M/s. Global Finsol Private Limited, Bengaluru V. Assistant Commissioner Of Income Tax, CPC TDS, Bengaluru

ITA 2081/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6907 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 27-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SUNDAR RAJAN
• Assessee Lawyers: B CHATTARAJ
• Keywords: Retrospective amendment; TDS; Set aside
• Section: 234E; 200A; 272A

Judgement Text

ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.2080, 2081 & 2082/BANG/2019 ASSESSMENT YEAR: 2013-14, 2014-15 & 2015-16 M/S. GLOBAL FINSOL PRIVATE LIMITED 4-A, AYYAPPA ARCADE, PAMPA EXTENTION, KEMPAPURA, HEBBAL, BANGALORE PAN NO : AACCT4782B VS. ASST. COMMISSIONER OF INCOME-TAX CPC, TDS BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI B. CHATTARAJ, A.R. RESPONDENT BY : SHRI S. SUNDAR RAJAN, D.R. DATE OF HEARING : 10.09.2020 DATE OF PRONOUNCEMENT : 10.09.2020 O R D E R PER BENCH: ALL THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-9, BANGALORE AND THEY RELATE TO THE ASSESSMENT YEARS 2013-14, 2014-15 AND 2015-1 6. IN ALL THESE APPEALS, THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN CONFIRMING THE DEMAND RAISED FOR PAYMENT OF LATE FI LING FEE U/S 234E OF THE ACT. 2. THE FACTS, AS CULLED OUT FROM THE RECORD, A RE THAT THE ASSESSEE HAS FILED QUARTERLY STATEMENT OF TDS INITIALLY FOR THESE THREE ASSESSMENT YEARS UNDER VARIOUS SECTIONS. SUBSEQUEN TLY, THE ASSESSEE FILED REVISED STATEMENT OF TDS FOR THESE Y EARS. THE RELEVANT DETAILS ARE SUMMARISED BELOW:- ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 2 OF 7 ASSESSMENT YEAR DATE OF FILING OF STATEMENT OF TDS INITIALLY DATE OF FILING OF REVISED STATEMENT 2013-14 20-04-2013; 13.7.2013 AND 17.7.2013 24.7.2018 2014-15 02-8-2014; 22.12.2014 24.7.2018; 25.7.2018 2015-16 04-9-2015; 01-12-2015; 24.06.2015 24.7.2018 IT IS NOT CLEAR AS TO WHETHER THE STATEMENT OF TDS FILED INITIALLY WAS PROCESSED OR NOT. HOWEVER, WHILE PROCESSING TH E REVISED STATEMENTS OF TDS, THE FEE U/S 234E OF THE ACT, THE DEMAND WAS RAISED TOWARDS FEE PAYABLE U/S 234E OF THE ACT, SIN CE THE LD CIT(A) OBSERVES THE DEMAND WAS RAISED ONLY IN REVISED STAT EMENT OF TDS. THE ASSESSEE CHALLENGED THE SAME BY FILING APPEALS BEFORE LD CIT(A). 3. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE ENABLING PROVISION FOR LEVYING FEE U/S 234E OF THE ACT WHILE PROCESSING THE STATEMENT OF TDS WAS INSERTED IN SEC. 200A OF THE A CT WITH EFFECT FROM 1.6.2015. IT WAS SUBMITTED THAT THE HONBLE K ARNATAKA HIGH COURT HAS HELD IN THE CASE OF FATHERAJ SINGHVI (201 6)(73 TAXMANN.COM 252) (289 CTR 602) HAS HELD THAT THE AM ENDMENT MADE IN SEC. 200A OF THE ACT BY INSERTING THE ENABL ING PROVISION WITH EFFECT FROM 1.6.2015 IS PROSPECTIVE IN NATURE. ACC ORDINGLY, IT WAS CONTENDED THAT THE DEMAND RAISED U/S 234E OF THE AC T FOR THE YEARS UNDER CONSIDERATION IS NOT VALID. ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 3 OF 7 4. THE LD CIT(A) DID NOT AGREE WITH THE CONTENTI ONS OF THE ASSESSEE. HE NOTICED THAT THE REVISED STATEMENTS OF TDS HAVE BEEN FILED AFTER 1.6.2015 AND THE FEE U/S 234E OF THE ACT WAS LEVIED WHILE PROCESSING THE ABOVE SAID REVISED STATEMENT OF TDS ONLY. ACCO RDINGLY HE HELD THAT THE ASSESSEE CANNOT TAKE SUPPORT OF THE DECISI ON RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF FATHERA J SINGHVI (SUPRA). ACCORDINGLY HE DISMISSED THE APPEALS OF THE ASSESSE E. HENCE THESE APPEALS CAME TO BE FILED BY THE ASSESSEE. 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ISSUE BEFORE US IF FULLY COVERED IN FAVOUR OF THE A SSESSEE BY THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT I N THE CASE OF FATHERAJ SINGHVI (SUPRA). FOR THE SAKE OF CONVENIE NCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY HONBLE KAR NATAKA HIGH COURT IN THE ABOVE SAID CASE: - 21. HOWEVER, IF SECTION 234E PROVIDING FOR FEE WAS BRO UGHT ON THE STATE BOOK, KEEPING IN VIEW THE AFORESAID PURPO SE AND THE INTENTION THEN, THE OTHER MECHANISM PROVIDED FOR CO MPUTATION OF FEE AND FAILURE FOR PAYMENT OF FEE UNDER SECTION 20 0A 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 ME CHANISM BUT IT CAN RATHER BE TERMED AS CONFERRING SUBSTANTIVE P OWER 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 U PON THE AUTHORITY WOULD ALSO BE A ASPECT WHICH MAY BE REQUI RED TO BE CONSIDERED BEFORE SUCH PROVISIONS IS HELD TO BE RET ROACTIVE IN NATURE. FURTHER, WHEN ANY PROVISION IS INSERTED FOR LIABILITY TO PAY ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 4 OF 7 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 AN D EXAMINED. NOT ONLY THAT, BUT, IF THE MODE AND THE MANNER IS NOT E XPRESSLY PRESCRIBED, THE PROVISIONS MAY ALSO BE VULNERABLE. ALL SUCH ASPECTS WILL BE REQUIRED TO BE CONSIDERED BEFORE ON E CONSIDERS REGULATORY MECHANISM OR PROVISION FOR REGULATING TH E MODE AND THE MANNER OF RECOVERY AND ITS ENFORCEABILITY AS RE TROACTIVE. IF AT THE TIME WHEN THE FEE WAS PROVIDED UNDER SECTION 23 4E, THE PARLIAMENT ALSO PROVIDED FOR ITS UTILITY FOR GIVING PRIVILEGE UNDER SECTION 271H(3) THAT TOO BY EXPRESSLY PUT BAR FOR P ENALTY UNDER SECTION 272A BY INSERTION OF PROVISO TO SECTION 272 A(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 PAY ABLE UNDER SECTION 234E. HENCE, CONSIDERING THE AFORESAID PECU LIAR FACTS AND CIRCUMSTANCES, WE ARE UNABLE TO ACCEPT THE CONTENTI ON OF THE LEARNED COUNSEL FOR RESPONDENT-REVENUE THAT INSERTI ON 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 TH E WELL ESTABLISHED PRINCIPLES OF INTERPRETATION OF STATUTE , UNLESS IT IS EXPRESSLY PROVIDED OR IMPLIEDLY DEMONSTRATED, ANY P ROVISION OF STATUTE IS TO BE READ AS HAVING PROSPECTIVE EFFECT AND NOT RETROSPECTIVE EFFECT. UNDER THE CIRCUMSTANCES, WE F IND THAT SUBSTITUTION MADE BY CLAUSE (C) TO (F) OF SUB-SECTI ON (1) OF SECTION 200A CAN BE READ AS HAVING PROSPECTIVE EFFECT AND N OT HAVING ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 5 OF 7 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 PURP ORTED EXERCISE OF POWER UNDER SECTION 200A BY THE RESPOND ENT 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 200 A, THE AFORESAID VIEW WILL NOT PERMIT THE DEDUCTOR TO REOP EN THE SAID QUESTION UNLESS HE HAS MADE PAYMENT UNDER PROTEST. 