SOCIAL WORK & RESEARCH CENTRE, AJMER V. ASSISTANT COMMISSIONER OF INCOME TAX, CPC (TDS), GHAZIABAD

ITA 67/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7848 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 18-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOOP SINGH JCIT DHK
• Keywords: Period of limitation; Bonafide mistake

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 67/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 (27 Q1). SOCIAL WORK & RESEARCH CENTRE, VPO TILONIA TEHSIL KISHANGARH, AJMER. CUKE VS. THE ACIT, CPC (TDS) GHAZIABAD, AAYKAR BHAWAN, SECTOR-3, VAISHALI, GHAZIABAD.(U.P) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/TAN NO. JDHS 03497 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJEEV JAIN (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ANOOP SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13.08.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/08/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21 ST SEPTEMBER, 2017 OF LD. CIT (A), AJMER ARISING FROM THE ORDER OF PROCESSING STATEMENTS UNDER SECTION 200A/206 CB OF THE ACT FOR THE ASSESSMENT YEAR 2015-16 (27Q, 1 ST QTR.). THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS :- 1. THE LD.CIT (APPEALS) HAS ERRED IN LAW AS WELL A S ON FACTS IOF THE CASE BY CONFIRMING DEMAND OF LATE FEE U/S 234E OF R S. 1,85,800/-. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DE LETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIM E OF HEARING. 2 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. 2. THE ASSESSEE MADE PAYMENTS TO VARIOUS NON-RESIDE NT PERSONS DURING THE PERIOD APRIL, TO JUNE, 2014 AND DEDUCTED TDS UNDER SECTION 195 OF THE IT ACT ON THE SAID PAYMENTS. THE ASSESSEE ALSO DEPOSITED THE TDS SO DEDUCTED WITHIN THE STIPULATED TIME PERIOD ON 5 TH MAY, 2014. HOWEVER, THE ASSESSEE DID NOT SUBMIT T HE QUARTER TDS STATEMENT IN FORM NO. 27Q WITHIN THE TI ME PRESCRIBED ON OR BEFORE 15.07.2014 BUT THE SAME WERE FILED BELATEDLY ON 29 TH JANUARY, 2017. THE AO WHILE PROCESSING THE STATEMENT IN FORM NO. 27Q HAS LEVIED THE FEE OF RS. 1,85,500/- UNDER SECTION 234E @ RS. 200/- PER DAY FOR THE PERIOD FRO M 16.07.2014 TO 29.01.2017 TOTAL 929 DAYS AND ISSUED INTIMATION UNDER SECTION 200A O F THE ACT. THE ASSESSEE CHALLENGED THE SAID ORDER/INTIMATION ISSUED BY THE AO UNDER SECTION 200A BEFORE THE LD. CIT (A) AND SUBMITTED THAT THE LEVY OF FEE UNDE R SECTION 234E FOR THE RELEVANT QUARTER IS BEYOND THE SCOPE OF INTIMATION UNDER SEC TION 200A AS THE SAME HAS BEEN INCLUDED IN THE SECTION BY THE FINANCE ACT 2014 WIT H EFFECT FROM 01.06.2015. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE KARNAT AKA HIGH COURT IN THE CASE OF FATHERAJ SINGHVI VS. UNION OF INDIA, 289 CTR 602 ON THIS POINT THAT THE AMENDMENT IN SECTION 200A BY FINANCE ACT 2015 AUTHORIZING LEV Y OF FEE UNDER SECTION 234E IS PROSPECTIVE IN NATURE WITH EFFECT FROM 01.06.2015. THE LD. CIT (A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE LE VY OF FEE UNDER SECTION 234E WHILE ISSUING THE INTIMATION UNDER SECTION 200A. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ENTIRE PAYMENT IN QUESTION WAS TO THE NON-RESIDENTS AND TDS WAS DE DUCTED UNDER SECTION 195 OF THE ACT AND, THEREFORE, WHEN THE AMOUNT IN QUESTION WAS NOT ASSESSABLE TO TAX IN THE HANDS OF THE RECIPIENT NON-RESIDENTS, THEN THE QUESTION OF ANY REVENUE LOSS TO 3 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. THE DEPARTMENT DOES NOT ARISE ONLY BECAUSE THE ASSE SSEE DID NOT FILE THE QUARTERLY STATEMENT OF TDS. HE HAS FURTHER CONTENDED THAT THE ASSESSEE DEDUCTED THE TDS IN TIME AND ALSO DEPOSITED THE SAME WITH THE GOVERNMEN T ACCOUNT WHICH IS NOT IN DISPUTE AND, THEREFORE, THE LEVY OF FEE UNDER SECTI ON 234E IS NOT WARRANTED. HE HAS FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 20 0A WERE AMENDED BY FINANCE ACT, 2014 WITH EFFECT FROM 01.06.2015 WHEREBY THE LEVY O F FEE UNDER SECTION 234E WAS INCLUDED WHILE PROCESSING THE STATEMENTS FILED IN F ORM NO. 27Q. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HONB LE KARNATAKA HIGH COURT IN CASE OF FATHERAJ SINGHVI VS. UNION OF INDIA (SUPRA). H ENCE THE LD. A/R HAS SUBMITTED THAT WHEN THE PROVISION IS APPLICABLE PROSPECTIVELY, THE N THE SAME CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE AS THE QUARTERLY STATEMENT PERTAINED TO THE PERIOD APRIL TO JUNE, 2014 WHEREAS THE SAID AMENDMENT WAS BROUGHT I N THE STATUTE WITH EFFECT FROM 01.06.2015. ALTERNATIVELY, THE LD. A/R HAS SU BMITTED THAT THE NON SUBMISSION OF THE STATEMENT IS DUE TO BONAFIDE MISTAKE AND ASS ESSEE REALIZED THE SAME ONLY WHEN THE INTERNAL AUDIT PARTY HAS POINTED OUT THE S AME. THEREFORE, WHEN THE ASSESSEE HAS ALREADY DEDUCTED THE TDS AND DEPOSITED THE SAME IN THE GOVERNMENT ACCOUNT WITHIN THE PERIOD OF LIMITATION, THEN MEREL Y BECAUSE THE ASSESSEE HAS FAILED TO SUBMIT THE QUARTERLY STATEMENT DUE TO INADVERTEN CE AND BONAFIDE MISTAKE WHERE THE RECIPIENT IS A NON RESIDENT THEN THE LEVY OF FE E UNDER SECTION 234E IS NOT WARRANTED. 3.1. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED T HAT THE PROVISIONS OF SECTION 234E ARE MANDATORY AND THE AO HAS NO DISCRETION BUT TO LEVY THE PENALTY @ RS. 200/- PER DAY DEFAULT IN FILING THE STATEMENT. HE H AS FURTHER SUBMITTED THAT WHEN THE 4 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. DEFAULT IS CONTINUOUS IN NATURE AND REMAIN EVEN AFT ER THE AMENDMENT BROUGHT INTO THE STATUTE WITH EFFECT FROM 01.06.2015, THEN THE PROVISIONS OF SECTION 200A AS WELL AS SECTION 234E ARE APPLICABLE IN THE CASE OF THE A SSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE MADE THE PAYMENT TO THE NON- RESIDENTS AND DEDUCTED TDS UNDER SECTION 195 OF THE IT ACT WHICH WAS ALSO DEPOSITED WITH THE GOVERNMENT ACCOUNT ON 5 TH MAY, 2014. THE PAYMENT PERTAINS TO THE 1 ST QUARTER FROM APRIL, TO JUNE, 2014 AND, THEREFORE, THE LAST DATE OF FILING THE QUARTER TDS STATEMENT IN FORM NO. 27Q WAS 15 TH JULY, 2014. HOWEVER, DESPITE THE TDS DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUN T WITHIN THE PERIOD OF LIMITATION, THE ASSESSEE DID NOT FILE THE STATEMENT AND FINALLY THE STATEMENT WAS FILED ON 29 TH JANUARY, 2017. THE QUESTION OF APPLICABILITY OF T HE PROVISIONS OF SECTION 234E WITH PROSPECTIVE EFFECT FROM 01.06.2015 HAS BE EN CONSIDERED THE HONBLE KARNATAKA HIGH COURT IN CASE OF FATHERAJ SINGHVI VS . UNION OF INDIA (SUPRA). THE HONBLE HIGH COURT HAS HELD IN PARA 23 TO 27 AS UND ER :- 23. IN VIEW OF THE AFORESAID OBSERVATION AND DISCUSSIO N, SINCE THE IMPUGNED INTIMATION GIVEN BY THE RESPONDENT-DEPARTMENT AGAIN ST 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 CA N BE SAID AS ILLEGAL AND INVALID. 