Sri Sai Durga Housing Estates, Vijayawada V. ACIT, Centralised Processing Cell-TDS, Ghaziabad

ITA 3/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3938 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 01-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: TDS; Set aside
• Section: 250; 6; 10; 154

Judgement Text

ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NOS.2&3/VIZAG/2018 ( / ASSESSMENT YEARS: 2013-14 & 2014-15) SRI SAI DURGA HOUSING ESTATES VIJAYAWADA ACIT, CENTRAL PROCESSING CELL-TDS GHAZIABAD [PAN NO. ABQFS0830H ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI V. APPALA RAJU, DR / DATE OF HEARING : 24.04.2018 / DATE OF PRONOUNCEMENT : 26.04.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) { CIT(A)}, VIJAYAWADA VIDE ITA NO.201 & 202/CIT(A)/VJA/2015-16 DATED 4.10.2017 FOR THE ASSESSMENT YEARS 2013-14 & 2014-1 5. ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 2 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE LEV Y OF LATE FEE U/S 234E OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS 'THE ACT'). THE ASSESSEE REQUIRED TO SUBMIT E-STATEMENTS OF TDS U/S 200(3) OF THE ACT FOR THE QUARTER ENDING 2, 3 & 4 OF THE FINANCIAL YE AR 2012-13 RELEVANT FOR THE ASSESSMENT YEAR 2013-14. SINCE THE ASSESSEE FI LED E-STATEMENTS WITH A DELAY OF 212 DAYS FOR THE QUARTER ENDING SEP TEMBER, 120 DAYS FOR THE QUARTER ENDING DECEMBER AND 196 DAYS FOR THE QU ARTER ENDING MARCH-2013, THE A.O. LEVIED THE LATE FEE OF ` 42,400/-, ` 24,000/- & ` 39,200/- RESPECTIVELY FOR THE QUARTERS ENDING SEPT , DEC AND MARCH 2012-13. THE DUE DATES FOR FILING E-STATEMENTS, DA TE OF FILING THE STATEMENT, THE DELAY AND THE LATE FEE CHARGED U/S 2 34E OF THE ACT IS AS UNDER: S.NO Q.NO FORM TYPE TYPE OF STATEMENT DUE DATE OF FILING DATE OF FILING DAYS OF DELAY IN FILING TOTAL TDS INTEREST CHARGEABLE U/S 234E 1 Q2 26Q CORRECTION 15.10.2012 15.05.2013 212 154539 42400 2 Q3 26Q CORRECTION 15.01.2013 15.05.2013 120 115468 24000 3 Q4 26Q ORIGINAL 15.05.2013 27.11.2013 196 183876 39200 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE LD. CIT(A) CONFIRMED THE LA TE FEE LEVIED BY THE ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 3 A.O. FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN RAJESH KOURANI VS. UOI REPORTED IN 83 TAXMANN.COM 137. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE(AR) ARGUED THAT THO UGH SECTION 234E OF THE ACT IS INTRODUCED IN THE INCOME TAX ACT, W.E.F . 1.7.2012 BY FINANCE ACT, 2012, THERE IS NO ENABLING PROVISION IN THE AC T TO LEVY THE LATE FEE. THE ENABLING PROVISION WAS INSERTED IN SECTION 200A BY FINANCE ACT, 2015 W.E.F. 1.6.2015 AND HENCE, PRIOR TO INSERTION OF SUB CLAUSE (C) OF SUB-SECTION (1) OF SECTION 200A THERE IS NO PROVISI ON FOR LEVY OF LATE FEE. THEREFORE, ARGUED THAT POWER TO CHARGE OR COLLECT T HE LATE FEE U/S 234E OF THE ACT WAS VESTED WITH THE REVENUE ONLY ON INSE RTION OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 200A VIDE FINANCE ACT, 2 015 W.E.F. 1.6.2015. HENCE, PRIOR TO 1.6.2015, NO FEE COULD HAVE BEEN LE VIED U/S 234E OF THE ACT WHILE ISSUING INTIMATION U/S 200A. THE LD. A.R . ALSO RELIED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF FATHERAJ SINGHVI (2016) 73 TAXMANN.COM 252. THE LD. A.R. FURTHER SUBMITTED THAT THE LD. CIT(A) HAS CONSIDERED THE DE CISION OF KARNATAKA HIGH COURT AND RELIED ON GUJARAT HIGH COURT IN THE CASE OF RAJESH KOURANI VS. UOI 83 TAXMANN.COM 137, WHEREIN HONBLE HIGH COURT HELD THAT SECTION 234E IS A CHARGING PROVISION CREATING A CHA RGE FOR ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 4 LEVYING FEE FOR CERTAIN DEFAULTS IN FILING STATEMEN TS, AND FEE PRESCRIBED UNDER SECTION 234E COULD BE LEVIED EVEN WITHOUT A REGULATORY PROVISION BEING FOUND IN SECTION 200A FO R COMPUTATION OF LATE FEE. THE LD. A.R. SUBMITTED THAT THE COORDINATE BENCH OF THIS TRIBUNAL CONSIDERED THE DECISION OF H ONBLE KARNATAKA HIGH COURT AND DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE IN CHALLAPALLI EXPORTS LIMITED AND OTHERS VS. ITO (TDS) WARD-1, GU NTUR IN ITA NOS.179 TO 182/VIZAG/2016 DATED 16.2.2017 AND HELD THAT THE LATE FEE U/S 234E OF THE ACT CANNOT BE LEVIED WHILE PROCESSI NG THE TDS STATEMENTS U/S 200A OF THE ACT BEFORE 1.6.2015. TH E LD. A.R. FURTHER SUBMITTED THAT THERE ARE TWO JUDGEMENTS OF HONBLE HIGH COURTS WITH CONTRADICTING VIEWS, THE DECISION OF HONBLE KARNAT AKA HIGH COURT IS IN FAVOUR OF THE ASSESSEE WHILE THE DECISION OF HONBL E GUJARAT HIGH COURT CITED (SUPRA) IS IN FAVOUR REVENUE FOR LEVY OF LATE FEE, IN THE CIRCUMSTANCES HONBLE HIGH COURT OF ANDHRA PRADESH JURISDICTIONAL HIGH COURT IN THE CASE OF STATE OF ANDHRA PRADESH VS. CO MMERCIAL TAX OFFICER IN 169 ITR 0564 HELD THAT THE DECISION WHICH IS MOS T FAVOURABLE TO THE ASSESSEE REQUIRED TO BE CONSIDERED. SIMILARLY, HON BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LIMITED IN 8 8 ITR 192 (SC), ALSO EXPRESSED THE SIMILAR VIEW. THEREFORE REQUESTED TO ADOPT THE DECISION IN FAVOUR OF THE ASSESSEE AND ALLOW THE RELIEF. ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 5 5. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DER OF THE LD. CIT(A) AND ARGUED THAT HONBLE GUJARAT HIGH COURT HAS CONSIDERED THE DECISION OF HONBLE KARNATAKA HIGH COURT WHILE REND ERING THE JUDGEMENT, HENCE, SUBMITTED THAT THE LD.CIT(A) RIGH TLY CONFIRMED THE ADDITION THUS REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA LS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS F ILED THE TDS STATEMENTS BELATEDLY AND THE DEPARTMENT HAS LEVIED LATE FEE OF ` 42,400/- FOR THE QUARTER ENDING SEPTEMBER, 2012, ` 24,000/- FOR THE QUARTER ENDING DECEMBER, 2012 AND ` 39,200/- FOR THE QUARTER ENDING MARCH, 2013. THE LD. A.R. ARGUED TH AT ENABLING PROVISION I.E. SUB CLAUSE OF SUB-SECTION (1) OF S ECTION 200A IS INSERTED IN THE INCOME TAX W.E.F. 1.6.2015, HENCE, THE A.O. IS NOT EMPOWERED TO CHARGE THE LATE FEE PRIOR TO 1.6.2 015 IN THE ABSENCE OF ENABLING PROVISION. THIS VIEW IS ALSO S UPPORTED BY THE DECISION OF COORDINATE BENCH OF ITAT, PUNE REPO RTED IN GAJANAN CONSTRUCTIONS. V. DEPUTY COMMISSIONER OF INCOME-TAX, CPC(TDS), GHAZIABAD, [2016] 73 TAXMANN.COM 380. HONBLE KARNATAKA HIGH COURT RENDERED THE DECISION IN FAVOU R OF THE ASSESSEE IN FATERAJ SINGHVI VS. UOI 73 TAXMANN.COM 252 AND ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 6 HELD THAT SECTION 200A OF THE ACT ENABLES THE A.O. TO DETERMINE LATE FEE U/S 234E OF THE ACT, BROUGHT ABOUT W.E.F. 1.6.2015 HELD TO BE PROSPECTIVE, HENCE NO COMPUTATION OF FEE FOR DEMAND OR INSTITUTION OF LATE FEE U/S 234E OF THE A CT COULD BE MADE FOR TDS DEDUCTED FOR RESPECTIVE ASSESSMENT YEA RS PRIOR TO 1.6.2015. HONBLE GUJARAT HIGH COURT IN THE CAS E OF RAJESH KOURANI VS. UOI (2017) 83 TAXMANN.COM 137 RENDERED THE JUDGEMENT IN FAVOUR OF REVENUE AND HELD THAT EVEN I N THE ABSENCE OF SECTION 200A(1) OF THE ACT, THE A.O. IS EMPOWERED TO LEVY LATE FEE U/S 234E OF THE ACT. SI NCE THERE ARE TWO CONFLICTING AND CONTRADICTING JUDGEMENTS OF HONBLE HIGH COURTS AS HELD BY HONBLE A.P. HIGH COURT, TH E DECISION, WHICH IS MOST FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. FOR READY REFERENCE, WE REPRODUCE HEREUNDER PARA -1 3 OF THE JURISDICTIONAL HIGH COURT JUDGEMENT IN THE CASE OF STATE OF ANDHRA PRADESH VS. COMMERCIAL TAX OFFICER 169 ITR 0 564 CITED (SUPRA) WHICH READS AS UNDER: 13. REFERENCE MAY ALSO BE INVITED TO THE DECISION OF TH E BOMBAY HIGH COURT IN SUBRAMANIAN, ITO VS. SIEMENS I NDIA LTD. (1985) 36 CTR (BORN) 197 (1985) 156 ITR 11 (BORN), THE QUESTION THAT AROSE FOR CONSIDERATION IN THIS CASE IS WHETHER THE ITO IS BOUND BY THE DECISION OF A SINGLE JUDGE OR A DIVISION BENCH OF T HE COURT WITHIN WHOSE JURISDICTION HE IS OPERATING EVEN IF AN APPEAL HAS BEEN PREFERRED AGAINST SUCH DECISION AND IS PENDING. THE FOLLOWING OBSERVA TIONS OF THE BOMBAY HIGH COURT MAY BE EXTRACTED: ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 7 SO FAR AS THE LEGAL POSITION IS CONCERNED, THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE HIGH COURT OF THE STATE WITHIN WHOSE JURISDI CTION HE IS (FUNCTIONING), IRRESPECTIVE OF THE PENDENCY OF ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THAT JUDGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION OF ANOTHER HIGH COUR T ON THE POINT, BECAUSE NOT TO FOLLOW THAT DECISION WOULD BE TO CAUSE GRAVE PREJUDICE TO THE ASSESSEE. WHERE THERE IS A C ONFLICT BETWEEN DIFFERENT HIGH COURTS, HE MUST FOLLOW THE D ECISION OF THE HIGH COURT WITHIN WHOSE JURISDICTION HE IS (FUN CTIONING), BUT IF THE CONFLICT IS BETWEEN DECISIONS OF OTHER H IGH COURTS, HE MUST TAKE THE VIEW WHICH IS IN FAVOUR OF THE ASSESS EE AND NOT AGAINST HIM. SIMILARLY, IF THE TRIBUNAL HAS DECIDE D A POINT IN FAVOUR OF THE ASSESSEE, HE CANNOT BE IGNORE THAT DE CISION AND TAKE A CONTRARY VIEW, BECAUSE THAT WOULD EQUALLY PR EJUDICE THE ASSESSEE. 7. SIMILAR VIEW WAS EXPRESSED BY THE HONBLE APEX C OURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LIMITED CITED (SUPRA) , THEREFORE FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE DECISION OF HONBLE KARNATAKA HIGH COURT, WHICH IS MOST FAVOURABLE TO THE ASSESSEE REQUIRED TO BE ADOPTED IN THIS CASE. AS DISCUSSED EARLIER, THIS TRIBUNAL IN THE CASE OF CHALLAPALLI EXPORTS PV T. LTD. VS. ITO (TDS) WARD-1 CITED (SUPRA) HELD THAT THE LATE FEE PAYABLE U/S 234E OF THE ACT CANNOT BE LEVIED WHILE PROCESSING THE STATEMENTS U/ S 200A OF THE ACT PRIOR TO 01/06/2015. THE COORDINATE BENCH HAS CONS IDERED THE DECISION OF HONBLE KARNATAKA HIGH COURT ALSO WHILE GIVING T HE RULING. FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE COORDINATE BENCH, WHICH READS AS UNDER: ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 8 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE ONLY LIMITED ISSUE CAME UP FOR OUR CONSIDERATION IS WHETHER ON FACTS AND CI RCUMSTANCES OF THE CASE, THE A.O. CAN LEVY LATE FILING FEE U/S 234E OF THE ACT, FOR B ELATED FILING OF TDS STATEMENTS U/S 200(3), PRIOR TO INSERTION OF SUB-CLAUSE (C) INTO S ECTION 200A OF THE ACT. ADMITTEDLY, IN THESE CASES, THE ASSESSEE HAS FILED TDS STATEMEN TS AFTER THE DUE DATE SPECIFIED UNDER THE RESPECTIVE PROVISIONS OF THE ACT AND RULE 31A OF INCOME TAX RULES, 1962. IT IS THE CLAIM OF THE ASSESSEE THAT THERE IS NO ENA BLING PROVISION IN SECTION 200A OF THE ACT, FOR COMPUTATION OF FEE PRESCRIBED U/S 234E OF THE ACT, THEREFORE, THE A.O. CANNOT COMPUTE LATE FEE PRESCRIBED U/S 234E OF THE ACT, PRIOR TO INSERTION OF SUB- CLAUSE (C) INTO SECTION 200A OF THE ACT, BY THE FIN ANCE ACT, 2015 W.E.F. 1.6.2015. 8. IN SUPPORT OF HIS ARGUMENTS, THE A.R. RELIED UPON PLETHORA OF JUDGEMENTS INCLUDING THE DECISION OF HONBLE HIGH COURT OF KAR NATAKA, IN THE CASE OF FATHERAJ SINGHVI VS. UOI (2016) 289 CTR 602 (KARN.) AND SUBMI TTED THAT THE HONBLE HIGH COURT, HELD THAT SECTION 200A OF THE ACT ENABLING A SSESSING OFFICER TO DETERMINE FEE U/S 234E OF THE ACT, BROUGHT ABOUT W.E.F. 1.6.2015 HELD TO BE PROSPECTIVE, HENCE NO COMPUTATION OF FEE FOR DEMAND OR INTIMATION FOR FEE U/S 234E OF THE ACT COULD BE MADE FOR TDS DEDUCTED FOR RESPECTIVE ASSESSMENT YEA R PRIOR TO 1.6.2015. WE FIND THAT THE HONBLE HIGH COURT OF KARNATAKA, IN THE SA ID CASE HELD THAT U/S 200A OF THE ACT, THE A.O. CANNOT LEVY FEE U/S 234E OF THE ACT, BEFORE INSERTION OF SUB-CLAUSE (C) INTO SECTION 200A OF THE ACT, BY THE FINANCE ACT, 2 015 W.E.F. 1.6.2015. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW. AS PER SECTION 200(3) READ WITH RULE 31A OF THE INC OME TAX RULES, 1962 A TAX DEDUCTOR IS REQUIRED TO FILE QUARTERLY STATEMENT OF SUCH TAXES DEDUCTED AT SOURCE BY HIM AS TDS AND FOR THE PERIOD IN QUESTION, THE RELE VANT DATES FOR FILING OF SUCH STATEMENT IS AS FOLLOWS: (I) 30 TH JUNE 15 TH JULY OF THE FINANCIAL YEAR, (II) 30 TH SEPTEMBER - 15TH OCTOBER OF THE FINANCIAL YEAR; (II I) 31ST DECEMBER - 15TH JANUARY OF THE FINANCIAL YEAR; AND (IV) 31ST MAR 15TH MAY O F THE FOLLOWING FINANCIAL YEAR. [PARA 8] IT MAY BE RECORDED THAT SECTION 200(3) REQUIRING T O FILE FORMAL TDS STATEMENT WITHIN THE AFORESAID EACH QUARTER INSERTED ON 14-20 05 AND AT THE RELEVANT POINT OF TIME, SECTION 272A(2)(K) PROVIDED FOR THE PENALTY O F RS. 100 PER FOR EACH DAY OF DEFAULT IN FILING TDS STATEMENT AND SUCH PROVISION ALSO CAME TO BE INSERTED WITH EFFECT FROM 14-2 ON 14-2010, SECTION 200A WAS INSER TED PROVIDING FOR THE PROCESSING OF THE TDS STATEMENT AND THE CONSEQ ISSUANCE OF THE INTIMATION TO THE DEDUCTOR, THE SAME DETERMINED AS PAYABLE BY IT OR REFUNDABLE BY I T. BUT, THE RELE ASPECT IS THAT, IN INITIAL PROVISIONS OF SECTION 200A, THERE WAS NO RE FERENCE FOR FEE PAYABLE UNDER SECTION 234E. ON 1-7-2012, SECTION 234E PROVIDING FOR LEVYING O F FEE OF RS.200 PER DAY FOR EACH DAY OF DEFAULT IN FILING STATEMENT WAS INSERTE D. [PARA 10] SIMILARLY, SECTION 271H WAS INSERTED WITH EFFECT FROM 1-7-2012 PROVIDING FOR IMPOSITION OF PENALTY FOR DEFAULT FILING TDS STATEM ENT AND ALSO FOR FURNISHING OF INCORRECT INFORMATION IN SUCH TDS STATEMENT. THE PR OVISO WAS INSE IN SECTION 272A PROVIDING FOR NO PENALTY UNDER THE SAID SECTION WIL L BE IMPOSED AFTER 1-7-2012 FOR FAILURE TO FILE STATEMENT ON TIME POSSIBLY BECAUSE A SEPARATE SECTION 271 H WAS INSERTED IN THE ACT.[PARA 11] ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 9 ON 1-6-2015, CLAUSES (C) TO (F) CAME TO BE SUBSTI TUTED UNDER SECTION 200A PROVIDING THAT THE FEE UNDER SECTION 2 CAN BE COMPU TED AT THE TIME OF PROCESSING OF THE RETURN AND THE INTIMATION COULD BE ISSUED SPECI FYING THE S PAYABLE BY THE DEDUCTOR AS FEE UNDER SECTION 234E.[PARA 12] WHEN THE RETURNS FOR TDS FILED BY THE RESPECTIVE APPELLANT-PETITIONERS WERE PROCESSED IN PURPORTED EXERCISE OF POWER UNDER SECT ION 200A, THE AMOUNT OF FEE UNDER SECTION 234E IS COMPUTED AND DETERMINED. THE DEMAND IS N AND THE INTIMATION GIVEN UNDER SECTION 200A INCLUDES THE CO MPUTATION AND THE DETERMINATION OF THE FEE PAYABLE B) APPELLANT-PETITIONERS. [PARA 13] SECTION 234E HAS COME INTO FORCE ON 1-7-2012. THE REFORE, ONE MAY AT THE FIRST BLUSH SAY THAT, SINCE SECTION 234E CHARGING S ECTION FOR FEE, THE LIABILITY WAS GENERATED OR HAD ACCRUED, IF THERE WAS FAILURE TO D ELIVER OR CAUSE T DELIVERED THE STATEMENT/S OF TDS WITHIN THE PRESCRIBED TIME. BUT, SECTION 234E CANNOT BE READ IN ISOLATION AN REQUIRED TO BE READ WITH THE MECHANISM AND THE MODE PROVIDED FOR ITS ENFORCEMENT. AS OBSERVED HEREINABOVE, M SECTION 234 E WAS INSERTED IN THE ACT SIMULTANEOUSLY, SECTION 271H WAS ALSO INSERTED IN T HE ACT PROVIDING FOR PENALTY FOR FAILURE OF FURNISHING OF STATEMENTS ETC. THEREFORE, IF THERE WAS FAILURE TO SUBMIT THE STATEMENT FOR TD PER SECTION 234E, THE FEE PAYABLE IS PROVIDED BUT THE MECHANISM PROVIDED WAS THAT IF THERE WAS FAILURE TO FUR STATE MENTS WITHIN THE PRESCRIBED DATE, THE PENALTY UNDER SECTION 271H (1) AND (2) COULD BE IMPOSED. HOWEVER, UT SUB- SECTION (3) OF SECTION 271H, THE EXCEPTION IS PROVI DED THAT NO PENALTY SHALL BE LEVIED FOR THE FAILURE REFERRED UNDER CLAUSE (A) OF SUB-SE CTION (1) IF THE PERSON PROVES THAT AFTER PAYING TDS WITH THE FEE AND INTEREST THE AMOU NT CREDITED AND HE HAD DELIVERED OR CAUSED TO DELIVER THE STATEMENT WITHIN ONE YEAR FROM THE TIME PRESCRIBED SUBMISSION OF THE SAID STATEMENT. TO PUT IT IN OTHE R WORDS, FOR FAILURE TO SUBMIT THE STATEMENTS, THE PENALTY PROVIDED UNDER SECTION 271( 1 )(A) CANNOT BE IMPOSED IF THE DEDUCTOR COMPLIES WITH THE REQUIREMENT OF SUB-SECTI ON (3) OF SEC 271H. HENCE, IT CAN BE SAID THAT THE FEE PROVIDED UNDER SECTION 234 E WOULD TAKE OUT FROM THE RIGORS OF PENALTY U SECTION 271H BUT OF COURSE SUBJECT TO THE OUTER LIMIT OF ONE YEAR AS PRESCRIBED UNDER SUB-SECTION (3) OF SECTION 2 IT CAN ALSO BE SAID THAT WHEN THE PARLIAMENT INTENDED TO INSERT THE PROVISIONS OF SEC TION 234E PROVIDING FOR SIMULTANEOUSLY THE UTILITY OF SUCH FEE WAS FOR CONF ERRING THE PRIVILEGE TO THE DEFAULTER DEDUCTOR TO COME OUT FROM RIGORS OF PENAL PROVISION OF SECTION 271H. BE IT RECORDED THAT, PRIOR TO SECTION 271H INSERTED IN THE STATUTE BOOK. ENFORCEABILITY OF REQUIREMENT TO FILE RETURN UNDER SECTION 200(3) AND SECTION 206 C(3) WAS BY VIRTUE OF SECTION 2721 (K) WHICH PROVIDED FOR THE PENALTY OF RS. 100 PER D AY FOR EACH DAY OF DEFAULT IN FILING TDS STATEMENTS. BUT, M SECTION 234E WAS INSERTED WI TH EFFECT FROM 1-7-2012 SIMULTANEOUSLY, A SECOND PROVISO WAS ADDED UNDER SE CTION 2 (2) WITH EFFECT FROM 1- 7-2012.[PARA 17] THE AFORESAID SHOWS THAT IN THE CLAUSE (K) IF THE SAID FAILURE RELATES TO A STATEMENT REFERRED TO IN SUB-SECTION (3 SECTION 200 OR THE SUB-SECTION (3) OF SECTION 206C, NO PENALTY SHALL BE IMPOSED FOR TDS AFTER 1-7 -201 2.[PARA 18] HENCE, IT CAN BE SAID THAT, THE MECHANISM PROVIDE D FOR ENFORCEABILITY OF SECTION 200(3) OR SECTION 206C (3) FOR FILING OF TH E STATEMENT BY MAKING IT PENAL UNDER SECTION 272A(2)(K) IS DONE AWAY IN VIEW OF TH E INSERTION OF SECTION 2 PROVIDING FOR PENAL PROVISION FOR SUCH FAILURE TO SUBMIT RETU RN. WHEN THE PARLIAMENT HAS SIMULTANEOUSLY BROUGHT AL SECTION 234E, SECTION 271 H AND THE AFORESAID PROVISO TO ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 10 SECTION 272A(2), IT CAN BE SAID THAT, THE FEE PROVI DED UI SECTION 234E IS CONTEMPLATED TO GIVE A PRIVILEGE TO THE DEFAULTER T O COME OUT FROM THE RIGORS OF PENALTY PROVIDED UNDER SECTION 271H (1) (A) IF HE P AYS THE FEE WITHIN ONE YEAR AND COMPLIES WITH THE REQUIREMENT OF SUB-SECTION ( SECT ION 271H.[PARA 19] IN VIEW OF THE AFORESAID OBSERVATIONS AND DISCUSSI ON, TWO ASPECTS MAY TRANSPIRE ONE, FOR SECTION 234E PROVIDING FEE AND G IVEN PRIVILEGE TO THE DEFAULTER IF HE PAYS THE FEE AND HENCE, WHEN A PRIVILEGE IS GIVE N FOR A PARTICULAR PURL WHICH IN THE PRESENT CASE IS TO COME OUT FROM RIGORS OF PENA L PROVISION OF SECTION 271H(1)(A), IT CANNOT BE SAID THAT PROVISIONS OF FEE SINCE CREA TES A COUNTER BENEFIT OR RECIPROCAL BENEFIT IN FAVOUR OF THE DEFAULTER IN THE RIGORS OF PROVISION, THE PROVISIONS OF SECTION 234E WOULD MEET WITH THE TEST OF QUID PRO QUO. [PAR A 20] HOWEVER, IF SECTION 234E PROVIDING FOR FEE WAS BR OUGHT ON THE STATE BOOK, KEEPING IN VIEW THE AFORESAID PURPOSE INTENTION THE N, THE OTHER MECHANISM PROVIDED FOR COMPUTATION OF FEE AND FAILURE FOR PAYMENT OF F EE UNDER SEC WHICH HAS BEEN BROUGHT ABOUT WITH EFFECT FROM 1-6-2015 CANNOT BE S AID AS ONLY BY WAY OF A REGULATORY MODE OR A MECHANISM BUT IT CAN RATHER BE TERMED AS CONFERRING SUBSTANTIVE POWER UPON THE AUTHORITY. IT IS TRUE THA T, A MECHANISM BY INSERTION OF ANY PROVISION MADE IN THE STATUTE BOOK, MAY HAVE A RETROACTIVE CHARACTER BUT, WHAT PROVISION PROVIDES FOR A MERE REGULATORY MECHANISM OR CONFERS SUBSTANTIVE POWER UPON THE AUTHORITY WOULD ALSO 1 WHICH MAY BE REQUIR ED TO BE CONSIDERED BEFORE SUCH PROVISIONS IS HELD TO BE RETROACTIVE IN NATURE. FUR THER, PROVISION IS INSERTED FOR LIABILITY TO PAY ANY TAX OR THE FEE BY WAY OF COMPENSATORY IN NATURE OR FEE SIMULTANEOUSLY MODE AND THE MANNER OF ITS ENFORCEABILITY IS ALSO R EQUIRED TO BE CONSIDERED AND EXAMINED. NOT ONLY IF THE MODE AND THE MANNER IS NO T EXPRESSLY PRESCRIBED, THE PROVISIONS MAY ALSO BE VULNERABLE. ALL SUCH ASPECTS REQUIRED TO BE CONSIDERED BEFORE ONE CONSIDERS REGULATORY MECHANISM OR PROVISION FOR REGULATING THE MODE AND OF RECOVERY AND ITS ENFORCEABILITY AS RETROACTIVE. IF A T THE TIME WHEN THE FEE WAS PROVIDED UNDER SECTION 234E, THE I ALSO PROVIDED FO R ITS UTILITY FOR GIVING PRIVILEGE UNDER SECTION 271H(3) THAT TOO BY EXPRESSLY PUTTING BAR FOR PEN SECTION 272A BY INSERTION OF PROVISO TO SECTION 272A(2), IT CAN BE SAID THAT A PARTICULAR SET UP FOR IMPOSITION PAYMENT OF FEE UNDER SECTION 234E WAS PR OVIDED BUT, IT DID NOT PROVIDE FOR MAKING OF DEMAND OF SUCH FEE U/S 200A PAYABLE U NDER SECTION 234E. HENCE, CONSIDERING THE AFORESAID PECULIAR FACTS AND CIRCUM STANCES, THE CONTENTED RESPONDENT-REVENUE THAT INSERTION OF CLAUSES (C) TO (F) UNDER SECTION 200A( 1) SHOULD BE TREATED AS RETROACTIVE IN NOT PROSPECTIVE IS UNA CCEPTABLE. [PARA 21] IT IS HARDLY REQUIRED TO BE STATED THAT, AS PER THE WELL ESTABLISHED PRINCIPLES OF INTERPRETATION OF STATUTE, UNLESS IT IS PROVIDED OR IMPLIEDLY DEMONSTRATED, ANY PROVISION OF STATUTE IS TO BE READ AS HAVING PROSPE CTIVE EFFECT AND NOT RET EFFECT. UNDER THE CIRCUMSTANCES, IT IS FOUND THAT SUBSTITUT ION MADE BY CLAUSES (C) TO (0 OF SUB-SECTION (1) OF SECTION BE READ AS HAVING PROSPE CTIVE EFFECT AND NOT HAVING RETROACTIVE CHARACTER OR EFFECT. RESULTANTLY, THE D EMAND U/S 200A FOR COMPUTATION AND INTIMATION FOR THE PAYMENT OF FEE UNDER SECTION 234E COULD NOT BE MADE IN PURPORTED POWER UNDER SECTION 200A BY THE RESPONDEN T FOR THE PERIOD OF THE RESPECTIVE ASSESSMENT YEAR PRIOR TO 1-6-2015. 1-1 I S MADE CLEAR THAT, IF ANY DEDUCTOR HAS ALREADY PAID THE FEE AFTER INTIMATION RECEIVED UNDER SECTION 200A, THE AFORI WILL ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 11 NOT PERMIT THE DEDUCTOR TO REOPEN THE SAID QUESTION UNLESS HE HAS MADE PAYMENT UNDER PROTEST.[PARA 22] IN VIEW OF THE AFORESAID OBSERVATION AND DISCUSSIO N, SINCE THE IMPUGNED INTIMATION GIVEN BY THE RESPONDENT- C AGAINST ALL T HE APPELLANTS UNDER SECTION 200A ARE SO FAR AS THEY ARE FOR THE PERIOD PRIOR TO 1-6- 2015 CAN BE SAID ANY AUTHORITY UNDER LAW. HENCE, THE SAME CAN BE SAID AS ILLEGAL A ND INVALID.[PARA 23] IF THE FACTS OF THE PRESENT CASES ARE EXAMINED IN LIGHT OF THE AFORESAID OBSERVATION AND DISCUSSION, IT APPEARS MATTERS, THE INTIMATION GIVEN IN PURPORTED EXERCISE OF POWER UNDER SECTION 200A ARE IN RESPECT OF FEES UNDER SECTION THE PERIOD PRIOR TO 1-6-2015. AS SUCH, IT IS ON ACCOUNT OF THE INTIMATION GIVEN MAKING DEMAND OF THE FEES IN EXERCISE OF POWER UNDER SECTION 200A , THE SAME HAS NECESSITATED THE APPELLANT-ORIGINAL PETITIONER TO CHALLENGE THE SECT ION 234E. IN VIEW OF THE REASONS RECORDED, WHEN THE AMENDMENT MADE UNDER SECTION 200 A WHICH HAS COME ON 1-6- 2015 IS HELD TO BE HAVING PROSPECTIVE EFFECT, NO CO MPUTATION OF FEE FOR THE DEMAND OR THE INTIMATION FOR THE SECTION 234E COULD BE MAD E FOR THE TDS DEDUCTED FOR THE RESPECTIVE ASSESSMENT YEAR PRIOR TO 1-6-2015. HENCE , TI NOTICES UNDER SECTION 200A BY THE RESPONDENT AUTHORITY FOR INTIMATION FOR PAYM ENT OF FEE UNDER SECTION 234E CAN WITHOUT ANY AUTHORITY OF LAW AND THE SAME ARE Q UASHED AND SET ASIDE TO THAT EXTENT. [PARA 24] AS SUCH, AS RECORDED EARLIER, IT IS ON ACCOUNT OF THE INTIMATION RECEIVED UNDER SECTION 200A FOR MAKING COMPUTATION DEMAND OF FEES UNDER SECTION 234E, THE SAME HAS NECESSITATED THE APPELLANT TO CHALLENGE THE CON STITUTIONAL VALIDITY 234E. WHEN THE INTIMATION OF THE DEMAND NOTICES UNDER SECTION 200A IS HELD TO BE WITHOUT AUTHORITY OF LAW S RELATES TO COMPUTATION AND DEMAN D OF FEE UNDER SECTION 234E, IT IS FOUND THAT THE QUESTION OF FURTHER SCRUTINY FOR CON STITUTIONAL VALIDITY OF SECTION 234E WOULD BE RENDERED AS AN ACADEMIC EXERCISE BECAUSE T HERE WOULD NOT BE AN: THE PART OF THE PETITIONERS TO CONTINUE TO MAINTAIN THE CHAL LENGE TO CONSTITUTIONAL VALIDITY UNDER SECTION 234E. AT TH MAY ALSO BE RECORDED THAT THE APPELLANT HAD ALSO DECLARED THAT IF THE IMPUGNED NOTICES UNDER SECTION 200A ARE SO FAR AS IT RELATES TO COMPUTATION AND INTIMATION FOR PAYMENT OF FEE UNDER SECTION 234E, THE APPELLANT- PETITIONERS PRESS THE CHALLENGE TO THE CONSTITUTION AL VALIDITY OF SECTION 234E. BUT, THEY SUBMITTED THAT THE QUESTION OF COR VALIDITY OF SECTION 234E MAY BE KEPT OPEN TO BE CONSIDERED BY THE DIVISION BENCH AND THE JUDGMEN T OF THE SIR MAY NOT CONCLUDE THE CONSTITUTIONAL VALIDITY OF SECTION 234E .[PARA 25] UNDER THESE CIRCUMSTANCES, NO FURTHER DISCUSSION WOULD BE REQUIRED FOR EXAMINING THE CONSTITUTIONAL VALIDITY 234E. SAVE AN D EXCEPT TO OBSERVE THAT THE QUESTION OF CONSTITUTIONAL VALIDITY OF SECTION 234E BEFORE THE DIVISION THIS COURT SHALL REMAIN OPEN AND SHALL NOT BE TREATED AS CONCLUDED.[ PARA 26] IN VIEW OF THE AFORESAID OBSERVATIONS AND DISCUSSI ON, THE IMPUGNED NOTICES UNDER SECTION 200A FOR COMPUTATION INTIMATION FOR P AYMENT OF FEE UNDER SECTION 234E AS THEY RELATE TO FOR THE PERIOD OF THE TAX DE DUCTED PRIOR TO 1-6-2( ASIDE. IT IS CLARIFIED THAT THE PRESENT JUDGMENT WOULD NOT BE IN TERPRETED TO MEAN THAT EVEN IF THE PAYMENT OF THE SECTION 234E ALREADY MADE AS PER DEMAND/INTIMATION UNDER SECTION 200A FOR THE TDS FOR THE PERIOD PRIOR TO 1. 4. TO BE REOPENED FOR CLAIMING ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 12 REFUND. THE JUDGEMENT WILL HAVE PROSPECTIVE EFFECT ACCORDINGLY. IT IS FURTHER OBSERVED OF CONSTITUTIONAL VALIDITY OF SECTION 234E SHALL REMAIN OPEN TO BE CONSIDERED BY THE DIVISION BENCH AND SHALL NOT THE ORDER OF THE SINGLE JUDGE [PARA 27]. 9. THE ASSESSEE RELIED UPON THE DECISION OF ITAT, P UNE IN THE CASE OF GAJANANA CONSTRUCTIONS VS. DCIT, CPC (TDS), GHAZIABAD (2016) 161 ITD 313 (PUNE TRIBUNAL). THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILA R CIRCUMSTANCES HELD THAT POWER TO CHARGE/COLLECT FEES U/S 234E OF THE ACT, WAS VES TED WITH REVENUE ONLY ON SUBSTITUTION OF CLAUSE (C) TO SECTION 200A OF THE A CT, VIDE FINANCE ACT, 2015 W.E.F. 1.6.2015. HENCE, PRIOR TO 1.6.2015, NO FEE COULD H AVE BEEN LEVIED U/S 234E OF THE ACT, WHILE ISSUING INTIMATION U/S 200A OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW: WHETHER ASSESSING OFFICER WHICH PROCESSING INTIMAT ION UNDER SECTION 20' COULD CHARGE LATE FEE UNDER PROVISIONS OF SECTION 234E? THE ISSUE ARISING IN THIS BUNCH OF APPEALS IS AGAIN ST LEVY OF FEES UNDER SECTION 234E. IN ORDER TO ADJUDICATE THE ISSUE, FIRST REFER ENCE IS BEING MADE TO THE RELEVANT PROVISIONS OF THE ACT. [PARA 15] LOOKING AT VARIOUS PROVISIONS OF THE ACT, THE ISSUE NEEDS TO BE ADJUDICATED IN THE CASE OF ASSESSEE, WHEREIN ADMITTEDLY, TDS RETUR NS WHICH WERE DEEMED TO BE FILED BY THE ASSESSEE WERE FILED AFTER DELAY AND THE QUESTION WAS WHETHER THE ASSESSING OFFICER WHILE PROCESSING THE INTIMATI ON UNDER SECTION 200A COULD CHARGE LATE FEE UNDER THE PROVISIONS OF SECTION 234 E. THE ASSESSEE CLAIMS THAT THE ASSESSING OFFICER AT BEST COULD CHARGE THE DIFF ERENCE IN TAX DEDUCTED AND NOT PAID IN TREASURY FROM THE DEDUCTOR AND/OR ANY I NTEREST PAYABLE ON SUCH DEDUCTION OF TAX AT SOURCE. HOWEVER, TILL SUBSTITUT ION OF CLAUSE (C) TO SECTION 200A(L) BY THE FINANCE ACT, 2015 WITH EFFECT FROM 1 -6-2015, THE ASSESSING OFFICER WAS NOT EMPOWERED TO CHARGE FEES UNDER SECT ION 234E . THE CASE OF REVENUE ON THE OTHER HAND, WAS THAT IT WAS THE DUTY OF DEDUCTOR WHILE FURNISHING THE STATEMENT UNDER SECTION 200(3) TO DE POSIT THE FEES REFERRED TO IN SECTION 234E( I). THE REVENUE STRESSED THAT FEES REFERRED TO IN SUB-SECTION (1) HAD TO BE PAID WHILE DELIVERING OR CAUSING TO D ELIVER THE STATEMENT IN ACCORDANCE WITH PROVISIONS OF SECTION 200(3) OR THE PROVISO TO SECTION 206C(3). HOWEVER, VARIOUS REGULATIONS AND THE STATU TORY PROVISIONS IN THIS REGARD POINT OUT THAT UNDOUBTEDLY, THE RESPONSIBILI TY OF THE DEDUCTOR WAS TO DEPOSIT THE TAX DEDUCTED AT SOURCE IN TIME AND IF N OT SO, THEN WITH INTEREST AND CONSEQUENTLY, WHERE THE TAX WAS NOT PAID IN TIM E AND INTEREST WAS NOT PAID IN TIME AND THEN, WHERE THE STATEMENT OF TAX D EDUCTED AT SOURCE COULD NOT BE FILED BEFORE THE PRESCRIBED AUTHORITY WITHIN STIPULATED TIME, THE ASSESSEE WAS LIABLE TO LEVY OF FEES UNDER SECTION 2 34E. HOWEVER, IN CASE ANY DEFAULT OCCURS DUE TO THE NON-PAYMENT OF FEES BY TH E ASSESSEE IN THIS REGARD, THEN THE PROVISION WHICH HAS TO BE CONSIDERED IS SE CTION 200A( I )(C). THE POWER TO CHARGE/COLLECT FEES AS PER PROVISIONS OF S ECTION 234E WAS VESTED WITH THE PRESCRIBED AUTHORITY UNDER THE ACT ONLY ON SUBS TITUTION OF EARLIER CLAUSE (C) TO SECTION 200A BY THE FINANCE ACT, 2015 WITH EFFEC T FROM 1-6-2015. ONCE ANY PROVISION OF THE ACT HAS BEEN MADE APPLICABLE FROM A RESPECTIVE DATE, THEN THE REQUIREMENT OF THE STATUTE IS TO APPLY THE SAID PROVISIONS FROM THE SAID DATE.[PARA 23] ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 13 IN RESPECT OF THE ISSUE RAISED BEFORE US, IT IS CLE AR THAT THE PRESCRIBED AUTHORITY HAS BEEN VESTED WITH THE POWER TO CHARGE FEES UNDER SECTION 234E ONLY WITH REGARD TO LEVY OF FEES BY THE SUBSTITUTIO N MADE BY FINANCE (NO.2) ACT, 2015 WITH EFFECT FROM 1-6-2015. ONCE THE POWER HAS BEEN GIVEN, UNDER WHICH ANY LEVY HAS TO BE IMPOSED UPON TAXPAYER, THE N SUCH POWER COMES INTO EFFECT FROM THE DATE OF SUBSTITUTION AND CANNO T BE APPLIED RETROSPECTIVELY. THE SAID EXERCISE OF POWER HAS BEE N PROVIDED BY THE STATUTE TO BE FROM 1-6-2015 AND HENCE, IS TO BE APPLIED PRO SPECTIVELY. THERE IS NO MERIT IN THE CLAIM OF REVENUE THAT EVEN WITHOUT INS ERTION OF CLAUSE (C) UNDER SECTION 200A( 1), IT WAS INCUMBENT UPON THE ASSESSE E TO PAY FEES, IN CASE THERE IS DEFAULT IN FURNISHING THE STATEMENT OF TAX DEDUCTED AT SOURCE. ADMITTEDLY, THE ONUS WAS UPON THE ASSESSEE TO PREPA RE STATEMENTS AND DELIVER THE SAME WITHIN PRESCRIBED TIME BEFORE THE PRESCRIBED AUTHORITY, BUT THE POWER TO COLLECT THE FEES BY THE PRESCRIBED AUT HORITY VESTED IN SUCH AUTHORITY ONLY BY WAY OF SUBSTITUTION OF CLAUSE (C) TO SECTION 200A(L) BY THE FINANCE ACT, 2015 WITH EFFECT FROM 16-2015. PRIOR TO SAID SUBSTITUTION THE ASSESSING OFFICER HAD NO AUTHORITY TO CHARGE THE FE ES UNDER SECTION 234E WHILE ISSUING INTIMATION UNDER SECTION 200A. BEFORE EXERCISING THE AUTHORITY OF CHARGING ANY SUM FROM ANY DEDUCTOR OR THE ASSESS EE, THE PRESCRIBED AUTHORITY SHOULD HAVE NECESSARY POWER VESTED IN IT AND BEFORE VESTING OF SUCH POWER, NO ORDER CAN BE PASSED BY THE PRESCRIBE D AUTHORITY IN CHARGING OF SUCH FEES UNDER SECTION 234E, WHILE EXERCISING J URISDICTION UNDER SECTION 200A . THUS, IN THE ABSENCE OF ENABLING PROVISIONS, UNDER WHICH THE PRESCRIBED AUTHORITY IS EMPOWERED TO CHARGE THE FEE S, THE ASSESSING OFFICER WHILE PROCESSING THE RETURNS FILED BY THE DEDUCTOR IN RESPECT OF TAX DEDUCTED AT SOURCE CAN RAISE THE DEMAND ON ACCOUNT OF TAXES, IF ANY, NOT DEPOSITED AND CHARGE INTEREST. HOWEVER, PRIOR TO 1-6-2015, TH E ASSESSING OFFICER DOES NOT HAVE THE POWER TO CHARGE FEES UNDER SECTION 234 E WHILE PROCESSING TDS RETURNS. IN THE ABSENCE OF ENABLING PROVISIONS, LEV Y OF FEES COULD NOT BE EFFECTED IN THE COURSE OF INTIMATION ISSUED UNDER S ECTION 200A PRIOR TO 1-6- 2015.[PARA 24] THE PERUSAL OF MEMORANDUM TO THE FINANCE BILL, 2015 EXPLAINING THE PROVISION RELATING TO INSERTION OF CLAUSE (C) TO SE CTION 200A CLARIFIES THE INTENTION OF LEGISLATURE IN INSERTING THE SAID PROV ISION. THE PROVISIONS OF SECTION 234E WERE INSERTED BY THE FINANCE ACT, 2012 , UNDER WHICH THE PROVISION WAS MADE FOR LEVY OF FEES FOR LATE FURNIS HING TDS/TCS STATEMENTS. BEFORE INSERTION OF SECTION 234E, THE FINANCE (NO.2 ) ACT, 2009 HAD INSERTED SECTION 200A, UNDER THE SAID SECTION, MECHANISM WAS PROVIDED FOR PROCESSING OF TDS STATEMENTS FOR DETERMINING THE AM OUNT PAYABLE OR REFUNDABLE TO THE DEDUCTOR, UNDER WHICH THE PROVISI ON WAS ALSO MADE FOR CHARGING OF INTEREST. HOWEVER, SINCE THE PROVISIONS OF SECTION 234E WERE NOT ON STATUTE WHEN THE FINANCE (NO.2) ACT, 2009 WA S PASSED, NO PROVISION WAS MADE FOR DETERMINING THE FEES PAYABLE UNDER SEC TION 234E AT THE TIME OF PROCESSING THE TDS STATEMENTS. SO, WHEN SECTION 234E WAS INTRODUCED, IT PROVIDED THAT THE PERSON WAS RESPONSIBLE FOR FUR NISHING THE TDS RETURNS/STATEMENTS WITHIN STIPULATED PERIOD AND IN DEFAULT, FEES WOULD BE CHARGED ON SUCH PERSON. THE SAID SECTION ITSELF PRO VIDED THAT FEES SHALL NOT EXCEED THE AMOUNT OF TAX DEDUCTED AT SOURCE OR COLL ECTED AT SOURCE. IT WAS FURTHER PROVIDED THAT THE PERSON RESPONSIBLE FOR FU RNISHING THE STATEMENTS SHALL PAY THE SAID AMOUNT WHILE FURNISHING THE STAT EMENTS UNDER SECTION 200(3). HOWEVER, POWER ENABLING THE ASSESSING OFFIC ER TO CHARGE/LEVY THE FEE UNDER SECTION 234E WHILE PROCESSING THE TDS RET URNS/STATEMENTS FILED ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 14 BY A PERSON DID NOT EXIST WHEN SECTION 234E WAS INS ERTED BY THE FINANCE ACT, 2012. THE POWER TO CHARGE FEES UNDER THE PROVI SIONS OF SECTION 234E WHILE PROCESSING THE TDS STATEMENTS, WAS DWELLED UP ON BY THE LEGISLATURE BY WAY OF INSERTION OF CLAUSE (C) TO SECTION 200A( 1) BY THE FINANCE ACT, 2015 WITH EFFECT FROM 1-6-2015. ACCORDINGLY, IT IS HELD THAT WHERE THE ASSESSING OFFICER HAS PROCESSED THE TDS STATEMENTS FILED BY THE DEDUCTOR, WHICH ADMITTEDLY, WERE FILED BELATEDLY BUT BEFORE I NSERTION OF CLAUSE (C) TO SECTION 200A( 1) WITH EFFECT FROM 1-6-2015, THEN IN SUCH CASES, THE ASSESSING OFFICER IS NOT EMPOWERED TO CHARGE FEES U NDER SECTION 234E WHILE PROCESSING THE TDS RETURNS FILED BY THE DEDUC TOR. [PARA 28] THE BOMBAY HIGH COURT IN RASHMIKANT KUNDALIA V. UNI ON OF INDIA 20 15] 54 TAXMANN.COM 200/229 TAXMAN 596/373 ITR 268 HAS UPHE LD THE CONSTITUTIONAL VALIDITY OF SAID SECTION INTRODUCED BY THE FINANCE ACT, 2015 WITH EFFECT FROM 1-6-2015 BUT WAS NOT ABREAST OF TH E APPLICABILITY OF THE SAID SECTION 234E BY THE ASSESSING OFFICER WHILE PR OCESSING TDS STATEMENT FILED BY THE DEDUCTOR PRIOR TO 1-6-2015, IN SUCH SC ENARIO, THERE IS NO MERIT IN THE PLEA OF THE REVENUE THAT THE BOMBAY HIGH COU RT IN RASHINIKANT KUNDAIIA CASE (SUPRA) HAS LAID DOWN THE PROPOSITION THAT FEES UNDER SECTION 234E IS CHARGEABLE IN THE CASE OF PRESENT SET OF AP PEALS, WHERE THE ASSESSING OFFICER HAD ISSUED THE INTIMATION UNDER S ECTION 200A PRIOR TO 1-6- 201 5[PARA 29] ANOTHER ASPECT OF THE ISSUE IS WHETHER THE AMENDMEN T BROUGHT IN BY THE FINANCE ACT, 2015 WITH EFFECT FROM 1-6-2015 BY WAY OF INSERTION OF CLAUSE (C) TO SECTION 200A(L) IS CLARIFICATORY OR IS PROSP ECTIVE IN NATURE AND IS NOT APPLICABLE TO THE PENDING ASSESSMENTS. UNDOUBTEDLY, THE PROVISIONS OF SECTION 234E WERE INSERTED BY THE FINANCE ACT, 2012 , UNDER WHICH THE LIABILITY WAS IMPOSED UPON THE DEDUCTOR IN SUCH CAS ES WHERE TDS STATEMENTS/RETURNS WERE FILED BELATEDLY TO PAY THE FEES AS PER SAID SECTION. HOWEVER, IN CASES, WHERE THE ASSESSEE HAS FAILED TO DEPOSIT THE SAID FEES, THEN IN ORDER TO ENABLE THE ASSESSING OFFICER TO CO LLECT THE SAID FEES CHARGEABLE UNDER SECTION 234E, IT IS INCUMBENT UPON THE LEGISLATURE TO PROVIDE MECHANISM FOR THE ASSESSING OFFICER TO CHAR GE AND COLLECT SUCH FEES. IN THE ABSENCE OF ENABLING PROVISIONS, THE AS SESSING OFFICER WHILE PROCESSING THE TDS STATEMENTS, EVEN IF THE SAID STA TEMENTS ARE BELATED, IS NOT EMPOWERED TO CHARGE THE FEES UNDER SECTION 234E . THE AMENDMENT WAS BROUGHT IN BY THE FINANCE ACT, 2015 WITH EFFECT FROM 1-6-2015 AND SUCH AN AMENDMENT WHERE EMPOWERMENT IS GIVEN TO THE ASSESSING OFFICER TO LEVY OR CHARGE THE FEES CANNOT BE SAID TO BE CLA RIFICATORY IN NATURE AND HENCE, APPLICABLE FOR PENDING ASSESSMENTS. [PARA 30 ] THE SUPREME COURT IN CIT V. VATIKA TOWNSHIP PVT. LTD. [2014] 367 ITR 466/227 TAXMAN 121/49 TAXMANN.COM 249 HAS EXPLAINED THE GENERAL PRINCIPLE CONCERNING RETROSPECTIVITY AND HELD THAT OF THE VARIOUS RULES GUIDING HOW A LEGISLATION HAS TO BE INTERPRETED, ON E ESTABLISHED RULE IS THAT UNLESS CONTRARY INTENTION APPEARS, A LEGISLATION IS PRESUMED NOT TO BE INTENDED TO HAVE A RETROSPECTIVE OPERATION. IDEA BE HIND THE RULE IS THAT CURRENT LAW SHOULD GOVERN CURRENT ACTIVITIES. THE M EMO EXPLAINING THE FINANCE BILL, 2015 VERY CLEARLY ALSO RECOGNIZES THA T AND REFERS TO THE CURRENT PROVISIONS OF SUB-SECTION (3) TO SECTION 200, UNDER WHICH THE DEDUCTOR IS TO FURNISH TDS STATEMENTS. HOWEVER, AS SECTION 234E WA S INSERTED AFTER INSERTION OF SECTION 200A, THE EXISTING PROVISIONS OF SECTION 200A DID NOT ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 15 PROVIDE FOR DETERMINATION OF FEES PAYABLE UNDER SEC TION 234E AT THE TIME OF PROCESSING OF TDS STATEMENTS. IN THIS REGARD, IT WA S THUS, PROPOSED TO AMEND THE PROVISIONS OF SECTION 200A SO AS TO ENABL E THE COMPUTATION OF FEES PAYABLE UNDER SECTION 234E AT THE TIME OF PROC ESSING OF TDS STATEMENTS UNDER SECTION 200A. IN OTHER WORDS, THE ASSESSING OFFICER IS EMPOWERED TO CHARGE FEES PAYABLE UNDER SECTION 234E IN THE INTIMATION ISSUED AFTER INSERTION OF CLAUSE (C) TO SECTION 200 A(1) WITH EFFECT FROM 1-6- 2015. THE LEGISLATURE ITSELF RECOGNIZED THAT UNDER THE EXISTING PROVISIONS OF SECTION 200A I.E. PRIOR TO 1-6-2015, THE ASSESSING OFFICER AT THE TIME OF PROCESSING THE TDS STATEMENTS DID NOT HAVE POWER TO CHARGE FEES UNDER SECTION 234E AND IN ORDER TO COVER UP THAT, THE AME NDMENT WAS MADE BY WAY OF INSERTION OF CLAUSE (C) TO SECTION 200A. IN SUCH SCENARIO, IT CANNOT BE SAID THAT INSERTION MADE BY SECTION 200A(L)(C) I S RETROSPECTIVE IN NATURE, WHERE THE LEGISLATURE WAS AWARE THAT THE FEES COULD BE CHARGED UNDER SECTION 234E AS PER FINANCE ACT, 2012 AND ALSO THE PROVISIONS OF SECTION 200A WERE INSERTED BY FINANCE (NO.2) ACT, 2009, UND ER WHICH THE MACHINERY WAS PROVIDED FOR THE ASSESSING OFFICER TO PROCESS THE TDS STATEMENTS FILED BY THE ASSESSEE. THE INSERTION CAT EGORICALLY BEING MADE WITH EFFECT FROM 1-6-2015 LAYS DOWN THAT THE SAID A MENDMENT IS PROSPECTIVE IN NATURE AND CANNOT BE APPLIED TO PROC ESSING OF TDS RETURNS/STATEMENTS PRIOR TO 1-6-2015. [PARA 3 1 ] IN RECENT JUDGMENT DATED 26-8-2016. THE KARNATAKA H IGH COURT IN WRIT APPEAL NOS.2663-2674/2015(TIT) IN FATHERAJ SINGHVI V. UNION OF INDIA [2016] 73 TAXMANN.COM 252 HAS QUASHED THE INTIMATIO N ISSUED UNDER SECTION 200A LEVYING THE FEES FOR DELAYED FILING TH E TDS STATEMENTS UNDER SECTION 234E. THE HIGH COURT NOTES THAT THE FINANCE ACT, 2015 HAD MADE AMENDMENTS TO SECTION 200A ENABLING THE ASSESSING O FFICER TO MAKE ADJUSTMENTS WHILE LEVYING FEES UNDER SECTION 234E W AS APPLICABLE WITH EFFECT FROM 1-62015 AND HAS HELD THAT IT HAS PROSP ECTIVE EFFECT. ACCORDINGLY, THE HIGH COURT HELD THAT INTIMATION RA ISING DEMAND PRIOR TO 1- 6-2015 UNDER SECTION 200A LEVYING SECTION 234E LATE FEES IS NOT VALID.HOWEVER, THE HIGH COURT KEPT OPEN THE ISSUE O N CONSTITUTIONAL VALIDITY OF SECTION 234E . THE DECISION OF BOMBAY HIGH COURT IN RASHMIKANT KUNDALIA'S CASE (SUPRA) HAS ALREADY BEEN REFERRED I N THIS REGARD, WHEREIN THE CONSTITUTIONAL VALIDITY OF SECTION 234E HAS BEE N UPHELD.[PARA 32] ACCORDINGLY, THE AMENDMENT TO SECTION 200A(1) IS PR OCEDURAL IN NATURE AND IN VIEW THEREOF, THE ASSESSING OFFICER WHILE PROCES SING THE TDS STATEMENTS/RETURNS IN THE PRESENT SET OF APPEALS FO R THE PERIOD PRIOR TO 1-6- 2015, WAS NOT EMPOWERED TO CHARGE FEES UNDER SECTIO N 234E. HENCE, THE INTIMATION ISSUED BY THE ASSESSING OFFICER UNDER SE CTION 200A IN ALL THESE APPEALS DOES NOT STAND AND THE DEMAND RAISED BY WAY OF CHARGING THE FEES UNDER SECTION 234E IS NOT VALID AND THE SAME IS DEL ETED. THE INTIMATION ISSUED BY THE ASSESSING OFFICER WAS BEYOND THE SCOP E OF ADJUSTMENT PROVIDED UNDER SECTION 200A AND SUCH ADJUSTMENT COU LD NOT STAND IN THE EYE OF LAW.[PARA 33] WHETHER ANY APPEAL IS MAINTAINABLE AGAINST INTIMATI ON ISSUED UNDER SECTION 20' AND/OR ORDER PASSED UNDER SECTION 154 READ WITH SECTION 20' BY ASSESSING OFFICER IN CHARGING FEES UNDER SECTION 23 4E? IN MEMORANDUM EXPLAINING THE FINANCE BILL, 2015, TH E HEADING WAS RATIONALIZATION OF PROVISIONS RELATING TO TAX DEDUC TION AT SOURCE (TDS) AND ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 16 TAX COLLECTION AT SOURCE (TCS). THE SAID MEMORANDUM CATEGORICALLY RECOGNIZED THAT UNDER THE EXISTING PR OVISIONS OF THE ACT, AFTER PROCESSING OF TDS STATEMENTS, AN INTIMATION IS GENE RATED SPECIFYING THE AMOUNT PAYABLE OR REFUNDABLE. IT WAS FURTHER NOTED THAT THIS INTIMATION GENERATED AFTER PROCESSING TDS STATEMENT IS (I) SUB JECT TO RECTIFICATION UNDER SECTION 154; (II) APPEALABLE UNDER SECTION 24 6A; AND (III) DEEMED AS NOTICE OF PAYMENT UNDER SECTION 156. UNDER THE AMEN DMENT, SIMILAR POSITION WAS GIVEN TO THE PROCESSING OF TCS STATEME NTS. IN OTHER WORDS, THE LEGISLATURE RECOGNIZES THAT A DEDUCTOR WHO HAS FILE D HIS STATEMENT OF TAX DEDUCTED AT SOURCE, WHICH IN TURN, HAS BEEN PROCESS ED BY THE ASSESSING OFFICER AND INTIMATION IS GENERATED UNDER WHICH, IF ANY AMOUNT IS FOUND TO BE PAYABLE, THEN SUCH INTIMATION GENERATED AFTER PR OCESSING OF TDS RETURNS IS SUBJECT TO RECTIFICATION UNDER SECTION 154 OF TH E ACT AND/OR IS ALSO APPEALABLE UNDER SECTION 246A, SINCE THE DEMAND ISS UED BY THE ASSESSING OFFICER IS DEEMED TO BE A NOTICE OF PAYMENT UNDER S ECTION 156. SINCE THE INTIMATION IN QUESTION ISSUED BY THE ASSESSING OFFI CER WAS APPEALABLE ORDER UNDER SECTION 246A(1)(A), THEREFORE, THE COMMISSION ER(APPEALS) SHOULD HAVE EXAMINED THE LEGALITY OF ADJUSTMENT MADE UNDER INTIMATION ISSUED UNDER SECTION 200A . THE COMMISSIONER (APPEALS) HAS REJECTED THE PRESENT SET OF APPEALS ON THE SURMISE THAT FIRST OF ALL, NO APPEAL IS PROVIDED AGAINST THE INTIMATION ISSUED UNDER SECTION 200A. FURTHER, THE COMMISSIONER (APPEALS) HAS ALSO DECIDED THE ISSUE ON MERITS AND THE ASSESSEE IS IN APPEAL ON BOTH THESE GROUNDS. VIS--VIS THE FIRST I SSUE OF MAINTAINABILITY OF APPEAL AGAINST THE INTIMATION ISSUED UNDER SECTION 200A, IT IS HELD THAT SUCH INTIMATION ISSUED BY THE ASSESSING OFFICER AFTER PR OCESSING THE TDS RETURNS IS APPEALABLE. THE DEMAND RAISED BY WAY OF CHARGING OF FEES UNDER SECTION 234E IS UNDER SECTION 156 AND ANY DEMAND RAISED UND ER SECTION 156 IS APPEALABLE UNDER SECTION 246A( 1 )(A) AND (C). ACCO RDINGLY, THE FINDINGS OF COMMISSIONER (APPEALS) IN THIS REGARD ARE REVERSED. SIMILAR PROPOSITION HAS BEEN DOWN BY MUMBAI BENCH OF TRIBUNAL IN BUNCH OF C ASES WITH LEAD ORDER IN KASH REALTORS (P.) LTD. V. ]TO [IT APPEAL NO.419 9 (MUM.) OF 2015, RELATING TO ASSESSMENT YEAR 2013-14, CONSOLIDATED O RDER DATED 27-7-2016, WHICH HAD ALSO DECIDED THE ISSUE OF CHARGING OF FEE S UNDER SECTION 234E IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISIONS OF O THER BENCHES OF TRIBUNAL. ONCE INTIMATION ISSUED UNDER SECTION 200A(L) IS APP EALABLE ORDER BEFORE THE COMMISSIONER (APPEALS) UNDER SECTION 246A(L)(A), TH EN SUCH APPEALABLE ORDER PASSED BY THE COMMISSIONER (APPEALS) UNDER SE CTION 250 IS FURTHER APPEALABLE BEFORE THE TRIBUNAL UNDER SECTION 253. H ENCE, THE PRESENT APPEALS FILED BY THE ASSESSEE EVEN ON THIS PRELIMIN ARY ISSUE ARE ADMITTED. THE ISSUE OF CHARGING FEES UNDER SECTION 234E HAS A LREADY BEEN ADJUDICATED BY THE ASSESSING OFFICER WHILE PROCESSING RETURNS/S TATEMENTS IN THE PARAS HEREINABOVE AND IN VIEW THEREOF, IT IS HELD THAT TH E ASSESSING OFFICER IS NOT EMPOWERED TO CHARGE THE FEES UNDER SECTION 234E BY WAY OF INTIMATION ISSUED UNDER SECTION 200A IN RESPECT OF DEFAULTS BE FORE 1-6-2015, THUS, CLAIM OF ASSESSEE ON BOTH THE ASPECTS IS ALLOWED. [ PARA 36] IN THE RESULT, ALL THE APPEALS FILED BY DIFFERENT A SSESSEES FOR DIFFERENT QUARTERS RELATING TO DIFFERENT YEARS ARE ALLOWED.[P ARA 37] 10. IN THIS VIEW OF THE MATTER AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF THE JUDGEMENTS DISCUSSED ABOVE, WE ARE OF THE VIEW THA T THERE IS NO ENABLING PROVISION ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 17 IN SECTION 200A OF THE ACT, BEFORE INSERTION OF SUB -CLAUSE (C) INTO SECTION 200A OF THE ACT, BY THE FINANCE ACT, 2015 W.E.F. 1.6.2015 AND H ENCE, NO ADJUSTMENTS CAN BE MADE TOWARDS LATE FEE PAYABLE U/S 234E OF THE ACT, FOR BELATED FILING OF TDS STATEMENTS U/S 200(3) OF THE ACT, WHILE ISSUING INT IMATION U/S 200A OF THE ACT, FOR PROCESSING TDS STATEMENTS FILED AND PROCESSED FOR T HE ASSESSMENT YEARS PRIOR TO 1.6.2015. IN THESE CASES, ADMITTEDLY ALL THE TDS R ETURNS HAS BEEN FILED AND PROCESSED BY THE TDS, CPC BEFORE 1.6.2015. THEREFO RE, WE ARE OF THE VIEW THAT FEE PAYABLE U/S 234E OF THE ACT, CANNOT BE LEVIED WHILE PROCESSING TDS STATEMENTS U/S 200A OF THE ACT. THE CIT(A), WITHOUT APPRECIATING THE FACTS SIMPLY UPHELD THE ACTION OF THE A.O. IN LEVYING LATE FEE U/S 234E OF THE ACT . HENCE, WE REVERSE THE CIT(A) ORDER AND DIRECT THE A.O. TO DELETE ADDITIONS MADE TOWARDS LATE FEE U/S 234E OF THE ACT. 8. IN THE INSTANT CASE, THE TDS RETURNS WERE FILED BEFORE 1.6.2015 AND PROCESSED BEFORE 1.6.2015. THE LATE FEE WAS RE LATED TO THE ASSESSMENT YEAR 2013-14, THEREFORE, THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION CITED (SUPRA). SI NCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF C OORDINATE BENCH AND FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH CO URT, WE HOLD THAT THE A.O. IS NOT EMPOWERED TO LEVY LATE FEE PRIOR TO 1.6 .2015 AND ACCORDINGLY, THE LATE FEE LEVIED BY THE A.O. IS CAN CELLED. THE ORDERS OF THE A.O. LEVYING THE LATE FEE FOR BOTH THE A.Y 2013 -14 AND 2014-15 ARE CANCELLED AND THE APPEALS OF THE ASSESSEES ARE ALLO WED. ITA NOS.2&3 /VIZAG/2018 SRI SAI DURGA HOUSING ESTATES, VIJAYAWADA 18 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 26.04.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI SAI DURGA HOUSING ESTATES, 4 0-3/1-52, KAMINENIVARI STREET, NEAR FORTUNE MURALI PARK, VIJA YAWADA 2. / THE RESPONDENT THE ACIT, CENTRAL PROCESSING CE LL-TDS, GHAZIABAD 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM