Case Law Details
Government Secondary School Principal Officer Vs ACIT (ITAT Jaipur)
The issue under consideration is whether the late filing fees u/s 234E can be deleted if there is a ‘reasonable cause’ for such default?
In the present case, the assessee is the Principal of Secondary School and responsible for deducting tax at source, depositing the same to the government account, and submitting quarterly TDS statement as required U/s 200(3) read with the proviso of the said Section. A late fee under section 234E was levied against the Assessee since there is a delay of 315 days in filing the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18 and consequently the A.O. The assessee claimed that due to some transfer postings of the Lower Division Clerk (LDC) as well as the teachers, looking after the matter, there was a delay in submitting the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18. It was claimed that since there was a reasonable cause for the delay, the levy should be deleted.
ITAT states that since the levy of late fee as prescribed U/s 234E of the Act is mandatory and consequential, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. It is pertinent to mention that though the intimation issued U/s 200A of the Act is an appealable order, however, the said order can be challenged only on the ground that the adjustment made by the A.O. or intimation issued U/s 200A of the Act is not in accordance with the provisions of Section 234E or Section 200A of the Act. Only if the A.O. has failed to comply with the mandatory provisions of these Sections while making the adjustment and issuing the intimation, the same can be challenged in the appeal. In absence of any such allegation that the A.O. has violated any of the provisions of Section 234E or Section 200A of the Act, the adjustment made by the A.O. on account of late filing fee U/s 234E of the Act cannot be deleted. Hence, Appeal filed by assessee dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order dated 17/06/2019 of ld. CIT(A)-3, Jaipur for the Financial Year 2017-18 (24Q 1st Quarter) arising from the levy of late fee U/s 234E of the Income Tax Act, 1961 (in short, the Act) while issuing the intimation U/s 200A of the Act dated 19/06/2018. The assessee has raised following grounds of appeal:
“1. That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the levy of penalty U/S 234E. He has not only failed to consider and appreciate the explanation given by the appellant in respect of the bonafide explanation on the ground of sufficient reason/genuine cause with proper documents and evidence in respect of the section 234E but has solely limited his order to the findings of appeal whereas we have Submitted before the Ld. CIT-(Appeals)-III, that during the considering quarter, the report of TDS was submitted by us for salary of the government employees, all the taxes was paid timely but the TQS return was filed late due to some reasonable, unavoidable and sufficient causes for failure.
a. during the quarter first there was limited staff
b. during the said quarter all the staff was busy in the programme of admission since 19th June, 2018 to 31st July, 2018 and implementation of such programme was necessary in the interest of public.
c. during the quarter first, the implied charge of such TDS work in the hand of the PTI (sport teacher) who was engaged in school tournament of sports activities from July to September.
d. during the quarter first , In the end of the July a peon promoted Office staff was joined as LDC, and he was not aware with proper rules and the promoted LDC was believed & satisfied with filling of the first quarter by Sports teacher and on the another side sports teacher was believed that charge is not in my hand and return is submitting by the new LDC without interruption, after long time the return was filed on 14th of June, 2018 after seeing the status of first quarter in Generated form 16 of the employee. Hence due to the above reasons and with the belief of timely filling, we have not filed TDS return on time and such TDS return was late filed by the our department, in this relation we request you that for such reasonable and unavoidable causes the late fees cannot be imposed on the assessee.
f. The Appellant was not in such condition to pay penalty as late fee because that we have Rajasthan State Government Department in the name and style of GOVERNMENT SECONDARY SCHOOL, TOOMLIKABAS, Chaksu, Jaipur to reform, improve and development of the education among the students of villages and farmers, the fund release from the state government. We further submit that the allocated fund is being utilized in said projects for the public. No other balances or assets in the name of the Appellant except these specified reserve fund.
That as per the above situation the payment of such late fee amount would cause genuine hardship to the Appellant. There is no default in deposition of TDS as per applicable rates.
The Appellant has already co-operated in each inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.
If the burden of such amount goes on the Appellant, than it would cause genuine hardship to the Appellant. It means it would be difficult to the Appellant to arrange such late fees amount because that the Appellant not having neither assets nor fund to clear such amount.
2. That on the facts and in the circumstances of the case, the Ld. Commissioner Of Income Tax (Appeals) has erred in sustaining the levy of penalty U/S 234E. Ld. CIT has not only failed to consider and appreciate the explanation given by the appellant in respect of the addition of Rs 63,000/- whereas the assessee is the Rajasthan State Government Department in the name and style GOVERNMENT SECONDARY SCHOOL, TOOMLIKABAS, Chaksu to that the assessee is the Rajasthan State Government Department in the name and style of GOVERNMENT SECONDARY SCHOOL, TOOMLIKABAS, Chaksu, Jaipur to reform, improve and development of the students with the providing education in the interest of the public. All the expenses was incurred for such education system by the Rajasthan Government. It means all the work was for the interest of the public with our limited staff.
3. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the basic concept behind TDS is, to deposit the Tax on the income of deductee as he earns the income. Therefore deductor/recipient has deposited the tax timely. No such offence has been committed by the assessee that he deducted the TDS and not deposited the Tax and utilizing the money for his purpose. Therefore No Late fees can be imposed on the assessee.
4. That the Ld. Commissioner Of Income Tax (Appeals) has failed to appreciate that as the Appellant was not in such condition to pay penalty as late fee because that we have Rajasthan State Government Department in the name and style of GOVERNMENT SECONDARY SCHOOL, TOOML IKA BAS, Chaksu, Jaipur to reform, improve and development of the education among the students of villages and farmers ,the fund release from the state government. We further submit that the allocated fund is being utilized in said projects for the public. No other balances or assets in the name of the Appellant except these specified reserve fund.
That as per the above situation the payment of such late fee amount would cause genuine hardship to the Appellant. There is no default in deposition of TDS as per applicable rates.
The Appellant has already co-operated in each inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.
If the burden of such amount goes on the Appellant, than it would cause genuine hardship to the Appellant. It means it would be difficult to the Appellant to arrange such late fees amount because that the Appellant not having neither assets nor fund to clear such amount.
5. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the Sub section (3) of the section 234E of the Act states that it shall be paid before delivering a TDS statement. It means that any late fees should have been deposited just at the time of delivering TDS statement and not later than this.
That once the TDS statement has been accepted without late fees and then such late fee cannot be recovered later on. In the view of the above, late fee cannot be recovered later on by way of any notice, no notice of demand U/s 156 can be issued for this.
6. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the Provisions of Sec.204 of the Act has made the person responsible for Sec. 190 to Sec. 203AA and Sec.285, this phrase does not cover Sec.234E, it means no one is responsible for default U/s 234E of the Act. It’s also clears that if late fees are due but not deposited along with the TDS statement anyone cannot be held responsible to deposit it later That the order of the Ld. Commissioner of Income Tax (Appeals) is arbitrary, against the facts and circumstances of the case, illegal and be therefore quashed outright.
7. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the sec.200A of the Act does not permit processing of TDS statement for default in payment of late fees, except any arithmetical error, or incorrect claim, or default in payment of interest and TDS payable or refundable etc. Hence late fees for TDS quarterly statement cannot be recovered by way of processing under section 200A. Therefore, demand notice cannot be issued under this section, but if issued, then it is illegal. hence liable to be cancelled.
8. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the recovery can be made of any amount which is legally payable, if the amount has not become legally payable, then how the recovery can be made for late fee.
9. That the Appellant prays that the penalty of Rs. 63,000/- made in respect of section 234E be deleted.
10. That the appellant prays for leave to add, alter, and amend the aforesaid grounds of appeal at or before the time of hearing of appeal.”
2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. The assessee is the Principal of Secondary School and responsible for deducting tax at source, depositing the same to the government account and submitting uarterly TDS statement as required U/s 200(3) read with the proviso of the said Section. There is delay of 315 days in filing the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18 and consequently the A.O. while issuing the intimation has made an adjustment of late filing fee U/s 234E of the Act of Rs. 63,000/-.
3. The assessee challenged the said levy of late filing fee before the CIT(A) and contended that due to some transfer postings of the Lower Division Clerk (LDC) as well as the teachers, looking after the matter, there was a delay in submitting the quarterly TDS statement of Quarter No. 1 of F.Y. 2017-18. The ld. CIT(A) did not accept the explanation of the assessee and confirmed the levy of late filing fee as adjustment made by the A.O.
4. Before the ITAT, the ld AR of the assessee has submitted that the assessee explained the reasonable unavoidable circumstances and sufficient cause for delay in filing the quarterly TDS statement. He has pointed out that the TDS deducted on the salary of the government employees was paid timely to the government account but the quarterly TDS statement could not be filed in time due to shortage of staff. He has further submitted that during the said quarter, the entire staffs of the school are busy in programme of admission scheduled from 19/06/2018 to 31/07/2018. Thus, the implementation of such programme was the primary work and necessary in the public interest. He has further pointed out that during the relevant period, the work of TDS was under the charge of physical teacher (PTI), who was engaged in the school tournaments and sport activities from the month of July to September, 2018. Further in the month of July, 2018, a peon was promoted to the post of LDC and therefore, he was not aware with the rules and procedure of filing the quarterly TDS statement. Due to all these unavoidable circumstances, there was a delay in filing the quarterly TDS statement for Quarter No. 1 of F.Y. 2017-18. However, neither in past nor in future, there was any lapse on the part of the school authorities in submitting the quarterly TDS statement. Thus, the ld AR has submitted that when the assessee has explained sufficient and reasonable cause for delay in submitting the quarterly TDS statement then the levy of late filing fee is not justified. He has further submitted that the ld. CIT(A) has failed to appreciate the reasons explained by the assessee and prevailing circumstances under which there was a delay in submitting the quarterly statement. Thus, the ld AR has pleaded that this is only a default on the part of the assessee and therefore, the late filing fee levied U/s 234E of the Act may be deleted.
