R B P R CHOUDARY, RAJAHMUNDRY V. INCOME TAX OFFICER, TDS WARD-1, RAJAHMUNDRY

ITA 110/VIZ/2023

AI Insights

The case revolves around the imposition of a late filing fee under Section 234E of the Income Tax Act, 1961, by the Income Tax Officer, TDS Ward-1, Rajahmundry, on R.B.P.R. Choudary, a doctor and proprietor of Apex Hospitals, Rajahmundry. The assessee filed TDS quarterly returns belatedly for the financial year 2012-13, relevant to the assessment year 2013-14. The Assessing Officer processed these returns and levied a late filing fee under Section 234E, which was contested by the assessee. The Commissioner of Income Tax (Appeals) upheld this decision, leading to the current appeal before the Tribunal. The primary legal contention was whether the late filing fee under Section 234E could be applied to returns filed for periods prior to June 1, 2015, the date from which the relevant provisions were enacted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128503 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 05-04-2023
• Other Referred Cases: Rashmikant Kundalia vs. Union of India, Rajesh Kourani vs. Union of India, Fatheraj Singhvi vs. Union of India, United Metals vs. ITO (TDS), Medical Superintendent Rural Hospital, Nashik vs. DCIT, CPC (TDS)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; TDS
• Section: 234E; 200A; 73; 272A

