Anumod Vishwambharan, Trivandrum V. ITO TDS Ward, Trivandrum

ITA 78/COCH/2023

AI Insights

The case involves appeals by Anumod Viswambharan against the late fees imposed under section 234E of the Income Tax Act for delayed filing of TDS statements for the assessment years 2013-14 and 2014-15. The primary legal contention was whether the late fees could be levied for periods before June 1, 2015, the date from which amendments allowing such levies became effective. The tribunal examined precedents and judicial interpretations, particularly focusing on the amendments to section 200A and the introduction of section 234E, which collectively govern the processing of TDS statements and the imposition of late fees. The tribunal's decision was heavily influenced by the judicial consensus that the amendments were prospective, thus invalidating any late fee demands for periods prior to the specified date.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115363 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 22-01-2023
• Other Referred Cases: M/s. Sarala Memorial Hospital Vs. Union of India, M/s Olari Little Flower Kuries (P.) Ltd. v. UoI [2022] 440 ITR 26 (Ker), Fatheraj Singhvi, Rajesh Kourani
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; TDS; Set aside
• Section: 234E; 200A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI SANJAY ARORA, AM AND SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No. 78/Coch/2023 (िनधाŊरण वषŊ / Assessment Year: 2013-14) & आयकर अपील सं/ I.T.A. No. 79/Coch/2023 (िनधाŊरण वषŊ / Assessment Year: 2014-15) Anumod Viswambharan TC 8/2164, Cheruvikal, Medical College, Thiruvananthapuram- 695011. बनाम/ Vs. ITO TDS Ward, Aayakar Bhavan, Peroorkada Road, Kowdiar, Thiruvananthapuram. ̾थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ADJPV0729M (अपीलाथŎ /Appellant) .. (ŮȑथŎ / Respondent) सुनवाई की तारीख / Date of Hearing: 18/05/2023 घोषणा की तारीख /Date of Pronouncement: 06/06/2023 आदेश / O R D E R PER BENCH These are appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC dated 14.10.2022 for AY. 2013-14 & 2014-15 (for Q3 & Q1 of FY. 2012-13 & 2013-14 respectively) confirming the order u/s 234E of the Income Tax Act, 1961 (hereinafter “the Act”). 2. At the outset, it is noted that the issue in both these appeals are regarding levy of ‘late fee’ u/s 234E of the Act; and main plea of the assessee against the imposition of late fees u/s 234E of the Act is that since the cause of action in both the appeals took place before 01.06.2015, the levy of ‘late fee’ u/s 234E of the Act is bad in law since the Hon’ble Jurisdictional High Court in the case of M/s. Sarala Assessee by: None Revenue by: Smt J. M Jamuna Devi, (Sr. AR) ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 2 Memorial Hospital Vs. Union of India held that the amendment brought in by insertion of clause ‘C’ in section 200A(1) of the Act [Processing of statements of tax deducted at source] is prospective in nature; and that only post 01.06.2015, processing of return entails levy of late fee as envisaged u/s 234E of the Act. It would be gainful to refer to the relevant extracts of the order of the Hon’ble High Court which are germane to the issue raised in the instant appeals, which reads as under: - 6. Indeed, the facts are not in dispute. The petitioner submitted quarterly returns for the assessment years 2012-2013 and 2013-2014. After processing them, the assessing officer issued the Exts.P1 to P4 intimations, requiring the petitioner to pay the late fee. The petitioner has assailed that. To put the issue in perspective, we need to examine the statutory provisions. To begin with, Section 200A before 1.6.2015 stood as follows: Processing of statements of tax deducted at source. 200A. (1) Where a statement of tax deduction at source 8a [or a correction statement] has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:— (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement; (c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to him under clause (c); and (e) amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor; (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor; ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 3 Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.—For the purposes of this sub-section, "an incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement- (i) of an item, which is inconsistent with another entry of the same other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate in accordance with the provisions of this Act. (2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.] 