23. IN VIEW OF THE AFORESAID OBSERVATION AND DISCUS SION, SINCE THE IMPUGNED INTIMATION GIVEN BY THE RESPONDENT-DEPARTM ENT AGAINST ALL THE APPELLANTS UNDER SECTION 200A ARE SO FAR AS THEY ARE FOR THE PERIOD PRIOR TO 1.6.2015 CAN BE SAID AS WITHOUT ANY AUTHORITY UNDER LAW. HENCE, THE SAME CAN BE SAID AS ILLEGAL AND INV ALID. 24. IF THE FACTS OF THE PRESENT CASES ARE EXAMINED IN LIGHT OF THE AFORESAID OBSERVATION AND DISCUSSION, IT APPEARS TH AT IN ALL MATTERS, THE INTIMATION GIVEN IN PURPORTED EXERCISE OF POWER UNDER SECTION 200A ARE IN RESPECT OF FEES UNDER SECTION 234E FOR THE PERIOD PRIOR TO 1.6.2015. AS SUCH, IT IS ON ACCOUNT OF THE INTIM ATION GIVEN MAKING DEMAND OF THE FEES IN PURPORTED EXERCISE OF POWER UNDER SECTION 200A, THE SAME HAS NECESSITATED THE APPELLA NT-ORIGINAL PETITIONER TO CHALLENGE THE VALIDITY OF SECTION 234 E OF THE ACT. IN VIEW OF THE REASONS RECORDED BY US HEREINABOVE, WHE N THE AMENDMENT MADE UNDER SECTION 200A OF THE ACT WHICH HAS COME INTO EFFECT ON 1.6.2015 IS HELD TO BE HAVING PROSPE CTIVE EFFECT, NO COMPUTATION OF FEE FOR THE DEMAND OR THE INTIMATION FOR THE FEE UNDER SECTION 234E COULD BE MADE FOR THE TDS DEDUCT ED FOR THE ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 6 OF 7 RESPECTIVE ASSESSMENT YEAR PRIOR TO 1.6.2015. HENCE , THE DEMAND NOTICES UNDER SECTION 200A BY THE RESPONDENT-AUTHOR ITY FOR INTIMATION FOR PAYMENT OF FEE UNDER SECTION 234E CA N BE SAID AS WITHOUT ANY AUTHORITY OF LAW AND THE SAME ARE QUASH ED AND SET ASIDE TO THAT EXTENT. IT CAN BE NOTICED THAT THE HONBLE KARNATAKA HIGH C OURT HAS HELD THAT 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 T HE RESPONDENT FOR THE PERIOD OF THE RESPECTIVE ASSESSMENT YEAR PR IOR TO 1.6.2015. ADMITTEDLY, THE ASSESSMENT YEARS UNDER CONSIDERATIO N ARE AY 2013-14 TO 2015-16 PERTAINING TO THE FINANCI AL YEARS 2012-13 TO 2014-15. THE QUARTERLY PERIODS FALLING UNDER TH ESE ASSESSMENT YEARS PERTAIN TO THE PERIOD PRIOR TO 1.6.2015. ACC ORDINGLY, AS PER THE BINDING DECISION OF HONBLE KARNATAKA HIGH COURT, T HE DEMAND U/S 234E COULD NOT BE MADE IN EXERCISE OF POWERS CONFER RED U/S 200A OF THE ACT. 6. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE IMPUGNED ORDERS PASSED BY LD CIT(A) CANNOT BE SUSTA INED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDERS PASSE D BY LD CIT(A) AND DIRECT THE AO TO DELETE THE DEMAND RAISED U/S 2 34E OF THE ACT IN ALL THE THREE YEARS UNDER CONSIDERATION. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPT, 2020 SD/- (GEORGE GEORGE K. ) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 10 TH SEPT, 2020. VG/SPS ITA NOS.2080, 2081 & 2082/BANG/2019 M/S. GLOBAL FINSOL PRIVATE LIMITED, BANGALORE PAGE 7 OF 7 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.