24. IF THE FACTS OF THE PRESENT CASES ARE EXAMINED IN LIGHT OF THE AFORESAID OBSERVATION AND DISCUSSION, IT APPEARS THAT 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 ACC OUNT OF THE INTIMATION GIVEN MAKING DEMAND OF THE FEES IN PURPORTED EXERCISE OF POWER U NDER SECTION 200A, THE SAME HAS NECESSITATED THE APPELLANT-ORIGINAL PETITIONER TO C HALLENGE THE VALIDITY OF SECTION 234E OF THE ACT. IN VIEW OF THE REASONS RECORDED BY US H EREINABOVE, WHEN THE AMENDMENT MADE UNDER SECTION 200A OF THE ACT WHICH HAS COME I NTO EFFECT ON 1.6.2015 IS HELD TO 5 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. BE HAVING PROSPECTIVE EFFECT, NO COMPUTATION OF FEE FOR THE DEMAND OR THE INTIMATION FOR THE FEE UNDER SECTION 234E COULD BE MADE FOR TH E TDS DEDUCTED FOR THE RESPECTIVE ASSESSMENT YEAR PRIOR TO 1.6.2015. HENCE, THE DEMAN D NOTICES UNDER SECTION 200A BY THE RESPONDENT-AUTHORITY FOR INTIMATION FOR PAYMENT OF FEE UNDER SECTION 234E CAN BE SAID AS WITHOUT ANY AUTHORITY OF LAW AND THE SAME A RE QUASHED AND SET ASIDE TO THAT EXTENT. 25. AS SUCH, AS RECORDED EARLIER, IT IS ON ACCOUNT OF THE INTIMATION RECEIVED UNDER SECTION 200A FOR MAKING COMPUTATION AND DEMAND OF F EES UNDER SECTION 234E, THE SAME HAS NECESSITATED THE APPELLANT TO CHALLENGE TH E CONSTITUTIONAL VALIDITY OF SECTION 234E. WHEN THE INTIMATION OF THE DEMAND NOTICES UND ER SECTION 200A IS HELD TO BE WITHOUT AUTHORITY OF LAW SO FAR AS IT RELATES TO CO MPUTATION AND DEMAND OF FEE UNDER SECTION 234E, WE FIND THAT THE QUESTION OF FURTHER SCRUTINY FOR TESTING THE CONSTITUTIONAL VALIDITY OF SECTION 234E WOULD BE RE NDERED AS AN ACADEMIC EXERCISE BECAUSE THERE WOULD NOT BE ANY CAUSE ON THE PART OF THE PETITIONERS TO CONTINUE TO MAINTAIN THE CHALLENGE TO CONSTITUTIONAL VALIDITY U NDER SECTION 234E OF THE ACT. AT THIS STAGE, WE MAY ALSO RECORD THAT THE LEARNED COUNSELS APPEARING FOR THE APPELLANT HAD ALSO DECLARED THAT IF THE IMPUGNED NOTICES UNDER SE CTION 200A ARE SET ASIDE, SO FAR AS IT RELATES TO COMPUTATION AND INTIMATION FOR PAYMEN T OF FEE UNDER SECTION 234E, THE APPELLANT-PETITIONERS WOULD NOT PRESS THE CHALLENGE TO THE CONSTITUTIONAL VALIDITY OF SECTION 234E OF THE ACT. BUT, THEY SUBMITTED THAT T HE QUESTION OF CONSTITUTIONAL VALIDITY OF SECTION 234E MAY BE KEPT OPEN TO BE CONSIDERED B Y THE DIVISION BENCH AND THE JUDGMENT OF THE LEARNED SINGLE JUDGE MAY NOT CONCLU DE THE CONSTITUTIONAL VALIDITY OF SECTION 234E OF THE ACT. 26. UNDER THESE CIRCUMSTANCES, WE FIND THAT NO FURTHER DISCUSSION WOULD BE REQUIRED FOR EXAMINING THE CONSTITUTIONAL VALIDITY OF SECTIO N 234E OF THE ACT. SAVE AND EXCEPT TO OBSERVE THAT THE QUESTION OF CONSTITUTIONAL VALI DITY OF SECTION 234E OF THE ACT BEFORE THE DIVISION BENCH OF THIS COURT SHALL REMAIN OPEN AND SHALL NOT BE TREATED AS CONCLUDED. 