5. On the other hand, the ld DR has submitted that the levy of late fee U/s 234E of the Act is mandatory and consequential in nature and therefore, the reasonable cause for default of not submitting the TDS statements cannot be considered a ground for deletion of such levy. She has further contended that this is not a penalty levied under Chapter-XXI of the Act which can be deleted if the assessee explained a reasonable and bonafide cause. Thus, a levy of late fee for default in furnishing the statements is required U/s 200(3) as well as Section 206C(3) of the Act. Therefore, the A.O. is having no discretion to levy or not to levy the penalty but it is mandatory once there is a default in furnishing the TDS statements on the part of the assessee. The ld DR has further contended that that Section 154 of the Act envisages amendment in intimation issued U/s 200A(1) of the Act and therefore, there is no error or illegality in the order of the A.O. passed U/s 154 of the Act and levying the fee for default in furnishing the TDS statement. Thus, the ld DR has contended that the reasons explained by the assessee for default are not relevant for the purpose of late fee levied U/s 234E of the Act. She has relied upon the orders of the authorities below.
6. We have considered the rival submissions as well as relevant material on record. There is no dispute that there was delay of 315 days in submitting the quarterly TDS statement for the Quarter No. 1 of F.Y. 2017-18 as the assessee filed the said statement only on 14/06/2018 as against the due date of 31/07/2017. The TDS statement filed by the assessee on 14/06/2018 was processed by the A.O. on 19/06/2018 and an intimation U/s 200A of the Act was issued whereby the A.O. made an adjustment of Rs. 63,000/- on account of late filing fee U/s 234E of the Act. Chapter XVII of the Act cast obligation on persons responsible for paying certain amounts to deduct TDS as well as TCS at source. The dispute before us in this appeal of the assessee is regarding the obligation of TDS and submission of quarterly TDS statements as required U/s 200(3) of the Act, which reads as under:
“Section 200- Duty of person deducting tax.
[(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, 24[prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority 25 or the person authorised by such authority such statement in such form26 and verified in such manner and setting forth such particulars and within such time as may be prescribed:]
[Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.]”
The quarterly TDS statement as well as annual TDS returns are required to be processed U/s 200A of the Act which reads as under:
“Processing of statements of tax deducted at source.
200A. (1) Where a statement of tax deduction at source 12[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;
13[(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 scheme14 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 sub-section.]
Section 200A(1) of the Act envisages the method and various adjustments which are required to be made by the A.O. while processing the statement of TDS and issuing intimation. Clause (c) of sub section (1) of Section 200A of the Act provides for adjustment on account of fee if any to be computed in accordance with the provisions of Section 234E of the Act. Therefore, in case, there is a default or delay in submitting the TDS statements, a late fee is levied as contemplated U/s 234E of the Act and the A.O. while processing the statements of TDS shall make the adjustment on this account. Thus, so far as the nature of levy U/s 234E of the Act is concerned, it is mandatory in nature and the A.O. has no discretion to take its own decision but he has to make the adjustment on account of levy of late fee as provided U/s 234E of the Act in case there is a delay in submitting the TDS statement. The levy has to be computed in accordance with the rate prescribed U/s 234E of the Act.
7. As far as merit of the appeal is concerned, we do not find any substance or merit in this appeal as the delay in filing the quarterly statement is accepted by the assessee. The only plea raised by the assessee before the ld. CIT(A) as well as before us is the explanation for such delay in filing quarterly statement. However, since the levy of late fee as prescribed U/s 234E of the Act is mandatory and consequential, therefore, the same cannot be deleted on the ground of reasonable cause as explained by the assessee. It is pertinent to mention that though the intimation issued U/s 200A of the Act is an appealable order, however, the said order can be challenged only on the ground that the adjustment made by the A.O. or intimation issued U/s 200A of the Act is not in accordance with the provisions of Section 234E or Section 200A of the Act. Only if the A.O. has failed to comply with the mandatory provisions of these Sections while making the adjustment and issuing the intimation, the same can be challenged in the appeal. In absence of any such allegation that the A.O. has violated any of the provisions of Section 234E or Section 200A of the Act, the adjustment made by the A.O. on account of late filing fee U/s 234E of the Act cannot be deleted. Hence, we uphold the orders of the lower authorities.
8. In the result, this appeal of the assessee is dismissed.
Order pronounced in the open court on 24th June, 2020.
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