7. Later through Finance Act, 2015 with effect from 01.06.2015, among other things, clause (c) was added, with other consequential changes. Now, with the amendment, the provision has this addition: “(c) the fee, if any, shall be computed in accordance with the provisions of Section 234E” 8. In fact, Section 234E affects the proceedings. Therefore, it prays to examine that provision as well. And it reads: "234E-Fee for default in furnishing statements:- (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of Section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay of fee, a sum of two hundred rupees for every day during which the failure continues (2) 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 (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.” 9. Interpreting Section 200A and Section 234E, the Karnataka High Court has held in Fatheraj that when the statute confers no express power under section 200A before 01.06.2015 on the authority either to compute and collect any fee under section 234E, the demand for the period before 01.06.2015 could not be sustained. Fatheraj in fact observes: ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 4 “14. We may now deal with the contentions raised by the learned counsel for the appellants. The first contention for assailing the legality and validity of the intimation under section 200A was that, the provision of section 200A(1)(c), (d) and (f) have come into force only with effect from 1.6.2015 and hence, there was no authority or competence or jurisdiction on the part of the concerned Officer or the Department to compute and determine the fee under section 234E in respect of the assessment year of the earlier period and the return filed for the said respective assessment years namely all assessment years and the returns prior to 1.6.2015. It was submitted that when no express authority was conferred by the statute under section 200A prior to 1.6.2015 for computation of any fee under section 234E nor the determination thereof, the demand or the intimation for the previous period or previous year prior to 1.6.2015 could not have been made. 10. But the Gujarat High Court has taken a contrary stand in Rajesh Kourani. It has held: - “In plain terms, Section 200A is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, as noted earlier, arithmetical or prima facie in nature. With effect from 1.6.2015, this provision specifically provides for computing the fee payable under Section 234E. On the other hand, Section 234E is the charging provision creating a charge for levying fee for certain defaults in filing the statements. Under no circumstances a machinery provision can override or overrule a charging provision. Section 200A does not create any charge in any manner. It only provides a mechanism for processing q statement for tax deduction and the method in which the same, would be done. When Section 234E has already created a charge for levying fee that would thereafter not have been necessary to have another provision creating the same charge. Viewing Section 200A as creating a new charge would bring about, dichotomy. In plain terms, the provision is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements” 11. There is cleavage in judicial opinion. But I am afraid, elaborate s the judgment may be in Rajesh Kourani, it does not seem to have considered the Circular No. 19 of 2015, which in para no. 47.3 clarifies: “47.3 Finance (No.2) Act, 2009 inserted section 200A in the Income-tax Act which provides for processing of TDS statements for determining the amount payable or refundable to the deductor. However, as section 243E was inserted after the insertion of section 200A in the Income-tax Act, the existing provisions of section 200A of the Income-tax Act did not provide for determination of fee payable under section 234E of the Income-tax Act at the time of processing of TDS statements. Therefore, the provisions of section 200A of the Income-tax Act has been amended so as to enable computation of fee payable under section 234E of the Income-tax ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 5 Act at the time of processing of TDS statement under section 200A of the Income- tax Act.” 12. Further, in para 47.20, the Circular has clearly emphasized that these amendments would take effect only from 1 st June, 2015. Under those circumstances, I hold that the amendment is prospective and the demand under exts. P1 to P6 demand notices cannot be sustained. I, accordingly, set aside the Exts. P1 to P6 demand notices. NO order on costs.” 