27. IN VIEW OF THE AFORESAID OBSERVATIONS AND DISCUSSI ON, THE IMPUGNED NOTICES UNDER SECTION 200A OF THE ACT FOR COMPUTATION AND INTIMAT ION FOR PAYMENT OF FEE UNDER SECTION 234E AS THEY RELATE TO FOR THE PERIOD OF TH E TAX DEDUCTED PRIOR TO 1.6.2015 ARE SET ASIDE. IT IS CLARIFIED THAT THE PRESENT JUDGMEN T WOULD NOT BE INTERPRETED TO MEAN THAT EVEN IF THE PAYMENT OF THE FEES UNDER SECTION 234E ALREADY MADE AS PER DEMAND/INTIMATION UNDER SECTION 200A OF THE ACT FOR THE TDS FOR THE PERIOD PRIOR TO 01.04.2015 IS PERMITTED TO BE REOPENED FOR CLAIMING REFUND. THE JUDGMENT WILL HAVE PROSPECTIVE EFFECT ACCORDINGLY. IT IS FURTHER OBSER VED THAT THE QUESTION OF CONSTITUTIONAL VALIDITY OF SECTION 234E SHALL REMAI N OPEN TO BE CONSIDERED BY THE DIVISION BENCH AND SHALL NOT GET CONCLUDED BY THE O RDER OF THE LEARNED SINGLE JUDGE. THUS THE HONBLE HIGH COURT HAS HELD THAT THE AMEND MENT MADE UNDER SECTION 200A OF THE ACT CAME INTO EFFECT FROM 01.06.2015 AND IS PROSPECTIVE IN NATURE, THEREFORE, NO COMPUTATION OF FEE FOR DEMAND OR INTIMATION UNDE R SECTION 234E COULD BE MADE 6 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. FOR TDS DEDUCTED FOR THE RESPECTIVE ASSESSMENT YEAR PRIOR TO 01.06.2015. THERE IS NO QUARREL ON THE POINT THAT THE DELAY IN FILING TH E STATEMENT UPTO 01.06.2015 WOULD NOT ATTRACT THE PROVISIONS OF SECTION 234E AS THE A MENDMENT IN SECTION 200A ENABLE THE AO TO LEVY THE FEE UNDER SECTION 234E WITH EFFE CT FROM 01.06.2015 AND, THEREFORE, THE AO WAS HAVING NO JURISDICTION OR AUT HORITY TO LEVY THE FEE FOR THE DELAY OF PERIOD PRIOR TO 01.06.2015. HOWEVER, WE FIND FO RCE AND MERITS IN THE CONTENTION OF LD. D/R THAT SINCE THE DELAY IS CONTINUOUS AND P ERPETUAL AND PERMEATES TO THE SUCCEEDING YEARS UPTO 29.01.2017 AND, THEREFORE, ON CE THE PROVISIONS OF SECTION 234E ARE APPLICABLE FROM 01.06.2015, THE DELAY FROM THAT DATE ONWARDS WILL ATTRACT THE LEVY OF FEE. UNDISPUTEDLY THE DEFAULT IN SUBMI TTING THE TDS STATEMENT IN FORM NO. 27Q IS A CONTINUOUS AND NOT A SINGLE INCIDENCE OF DEFAULT. FURTHER, THE LEVY OF FEE IS ALSO NOT BASED ON THE SINGLE DEFAULT BUT IT IS BASED ON DAY TO DAY DEFAULT @ RS. 200/- PER DAY. THUS THE PROVISIONS OF SECTION 234E ENVISAGE THE LEVY OF FEE FOR A CONTINUOUS DEFAULT TILL IT IS END. HOWEVER, THE HO NBLE KARNATAKA HIGH COURT HAS HELD THAT AO HAS NO AUTHORITY TO LEVY THE FEE U/S 234E W HILE ISSUING THE INTIMATION U/S 200A SO FAR AS THEY ARE FOR THE PERIOD PRIOR TO 01. 06.2015. IN THE PRESENT CASE THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE PLEA THAT T HE PAYMENT WAS MADE TO THE NON- RESIDENT AND TDS WAS DEDUCTED UNDER SECTION 195 OF THE ACT, THEREFORE, UNTIL AND UNLESS IT IS DETERMINED THAT THE SAID AMOUNT IN THE HANDS OF THE NON-RESIDENTS IS TAXABLE IN INDIA, THE NON-FILING OF TDS STATEMENT W OULD BE INCONSEQUENTIAL AND THERE WOULD BE NO POSSIBLE LOSS OF REVENUE. HENCE IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISIO N OF HONBLE KARNATAKA HIGH 7 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR. COURT IN THE CASE OF FATHERAJ SINGHVI VS. UNION OF INDIA (SUPRA), WE DELETE THE LEVY OF FEE UNDER SECTION 234E OF THE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 14/08/2018 . SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 14/08/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. SOCIAL WORK & RESEARCH CENTR E, JAIPUR. 2. THE RESPONDENT THE ACIT, CPC (TDS), GHAZIABAD. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 67/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 8 ITA NO. 67/JP/2018 SOCIAL WORK & RESEARCH CENTRE, JAIPUR.