Touchstone Services P. Ltd., Rajnandgaon V. Income Tax Officer (TDS), Durg

ITA 69/RPR/2021

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The case involves two appeals by Touchstone Services P. Ltd. against the orders of the CIT(A) which upheld the demands raised under section 234E for delays in filing TDS Quarterly Statements for the assessment years 2013-14 and 2014-15. The primary legal contention was whether the late fee under section 234E could be levied for periods prior to the amendment of section 200A(1) on 01.06.2015. The Tribunal considered various precedents, including decisions from the Pune ITAT and the Karnataka High Court, which supported the assessee's position that the levy of such fees was not applicable retrospectively.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 133452 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 29-08-2021
• Other Referred Cases: Chhattisgarh Gramin Bank & Others Vs. ITO (TDS), Rajesh Kourani Vs. UOI, Fatehraj Singhvi & Ors. Vs. UOI, CIT Vs. Vegetable Products Ltd., Medical Superintendent Rural Hospital vs. DCIT, CPC(TDS), Maharashtra Cricket Association v. Dy. CIT, Vidya Vardhani Education & Research Foundation v. Dy. CIT, Swami Vivekanand Vidyalaya, Medical Superintendant Rural Hospital v. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; TDS; Set aside
• Section: 154; 234E; 200A; 272A