3. The Division Bench of the Hon’ble Kerala High Court affirmed the aforesaid ratio of the single bench in the case of M/s Olari Little Flower Kuries (P.) Ltd. v. UoI [2022] 440 ITR 26 (Ker), after reproducing paras 20 to 23 of the decision in Fatheraj Singhvi (supra), and concluding it’s findings, at para 6.1 of the Judgment, it expresses it’s agreement therewith at para 6.2 and held as under: - “23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department 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 invalid.” At Paras 21 & 22 of the decision in Fatheraj Singhvi (supra) Hon’ble High Court (Kar) specifically held that the amendment vide Finance Act, 2015, w.e.f. 01/6/2015 would not have a retroactive effect as it confers a substantive power on the AO, and is not merely a regulatory mechanism, as held by the Hon’ble Gujarat High Court in Rajesh Kourani (supra). We also extract the afore-referred para 6.2, as follows, for ready reference: “6.2 Firstly, we are convinced with the reasoning and basis for the view taken by the learned single judge in the judgment under appeal, and secondly, the view taken by the Karnataka High Court in the judgment referred to above is to the same effect. Keeping in view the grounds of challenge and the view taken by this court as well as the Karnataka High ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 6 Court in the judgment referred to above, we are of the view that the appeal at the instance of second respondent is without merit and is liable to be dismissed. Accordingly dismissed.” 4. Further, the Hon’ble Division Bench of the High Court (Ker) held as under: - “9.1 Stated briefly, the writ petitioner challenges the intimation received under section 200A from the respondent/Revenue calling upon the writ petitioner to pay late fee for delayed filing of quarterly statements of TDS. The periods for which the notices are issued are stated as prior to 1-6-2015. By following the judgment in W.P.(C) No. 37775/2018, as confirmed in W.A. No. 722/2019, the writ petition stands allowed and the intimations dealing with filing of belated statements prior to 1- 6-2015 are set aside. A return filed subsequent to 1-6-2015 is present, the respondents are given liberty to issue notice, hear the writ petitioner, and pass orders in accordance with law. The writ petition is allowed as indicated above.” 5. It thus stands clarified by the binding decision of jurisdictional High Court that no late filing fee could be levied for processing u/s. 200A(1) for any period prior to 01.6.2015. In the light of the aforesaid decision of the Hon’ble Jurisdictional High Court, we find in the instant appeals that the ‘late filing fee’ u/s 234E of the Act has been levied for Quarter-4 ending for FY. 2012-13 Rs.6,200/- (ITA. No.887/Coch/2022) and late filing ‘fee’ u/s 234E of the Act for Quarter-2 for FY. 2012-13 at Rs.9,153/- (ITA. No.888/Coch/2022) has been levied. We note that only after 1 st June, 2015 while processing of ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 7 a TDS/TCS statement and issuance of intimation u/s 200A/206CB of the Act in respect thereof, an adjustment could have been made in respect of ‘fee’, if any shall be computed in accordance with the provisions of section 234E of the Act. Prior to 1 st June, 2015, there was no enabling provision therein for raising a demand in respect of levy of fees u/s 234E of the Act. Therefore, no such levy could have been effected, [ Refer the decisions of the Hon’ble High Court in the case of (i) M/s. Olari Little Flower Kuries Pvt. Ltd. Vs. Union of India, (ii) M/s. Sarala Memorial Hospital Vs. Union of India, (iii) M/s. Mayi Industries Vs. Union of India, (iv) M/s. Anadiyil Hospital Vs. Union of India,] Ergo, we hold that the order levying late ‘fee’ u/s 234E of the Act is bad in law and therefore, cancelled. 6. Before we part, we note that that Ld. CIT(A) has not condoned the delay and dismissed the appeal of assessee, we note the assessee’s excuse was that delay caused since he filed rectification application before CPC (TDS) to rectify the mistake. Be that as it may, we note that when the assessee challenges the intimation received from CPC (TDS) calling upon the assessee to pay late fees for delayed filing of quarterly statements of TDS and the perusal for which the late fees u/s 234E of the Act has been imposed are prior to 1-6-2019, by following the ratio of the Hon’ble jurisdictional High Court M/s. Olari Little Flower Kuries Pvt. Ltd. (supra), the same cannot be legally sustained being prospective in nature from 01-6.2015 and not before, the levy of impugned fees is bad in law. ITA No. 78/Coch/2023 79/Coch/2023 A.Ys. 2013-14 & 2014-15 Anumod Vishwanbharan 8 7. In the light of the discussion (supra), the levy of late ‘fee’ u/s 234E of the Act being of Q3 and Q1 of AY. 2012-13 & AY 2013-14 being prior to 01.06.2015, are directed to be deleted. 8. In the result, the appeals of the assessee are allowed. Order pronounced in the open court on this 06/06/2023. Sd/- Sd/- (SANJAY ARORA) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 06/06/2023. Vijay Pal Singh, (Sr. PS) Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-Trichur. 4. The CIT, Cochin. 5. The DR, ITAT, Cochin. 6. Guard File. Asst. Registrar/ITAT, Cochin