Judgement Text

आयकर अपीलȣयअͬधकरण, ͪवशाखापटणम पीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įी दुåवूǽ आर एल रेɬडी, ÛयाǓयक सदèय एवं Įी एस बालाकृçणन, लेखा सदèय के सम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ I.T.A. No.110/Viz/2023 (Ǔनधा[रण वष[ / Assessment Year: 2013-14) R.B.P.R. Choudary, Prakash Nagar, Rajahmundry. PAN: AFCPR 2275 M Vs. Income Tax Officer, TDS Ward-1, Rajahmundry. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Sri GVN Hari, AR Ĥ×याथȸ कȧ ओर से / Respondent by : Sri ON Hari Prasada Rao, Sr. AR सुनवाई कȧ तारȣख / Date of Hearing : 29/05/2023 घोषणा कȧ तारȣख/Date of Pronouncement : 01/06/2023 O R D E R PER DUVVURU RL REDDY, Judicial Member : This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)-NFAC] in DIN & Order No. ITBA/NFAC/S/250/2022-23/1050161496(1), AY 2013-14 arising out of the order passed U/s. 200A of the Act. 2 2. Brief facts of the case are that the assessee is, an individual and a Doctor, the proprietor of Apex Hospitals, Rajahmundry. The assessee, being a deductor of TDS, filed the TDS Quarterly returns [Q2] for the FY 2012-13 relevant to the AY 2013-14 belatedly. The belated quarterly statement was processed by the Ld. AO [ACIT, CPC-TDS] and passed intimation U/s. 200A of the Act and levied late filing fee U/s. 234E of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC with a delay of 973 days. 3. On appeal, the Ld. CIT(A)-NFAC did not condone the delay and, by relying on various decisions to state that the reasons advanced by the assessee do not constitute reasonable and sufficient cause for condonation of delay, dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The CPC-TDS is not correct in levying the late f iling f ee U/s. 234E of the Income Tax Act, 1961. 2. The CPD-TDS erred in law to charge the f ees U/s. 234E of the Income Tax Act, 1961 by way of intimation issued U/s. 200A of the Income Tax Act, 1961 in respect of def aults bef ore 01/06/2015. 3 3. The Commissioner of Income Tax (Appeals) should have seen that there is a reasonable and genuine reason f or delay in f iling of quarterly statements. 4. Any other ground that may be urged at the time of hearing of the appeal.” 4. At the outset, it is the submission of the Ld. AR that the enabling provision for computation of fee while processing the statements was inserted in section 200A only w.e.f 1/6/2015 and therefore, the charging section i.e., section 234E cannot be enforced prior to 1/6/2015. Further, it is also contended that the amended provision applies for all the returns pertaining to the period after 1/6/2015 and not for the returns pertaining to the period prior to 01/06/2015 notwithstanding the fact that the returns pertaining to the period prior to 01/06/2015 were filed after 01/06/2015 or processed after 01/06/2015. Further, it is also the contention of the Ld. AR that in the present case, the due date for filing the TDS return is 15/10/2012 (For Q2 of FY 2012-13) and therefore section 234E cannot be enforced since it is prior to 1/6/2015 and the Ld. Revenue Authorities erred in levying the levy of late fee U/s. 234E of the Act while processing the TDS return U/s. 200A of the Act for the relevant period under consideration. Therefore, it was pleaded that the decision of the Ld. Revenue Authorities may be set-aside and the assessee may 4 be granted relief by deleting the late fee levied U/s. 234E of the Act. 5. On the other hand, the Ld. Departmental Representative heavily relied on the decision of the Ld. ACIT, TDS-CPC. It is the submission of the Ld. DR that since the assessee filed its TDS statement beyond the stipulated time as per the TDS provisions, the late fee levied on account of default in furnishing the statements beyond the prescribed time limit is as per the provisions of the IT Act, 1961. The Ld. DR further submitted that the fee charged U/s. 234E is not in lieu of penalty as the fee charged under section 234E is not in the nature of penalty and is a fee which the deductor shall be liable to pay in the event of delay in filing the TDS statements as prescribed. The Ld. DR further submitted that the Fee charged U/s. 234E is a fixed fee charged, in case the statements are rendered beyond the stipulated time which is happened in the instant case. The Ld. DR also submitted that it is rightly observed by the Hon’ble Bombay High Court in the case of Rashmikant Kundalia vs. Union of India (supra) “because of late filing of TDS state ments Department is overburdened with ex tra work which is o therwise no t required if the TDS state ments are furnished within the 5 prescribed time limit.” The Ld. DR also heavily relied on the decision of the Hon’ble Gujarat High Court in the case of Rajesh Kourani vs. Union of India (supra) for the proposition that “a machinery provision (sec tion 200A) cannot override the substantive provision of law”. The Ld. DR further referring to the Ld. CIT(A)’s order submitted that the onus is on the assessee to explain the huge delay involved in the instant case with sufficient and reasonable cause. In the absence of any cogent explanation which forms sufficient and reasonable cause for condonation of delay, the Ld. CIT(A)-NFAC dismissed the appeal of the assessee. Therefore, the Ld. DR pleaded that since the action taken by the Ld. Revenue Authorities is in accordance the provisions of the Act and also in accordance with law, as discussed above, and hence the orders of the Ld. Revenue Authorities need not be disturbed / interfered with. 6. We have heard both the sides, perused the material available on record as well as the orders of the Ld. Revenue Authorities. The main question that arises in this appeal is whether TDS returns pertaining to the period prior to 01/06/2015, if filed after 01/06/2015 and processed after 01/06/2015, whether they attract the amended provisions of Finance Act, 2012 and the 6 specific provision for levy of “fee” under section 234E of the Act which was inserted w.e.f 1/6/2015. In the present case the due date for filing the TDS return [Q2– FY 2012-13] is 15/10/2012 but filed belatedly. The Ld. AO treating this filing / furnishing of TDS statement as a default since it is not filed within the stipulated time as per the TDS provisions and imposed late fees u/s. 234E of the Act. On appeal, the Ld. CIT(A)-NFAC confirmed the action of the Ld. AO and dismissed the assessee’s appeal. 