Judgement Text

आयकर अपीलीय अिधकरण Ɋायपीठ रायपुर मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH :: RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.68 & 69/RPR/2021 िनधाᭅरण वषᭅ / Assessment Year : 2013-14 & 2014-15 Touchstone Services P. Ltd., C/o.Uday Raj Parakh, “Mangaldeep”, G.E.Road, Rajnandgaon (C.G.) – 491441 PAN: AACCT 6932 F V s The Income Tax Officer(TDS), Bhilai, Ground Floor, Aayakar Bhawan, New Civic Centre, Bhilai, Dist. Durg(C.G) – 490006. Appellant/ Assessee Respondent /Revenue Assessee by None Revenue by Shri G.N.Singh – Sr.DR Date of hearing 22/11/2022 Date of pronouncement 12/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: These are two appeals filed by the assessee i.e. Touchstone Services Pvt. Ltd., for the A.Y.2013-14 & 2014-15 against the two separate orders of ld.CIT(A)[NFAC] dated 05.08.2021. Both these appeals were clubbed, heard together and disposed of by a common order. For the sake of convenience we take the Appeal No.68/RPR/2021 for A.Y.2013-14 treated as lead case. The assessee for A.Y.2013-14 has raised following Grounds of Appeal: “1) On the facts and in the circumstances of the case, CIT(A) erred in upholding demand raised in respect of levying fee u/s 234E in intimation u/s 200A for default in furnishing TDS statements so far as period prior to 01.06.2015 by ignoring binding decisions of hon’ble jurisdictional IT AT, Raipur Bench in cases of "Chhattisgarh Gramin Bank & Others Vs. ITO (TDS) dt. 23.06.2016 reported in (2016) 29 ITJ 310" and ITA No’s.68 & 69/RPR/2021 Touchstone Services P. Ltd., [A] 2 ""Chhattisgarh Gramin Bank & Others Vs. ITO (TDS) dt. 31.01.2019" relied on in written submission filed before him. 2) On the facts and in the circumstances of the case, CIT(A) erred in confirming the levy of fee under section 234E in the course of processing of TDS returns and intimation u/s 200A(1) for the F.Y. 2012/13 (A.Y. 2013/14) by following decision of hon'ble Gujarat High Court in case of "Rajesh Kourani Vs. UOI" in favour of department but ignoring and even not dealing with decision of hon'ble Karnataka High Court in favour of the assessee in case of "Fatehraj Singhvi & Ors. Vs. UOI (2016) 289 CTR 602" relied on by the appellant in written submission filed before him in the light of decision of hon’ble Supreme Court in case of "CIT Vs. Vegetable Products Ltd. 88 ITR 192" wherein it is held that "when there are conflicting decisions, the view taken in favour of the assessee should be followed". 2. No one appeared on behalf of the assessee. We heard ld.Departmental Representative(ld.DR) for the Revenue and perused the records. 3. The ld.DR for the Revenue relied on the order of ld.CIT(A). 4. We heard ld.DR for the Revenue and perused the records. The Assessing Officer (AO) had levied late fee of Rs.54,400/- for A.Y.2013-14 under section 234E of the Act for delay in filing TDS Quarterly Statements. Similarly for A.Y. 2014-15, the AO had levied late fee of Rs.2,02,000/- under section 234E for delay in filing TDS Quarterly Statements. Thus, it is a fact that these cases pertains to period prior to 2015. This issue is a covered issue. 4.1 The issue involved in this case is whether late fee under section 234E can be levied for A.Y. 2013-14. This issue is covered in favour of the assessee. The ITAT Pune in the case of Medical ITA No’s.68 & 69/RPR/2021 Touchstone Services P. Ltd., [A] 3 Superintendent Rural Hospital, vs. DCIT, CPC(TDS) [2018] 100 taxmann.com 78 (Pune Tribunal) has observed as under: “11. We have heard the rival contentions and perused the record. The issue arising in the present bunch of appeals is against levy of late filing fees under section 234E of the Act while issuing intimation under section 200A of the Act, in the first bunch of appeals. The second bunch of appeals in the case of Junagade Healthcare Pvt. Ltd. is against order of Assessing Officer passed under section 154 of the Act rejecting rectification application moved by assessee against intimation issued levying late filing fees charged under section 234E of the Act. The case of assessee before us is that the issue is squarely covered by various orders of Tribunal, wherein the issue has been decided in respect of levy of late filing fees under section 234E of the Act, in the absence of empowerment by the Act upon Assessing Officer to levy such fees while issuing intimation under section 200A of the Act. The Tribunal vide order dated 21.09.2016 with lead order in Maharashtra Cricket Association v. Dy. CIT [2016] 74 taxmann.com 6 (Pune - Trib.) relating to assessment years 2013-14 and 2014-15 for the respective quarters deliberated upon the issue and held as under:— "34. Accordingly, we hold that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law." 12. The said proposition has been applied in the next bunch of appeals with lead order in Vidya Vardhani Education & Research Foundation v. Dy. CIT [2017] 88 taxmann.com 894 (Pune - Trib.) and also in Swami Vivekanand Vidyalaya (supra) and Medical Superintendant Rural Hospital v. ACIT [IT Appeal Nos.2072 & 2073 (PUN) of 2017, order dated 21-12-2017], which has been relied upon by the learned Authorized Representative for the assessee. ITA No’s.68 & 69/RPR/2021 Touchstone Services P. Ltd., [A] 4 13. The Hon'ble High Court of Karnataka in the case of Fatheraj Singhvi (supra) had also laid down similar proposition that the amendment to section 200A of the Act w.e.f. 01.06.2015 has prospective effect and is not applicable for the period of respective assessment years prior to 01.06.2015. The relevant findings of the Hon'ble High Court are in paras 21 and 22, which read as under:— "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 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 ITA No’s.68 & 69/RPR/2021 Touchstone Services P. Ltd., [A] 5 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." 14. The Hon'ble High Court thus held that where the impugned notices given by Revenue Department under section 200A of the Act were for the period prior to 01.06.2015, then same were illegal and invalid. Vide para 27, it was further held that the impugned notices under section 200A of the Act were for computation and intimation for payment of fees under section 234E of the Act as they relate for the period of tax deducted at source prior to 01.06.2015 were being set aside. 5. Respectfully following the above decision of ITAT Pune Bench, we hold that the levy of late fee under section 234E of the Act for A.Y. 2013-14 is bad in law. Therefore, the Assessing Officer is directed to delete the said late fee. Accordingly, the appeal of the assessee is allowed. ITA No.69/RPR/2021 for A.Y.2014-15 : 6. As we have noted above that the assessee has raised identical ground of appeal and the facts of this appeal under consideration are almost identical to the facts in ITA No.68/RPR/2021. Therefore, our decision in ITA No.68/RPR/2021 will apply mutatis-mutandis to this ITA No’s.68 & 69/RPR/2021 Touchstone Services P. Ltd., [A] 6 appeal number ITA No.69/RPR/2021. Accordingly, grounds of appeal raised by the assessee are allowed. 7. To sum up, both appeal of the Assessee are Allowed. Order pronounced in the open Court on 12 th December, 2022. Sd/- Sd/- (RAVISH SOOD ) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 12 th Dec, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Applicant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-I, Raipur. 4. The Pr. CIT-I, Raipur. 5. DR, ITAT, “Raipur” Bench. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.