ELIND INDUCTION FURNACES P.LTD, MUMBAI V. DCIT CPC TDS, MUMBAI

ITA 500/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5551 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 03-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Right to appeal; Condonation of delay
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 500 / MUM/20 16 & 501/MUM/2016 ( ASSESSMENT YEAR : 2013 - 14 ) M/S. ELIND INDUCTION FURNACES PVT. LTD., PLOT NO.46, ABHAR, GROUND FLOOR 5 TH ROAD, KHAR (W) MUMBAI - 400032 V S. DCIT - CPC - TDS MUMBAI PAN/GIR NO. MUMM21135C APPELLANT ) .. RESPONDENT ) ASSESSEE BY NONE REVENUE BY SHRI V. JUSTIN DATE OF HEARING 24 / 07 /201 8 DATE OF PRONOUNCEMENT 24 / 07 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 59, MUMB A I DATED 06/04/2015 FOR A.Y.2013 - 14 IN THE MATTER OF ORDER PASSED U/S. 200A OF THE IT ACT. 2. THE APPEALS ARE DELAYED BY 3 2 0 DAYS, HOWEVER, NO REASONS FOR DELAY IN FILING THE APPEAL OR REQUEST FOR CONDONATION OF DELAY WAS FILED. NOBODY APPEARED BEFORE US NOR WAS ANY ADJOURNMENT PETITION FILED. WE FOUND THAT EVEN ON EARLIER OCCASION WHEN THE APPEALS WERE FIXED FOR ITA NO. 500/MUM/2016 & 501/MUM/2016 M/S. ELIND INDUCTION FURNACES PVT. LTD., 2 HEARING ON 3 1/01/2018, 10/04/2018 AND 05/06/2018 NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 3. FACTS IN BOTH THE APPEALS ARE SAME. THE ONLY EFFECTIVE GROUND OF APPEAL RAISED IS AGAINST LEVY OF FEES OF RS.14,800/ - FOR 2 ND QUARTER, RS.8,400/ - FOR 3 RD QUARTER AND RS.6 ,700/ - FOR 4 QUARTER U/S. 234EOF THE ACT. 4. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 5. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE CIT(A) HAS CONFIRMED THE ORDER OF THE AO AFTER FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF RASMIKANT KUNDALIA. PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: - I HAVE CONSIDERED THE FACTS OF THE CASE, GROUNDS OF APPEAL AND STATEMENT OF FACTS THE ISSUE STANDS COVERED IN FAVOUR OF REVENUE BY HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF RASHMIKANT KUNDALIA VS. UNION OF INDIA DATED 9 TH FEBRUARY, 2015. THE HON'BLE BOMBAY HIGH COURT HAS HELD AS UNDER: - 6. 234E OF THE INCOME - TAX ACT, 1961 INSERTED BY THE FINANCE ACT, 2012 PROVIDES FOR SL O F A FEE OF RS. 200/ - FOR EACH DAYS DELAY IN FILING THE STATEMENT OF TAX DEDUCTED SOURCE (TDS) OR TAX DEDUCTED AT SOURCE (TCS). A WRIT PETITION TO CHALLENGE THE VALIDITY OF S. 234B HAS BEEN FILED IN THE BOMBAY HIGH COURT. THE PETITION CLAIMS THAT - ASSESSES WHO ARE DEDUCTING TAX AT SOURCE ARE DISCH ARGING AN ADMINISTRATIVE FUNCTION OF THE DEPARTMENT AND THAT THEY ARE AN 'HONORARY AGENT' OF THE DEPARTMENT. IT IS STATED THAT THIS OBLIGATION IS ONEROUS IN NATURE AND THAT THERE ARE ALREADY NUMEROUS PENALTIES PRESCRIBED FOR A DEFAULT. IT I* STATED THAT TH E FEE NOW LEVIED BY S. 234E IS 'EXPONENTIALLY HARSH AND BURDENSOME' AND ALSO 'DECEITFUL, ATROCIOUS AND OBNOXIOUS'. IT IS ALSO CLAIMED THAT PARLIAMENT DOES NOT HAVE THE JURISDICTION OR COMPETENCE TO IMPOSE SUCH