7. Considering the facts of the present case, we are of the considered view since the enabling provision for computation of fee while processing the statements was inserted in section 200A only w.e.f 1/6/2015 and therefore, the charging section i.e., section 234E cannot be enforced to the cases prior to 1/6/2015. Further, we are of the view that the amended provision applies for all the returns pertaining to the period after 1/6/2015 and not for the returns pertaining to the period prior to 01/06/2015 notwithstanding the fact that the returns pertaining to the period prior to 01/06/2015 were filed after 01/06/2015 or processed after 01/06/2015. 8. The Hon’ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India [2016] 73 taxmann.com 252 7 (Karnataka) observed that “one may at the first blush say that, since the section 234E is a charging section for fee, the liability was generated or had accrued, if there was failure to deliver or cause to be delivered the state ment/s of TDS within the prescribed time. But section 234E canno t be read in isolation and is required to be read with the mechanism and the mode provided for its enforce ment......”. The observations and relevant held portions in the judgment of the Hon’ble Karnataka High Court (supra) are extracted herein below for reference: "21. However, if Section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under Section 200A which has been brought about with effect from 1.6.2015 cannot be said as only by way of a regulatory mode or a regulatory mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a regulatory mechanism by insertion of any provision made in the statute book, may have a retroactive character but, whether such provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also be a aspect which may be required to be considered before such provisions is held to be retroactive in nature. Further, when any provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee independently simultaneously mode and the manner of its enforceability is also required to be considered and examined. Not only that, but, if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects will be required to be considered before one considers regulatory mechanism or provision for regulating the mode and the manner of recovery and its enforceability as retroactive. If at the time when the fee was provided under Section 234E, the Parliament also provided for its utility for giving privilege under Section 271H(3) that too by expressly put bar for penalty under Section 272A by insertion of proviso to Section 272A(2), it can be said that a particular set up for imposition and the payment of fee under Section 234E was provided but, it did not provide for making of demand of such fee under Section 200A payable under Section 234E. Hence, considering the aforesaid peculiar facts and circumstances, we are unable to accept the contention of the learned counsel for respondent-Revenue that 8 insertion of clause (c) to (f) under Section 200A(1) should be treated as retroactive in character and not prospective. 22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest." 9. Further, the Hon’ble Kerala High Court in the case of United Metals vs. ITO (TDS) reported in [2022] 137 taxmann.com 115 (Kerala) observed as under: “Amendment in section 200A by way of incorporating sub-cl ause (c) to cl ause (f) which referre d to co mputation of fee payabl e under section 234E was b rought into effect from 1/6/2015, therefore, deman d raised for l evying l ate fee under section 234E for period prior to 1/6/2016 woul d not be sustain abl e.” 10. The Pune Bench of the Tribunal vide its order dated 25/10/2018 in the case of Medical Superintendent Rural Hospital, Nashik vs. DCIT, CPC (TDS) (supra), has observed as under: “16.............. the Assessing Officer whil e processing TDS re turns / statements for the period prior to 01/06/2015 was not empo we red to ch arge l ate fil ing fees under section 234E of the Act, even in the cases where such TDS returns we re fil ed bel atedl y after June, 2015 and even in cases where the Assessing Officer processed the said TDS re turns after June, 9 2015. Accordingl y...............the deman d raised b y ch arging l ate fil ing fee u/s 234E of the Act is not v al id and the s ame is del eted.” 11. Thus, in the instant case since the period of default was before the said date ie., 01/06/2015, there is no merit in charging late filing fee U/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 200A of the Act. Since we hold that the no late filing fee is to be charged, the consequential interest charged U/s. 220(2) of the also does not survive. Thus, the grounds raised by the assessee are allowed. 12. In the result, appeal filed by the assessee is allowed. Pronounced in the open Court on the 01 s t June, 2023. Sd/- Sd/- (एस बालाकृçणन) (दुåवूǽ आर.एल रेɬडी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदèय/ACCOUNTANT MEMBER ÛयाǓयकसदèय/JUDICIAL MEMBER Dated : 01/06/2023 OKK - SPS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee – RBPR Choudary, D.No. 75-6-23, Prakash Nagar, Rajahmundry, Andhra Pradesh – 533103. 2. राजèव/The Revenue – Income Tax Officer, TDS Ward-1, O/o. Income Tax Office, D.No. 46-20-15, Danavaipeta, Rajahmundry, Andhra Pradesh – 533105. 10 3. The Principal Commissioner of Income Tax, 4. आयकर आयुÈत (अपील)/ The Commissioner of Income Tax (Appeals), 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, ͪवशाखापटणम/ DR, ITAT, Visakhapatnam 6 .गाड[ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam