quarterly years in FY 2012-13 to 2014-15 (relevant to AY 2013-14 to 2015-16).
The statement was processed by CPC TDS, Bengaluru. There was a delay in filing the TDS statement and the Ld.AO by intimation u/s. 200A of the Act levied late fee u/s. 234E of the Act.
2.2 The Ld.DR was of the view that, u/s.234E of the Act, if there is a delay in filing statement of TDS within the prescribed time then the person responsible for making payment and filing return of TDS is liable to pay by way of fee a sum of Rs.200/-per day during which the failure continues.
2.3 Aggrieved by the order of Ld.AO, the assessee preferred appeal before Ld.CIT(A). The assessee contended before Ld.CIT(A) that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. 1.7.2012. Section 200A of the Act is a provision which deals with how a return of TDS filed u/s.200(3) of the Act has to be processed and it reads as follows:-
“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 fee, if any, shall be computed in accordance with the provisions of section 234E;
(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 provisions of this Act.
(2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said subsection.”
4. Clause (c) to (f) of section 200A(1) was substituted by the Finance Act, 2015 w.e.f. 1.6.2015. The Assessee contended that AO could levy fee u/s.234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by virtue of the provisions of Sec.200A(1)(c), (d) & (f) of the Act and those provisions came into force only from 1.6.2015 and therefore the authority issuing intimation u/s. 200A of the Act while processing return of TDS filed u/s.200(3) of the Act, could not levy fee u/s. 234E of the Act in respect of statement of TDS filed prior to 1.6.2015. The Assessee, thus, challenged the validity of charging of fee u/s. 234E of the Act. The Assessee relied on the decision of the Hon’ble High Court of Karnataka in the case of Fatehraj Singhvi v. UOI [2016] 73 taxmann.com 252 wherein the Hon’ble Karnataka High Court held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have been made for tax deducted at source for the assessment years prior to 1.6.2015.
3. The Ld.CIT(A) after considering the above submissions observed as under:
“6.2 I have considered the grounds raised, the written submission filed and the cases relied in support of the Appellant’s case. This issue has been examined in detail by Hon’ble Gujrat High Court in the case of Rajesh Kourani v. Union of India[2017] 83 taxmann.com 137/249 Taxman 402 (Guj.). Hon’ble Gujarat High Court have clearly ruled that section 200A is merely a machinery provision and section 234E being a charging section can not be overruled just due to the lack of the enabling machinery provision. They have held that the late filing fees can be levied u/s 234E even in absence of section 200A. In this regard the following observations of the Hon’ble Gujarat High Court are specifically relevant to the issue at hand:
“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 the other hand, section 234E is a charging provision creating a charge for levying fee for certain defaults in filing the statements. Under no circumstances a machinery provision can override or overrule a charging provision. We are unable to see that section 200A of the Act creates any charge in any manner. It only provides a mechanism for processing a statement for tax deduction and the method in which the same would be done. When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements.
20. Even in absence of section 200A of the Act with introduction of section 234E, it was always open for the Revenue to demand and collect the fee for late filing of the statements. Section 200A would merely regulate the manner in which the computation of such fee would be made and demand raised. In other words, we cannot subscribe to the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied. Any such view would amount to a charging section yielding to the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would 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 of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. This would have one direct effect. An order passed under section 200A of the Act is rectifiable under section 154 of the Act and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A of the Act, 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 recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act.
6.3 Hon’ble Gujarat High Court, in the above mentioned case, have also stated that they do not concur with the decision given by Hon’ble Karnataka High Court in the case of Sri Fateheraj Singhvi and Ors. Vs. Union of India and Ors observing as under:
“The Karnataka High Court in case of FatherajSinghvi(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.”
6.4 Respectfully following the decision of Hon’ble Gujrat High Court as given in the case of Rajesh Kourani vs. Union of India (Supra), I hold that the late filing fees u/s 234E can be levied even for a period prior to 01.06.2015, even though the enabling machinery provision in the form of clause (c) to sec. 200A (1) was not present on the statute.”
4. We have perused the submissions advanced by both sides in the light of records placed before us. We note that CPC levied 234E interest for belated filing of the Quarterly TDS return by the assessee. The details are as under:
5. Clause (c) to (f) of section 200A(1) reproduced hereinabove was substituted by the Finance Act, 2015 w.e.f. 1.6.2015. The assessee contended that AO could levy fee u/s.234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by virtue of the provisions of Sec.200A(1)(c), (d) & (f) of the Act and those provisions came into force only from 1.6.2015 and therefore the authority issuing intimation u/s. 200A of the Act while processing return of TDS filed u/s.200(3) of the Act, could not levy fee u/s. 234E of the Act in respect of statement of TDS filed prior to 1.6.2015. The assessee, thus, challenged the validity of charging of fee u/s. 234E of the Act. The assessee relied on the decision of the Hon’ble High Court of Karnataka in the case of Fatehraj Singhvi v. UOI [2016] 73com 252 wherein the Hon’ble Karnataka High Court held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have been made for tax deducted at source for the assessment years prior to 1.6.2015.
6. Coordinate Bench of this Tribunal in case of Mindlogicx Infratec Ltd. vs. ACIT in ITA Nos. 462 to 483/Bang/2022 by order dated 19/07/2022 for A.Ys. 2013-14 to 2015-16 observed and held as under:
“13. It is not in dispute that if the ratio laid down by the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra) if applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the assessee relate to TDS returns filed prior to 1.6.2015. The decision of the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra)was rendered on 26.8.2016. As rightly contended by the learned Counsel for the assessee, there is no ambiguity in the non applicability of the provisions of section 200A of the Act for the period prior to 01.06.2015 as interpreted by the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra). Therefore the issue before the AO in the application under section 154 of the Act cannot be said to be a debatable issue on which two views are possible. It cannot also be said that the mistake is not obvious and patent. The law is well settled that the decision of the Jurisdictional High Court is binding on the authorities functioning under its jurisdiction. The AO as well as the CIT(A) ought to have allowed the application of the assessee under section 154 of the Act by following law laid down by the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra).”
Respectfully following the above, all the appeals filed by the assessee are allowed and the interest u/s. 234E as tabulated hereinabove cannot be sustained.
In the result, all the four appeals filed by the assessee stands allowed.
Order pronounced in open court on 29th July, 2022.
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