A LEVY ON TAX - PAYERS. HELD BY THE HIGH COURT D ISMISSING THE PETITION: (I) ON A PERUSAL OF SUB - SECTION (1) OF SECTION 234E, IT IS CLEAR THAT A FEE IS SOUGHT TO BE LEVIED INTER ALIA ON A PERSON WHO FAILS TO DELIVER OR ITA NO. 500/MUM/2016 & 501/MUM/2016 M/S. ELIND INDUCTION FURNACES PVT. LTD., 3 CAUSE TO BE DELIVERED THE TDS RETURN/STATEMENTS WITHIN THE PRESCRIBED TIME IN SUB - SEC TION (3) OF SECTION 200. THE FEE PRESCRIBED IS RS.200/ - FOR EVERY DAY DURING WHICH THE FAILURE CONTINUES. SUB SECTION (2) FURTHER STIPULATES THAT THE AMOUNT OF FEE REFERRED TO IN SUB - SECTION (1) SHALL NOT EXCEED THE AMOUNT OF TAX - DEDUCTIBLE OR COLLECTIBLE AS THE CASE MAY BE; (II ) IT IS NOT IN DISPUTE THAT AS PER THE EXISTING PROVISIONS, A PERSON RESPONSIBLE FOR DEDUCTION OF TAX (THE DEDUCTOR) IS REQUIRED TO FURNISH PERIODICAL QUARTERLY STATEMENTS CONTAINING THE DETAILS OF DEDUCTION OF TAX MADE DURING THE Q UARTER, BY THE PRESCRIBED DUE DATE. UNDOUBTEDLY, DELAY IN FURNISHING OF TDS RETURN/STATEMENTS HAS A CASCADING EFFECT. UNDER THE INCOME TAX ACT, THERE IS AN OBLIGATION ON THE INCOME TAX DEPARTMENT TO PROCESS THE INCOME TAX RETURNS WITHIN THE SPECIFIED PERIO D FROM THE DATE OF FILING. THE DEPARTMENT CANNOT ACCURATELY PROCESS THE RETURN ON WHOSE BEHALF TAX HAS BEEN DEDUCTED (THE DEDUCTEE) UNTIL INFORMATION OF SUCH DEDUCTIONS IS FURNISHED BY THE DEDUCTOR WITHIN THE PRESCRIBED TIME. THE TIMELY PROCESSING OF RETUR NS IS THE BEDROCK OF AN EFFICIENT TAX ADMINISTRATION SYSTEM. IF THE INCOME TAX RETURNS, ESPECIALLY HAVING REFUND CLAIMS, ARE NOT PROCESSED IN O TIMELY MANNER, THEN (I) A DELAY OCCURS M THE GRANTING OF CREDIT OF TDS TO THE PERSON ON WHOSE BEHALF TAX IS DEDU CTED (THE DEDUCTEE) AND CONSEQUENTLY LEADS TO DELAY IN ISSUING REFUNDS TO THE DEDUCTEE, OR RAISING OF INFRUCTUOUS DEMANDS AGAINST THE DEDUCTEE; (II) THE CONFIDENCE OF A GENERAL TAXPAYER ON THE TAX ADMINISTRATION IS ERODED; (HI) THE LATE PAYMENT OF REFUND A FFECTS THE GOVERNMENT FINANCIALLY R*S THE GOVERNMENT HAS TO PAY INTEREST FOR DELAY IN GRANTING THE REFUNDS; AND (IV) THE DELAY IN RECEIPT OF REFUNDS RESULTS INTO A CASH FLOW CRUNCH, ESPECIALLY FOR BUSINESS ENTITIES; (IIII) THE LEGISLATURE TOOK NOTE OF THE FACT THAT A SUBSTANTIAL NUMBER OF DEDUCTORS WERE NOT FURNISHING THEIR TDS RETURN/STATEMENTS WITHIN THE PRESCRIBED TIME FRAME WHICH WAS ABSOLUTELY ESSENTIAL. THIS LED TO AN ADDITIONAL WORK BURDEN UPON THE DEPARTMENT DUE TO THE FAULT OF THE DEDUCTOR BY NOT FURNISHING THE INFORMATION IN TIME AND WHICH HE WAS STATUTORILY BOUND TO FURNISH. IT IS IN THIS LIGHT, AND TO COMPENSATE FOR THE ADDITIONAL WORK BURDEN FORCED UPON THE DEPARTMENT, THAT A FEE WAS SOUGHT TO BE LEVIED UNDER SECTION 234E OF THE ACT LOOKING AT THIS FROM THIS PERSPECTIVE, WE ARE CLEARLY OF THE VIEW THAT SECTION 234E OF THE ACT IS NOT PUNITIVE IN NATURE BUT A FEE WHICH IS A FIXED CHARGE FOR THE EXTRA SERVICE WHICH THE DEPARTMENT HAS TO PROVIDE DUE TO THE LATE FILING OF THE TDS STATEMENTS; (IV) .A S STATED EARLIER, THE LATE SUBMISSION OF TDS STATEMENTS MEANS THE DEPARTMENT I S BURDENED WITH EXTRA WORK WHICH IS OTHERWISE NOT REQUIRED IF THE TDS STATEMENTS WERE FURNISHED WITHIN THE PRESCRIBED TIME. THIS FEE IS FOR THE PAYMENT OF THE ADDITIONAL BURDEN FORCED UPON THE DEPORTMENT. A PERSON DEDUCTING THE TAX (THE DERIVATOR), IS ALLOWED ITA NO. 500/MUM/2016 & 501/MUM/2016 M/S. ELIND INDUCTION FURNACES PVT. LTD., 4 TO FILE HIS TDS STATEMENT BEYOND THE PRESCRIBED TIME PROVIDED HE PAYS THE FEE AS PRESCRIBED UNDER SECTION 234E OF THE ACT. IN OTHER WORDS, THE LATE FILING OF THE TDS RETURN/ STATEMENTS IS REGULARIZED UPON PAYMENT OF THE FEE ASSET OUT IN SECTION 234E. THIS IS NOTHING BUT A PRIVILEGE AND A SPECIAL SERVICE TO THE DEDUCTOR ALLOWING HIM TO FILE THE TDS RETURN/STATEMENTS BEYOND THE TIME PRESCRIBED BY THE ACT AND/OR THE RULES. WE THE REFORE CANNOT AGREE WITH THE ARGUMENT OF THE PETITIONERS THAT THE FEE THAT IS SOUGHT TO BE COLLECTED UNDER SECTION 234E OF THE ACT IS REALLY NOTHING BUT A COLLECTION IN THE GUISE OF A TAX; (V) WE ARE THEREFORE, CLEARLY OF THE VIEW THAT THE FEE SOUGHT TO B E LEVIED UNDER SECTION 234E OF THE INCOME TAX ACT, 1961 IS NOT IN THE GUIDE OF A TAX THAT IS SOUGHT TO BE LEVIED ON THE DEDUCTOR. WE ALSO DO NOT FIND THE PROVISIONS OF SECTION 234E AS BEING ONEROUS ON THE GROUND THAT THE SECTION DOES NOT EMPOWER THE ASSES SING OFFICER TO CONDONE THE DELAY IN LATE FILING OF THE TDS RETURN/STATEMENTS, OR THAT NO APPEAL IS PROVIDED FOR FROM AN ARBITRARY ORDER PASSED UNDER SECTION 234E. IT MUST BE NOTED THAT A RIGHT OF APPEAL IS,NOT A MATTER OF RIGHT BUT IS A CREATURE OF THE ST ATUTE, AND IF THE LEGISLATURE DEEMS IT FIT NOT TO PROVIDE A REMEDY OF APPEAL, SO BE IT. EVEN IN SUCH A SCENARIO IT IS NOT AS IF THE AGGRIEVED PARTY IS LEFT REMEDILESS. SUCH AGGRIEVED PERSON CAN ALWAYS APPROACH THIS COURT IN ITS EXTRA ORDINARY EQUITABLE JUR ISDICTION UNDER ARTICLE 226 / 227 OF THE CONST/TUT/ON OF INDIA, AS THE CASE MAY BE. WE THEREFORE CANNOT AGREE WITH THE ARGUMENT OF THE PETITIONERS THAT SIMPLY BECAUSE NO REMEDY OF APPEAL IS PROVIDED FOR, THE PROVISIONS OF SECTION 234E ARE ONEROUS. SIMILARL Y, ON THE SAME PARITY OF REASONING, WE FIND THE ARGUMENT REGARDING CONDONATION OF DELAY ALSO TO BE WHOLLY WITHOUT ANY MERIT . 3 . 2 RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) THE ACTION OF THE A - 0 IN LEVYING THE FEE U/S. 234E FOR ALL QUARTERS IS UPHELD. GROUND IS DISMISSED . 6. NOTHING WAS PLACED BEFORE US SO AS TO PERSUADE AS TO DEVIATE FROM THE FINDINGS RECORDED BY CIT(A) AFTER RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT . ACCORDINGLY, WE CONFIRM THE ACTION OF CIT(A) IN BO TH THE APPEALS UNDER CONSIDERATION. ITA NO. 500/MUM/2016 & 501/MUM/2016 M/S. ELIND INDUCTION FURNACES PVT. LTD., 5 7. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 07 /201 8 SD/ - ( SANDEEP GOSAIN ) SD/ - (R.C.SHARMA) JUDICI AL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 / 07 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . //TRUE COPY//