KORAGA POOJARI RAVINDRA V. UNION OF INDIA

WP/9049/2015

AI Insights

The case revolves around the challenge to the constitutional validity of Section 234E of the Income Tax Act, 1961, which pertains to the levy of interest for failure to deduct tax at source. Koraga Poojari Ravindra, the petitioner, contested the intimation received under Section 200A, which was based on the provisions of Section 234E. The petitioner argued that the intimation and the subsequent demand for interest were unconstitutional and unreasonable. The High Court referenced a previous Division Bench judgment in Fatheraj Singhvi & Ors. Vs. Union of India & Ors, which held that no interest could be levied under Section 234E for periods prior to June 1, 2015, as the amendment to Section 200A was prospective. The court's decision to set aside the intimation under Section 200A was based on this precedent, leading to the remand of the matter to the local Assessing Authority for fresh consideration.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 678524 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-12-2017
• Assessment Year: misc
• Other Referred Cases: Fatheraj Singhvi & Ors. Vs. Union of India & Ors
• Laws Referred To: Income Tax Act, 1961, Finance Act No.2 of 2012
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: VISHWANATHA
• Keywords: Demand notice; Interest Levy; Intimation; Tax deduction at source; Unconstitutional; Unreasonable
• Section: 234E; 200A

Judgement Text

" 1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 12th DAY OF DECEMBER 2017 BEFORE THE HON'BLE Dr.JUSTICE VINEET KOTHARI WRIT PETITION Nos.9049/2015 & 26715/2015 (T-IT) BETWEEN: KORAGA POOJARI RAVINDRA S/O KORAGA POOJARI AGE 58 YEARS YEDUR MAIN ROAD, YEDUR POST HOSANAGAR TALUK SHIMOGA DISTRICT-577246. ... PETITIONER (BY Mr. VISHWANATHA K, ADV.,) AND: 1. UNION OF INDIA REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE SOUTH BLOCK NEW DELHI NEW DELHI-110001. 2. CENTRAL BOARD OF DIRECT TAXES REPRESENTED BY ITS CHAIRMAN DEPARTMENT OF REVENUE FOURTH FLOOR, JEEVAN DEEP BUILDING PARLIAMENT STREET, NEW DELHI-110001. 3. THE INCOME TAX OFFICER, T.D.S. WARD DAVANEGERE, C.R. BUILDINGS DEVARAJ URS LAYOUT DAVANAGERE-577002. Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 2/8 4. TDS RECONCILIATION ANALYSIS AND CORRECTION ENABLING SYSTEM TDS, CPC, AAYKAR BHAVAN SECTOR-3, VISHALI GHAZIABAD, U P-201020. ... RESPONDENTS (BY Mr. K.V. ARAVIND, ADV.,) THESE W.Ps. ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE FINANCE ACT NO.2 OF 2012 INSERTING SECTION 234E TO THE INCOME TAX ACT, 1961 BY DECLARING IT AS UNREASONABLE, UNCONSTITUTIONAL AND OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA & ETC., THESE W.Ps. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER Mr. Vishwanatha K, Adv. for Petitioner Mr. K.V. Aravind, Adv. for Respondents 1. The petitioner is aggrieved by the impugned intimation under Section 200A of the Income Tax Act, 1961 issued by the Centralized Processing Cell (TDS), Ghaziabad, Uttar Pradesh, by the concerned Deputy Commissioner of Income Tax regarding the alleged failure of the petitioner to deduct the Tax at Source and the levy of interest under Section 234E was made in the Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 3/8 impugned intimation resulting in demand against the petitioner-assessee. 2. However, the learned counsels for both the parties have brought to the notice of the Court that the Division Bench of this Court in the case of Fatheraj Singhvi & Ors. Vs. Union of India & Ors, since reported in (2016) 142 DTR Judgments 281 has held that no such interest can be levied under Section 234E of the Act. The relevant paras 23 to 27 are quoted below for ready reference:- “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. 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 Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 4/8 Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand 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 are 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 fees under Section 234E, the same has necessitated the appellant to challenge the constitutional validity of Section 234E. When the intimation of the demand notices under Section Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 5/8 200A is held to be without authority of law so far as it relates to computation 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 rendered 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 under 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 Section 200A are set aside, so far as it relates to computation and intimation for payment 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 the question of constitutional validity of Section 234E may be kept open to be considered by the Division Bench and the Judgment of the learned Single Judge may not conclude 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 Section 234E of the Act. Save and except to observe that Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 6/8 the question of constitutional validity 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 discussion, the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. It is clarified that the present judgment 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 observed that the question of constitutional validity of Section 234E shall remain open to be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge. 28. The appeals are partly allowed to the aforesaid extent. Considering the facts and circumstances, no order as to costs”. Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 7/8 3. The learned counsel for the petitioner Mr.K.Vishwanatha has argued that the said judgment of the Division Bench of this Court is binding on the Respondents and since they have not apparently appealed against the said judgment before the Hon’ble Supreme Court, the said judgment deserves to be implemented by them. 4. This is not disputed by the learned counsel for the Revenue Mr.K.V.Aravind. 5. Accordingly, the writ petitions are allowed and the impugned Intimation under Section 200A of the Act issued by the Centralized Processing Cell (TDS) by the concerned Deputy Commissioner of Income Tax is set aside. The matter is remanded back to the local Assessing Authority of the petitioner-assessee to pass fresh orders in accordance with law, if at all called for and necessary, after giving an opportunity of hearing to Date of Order 12-12-2017 W.P.Nos.9049/2015 & 26715/2015 Koraga Poojari Ravindra Vs. Union of India & Others 8/8 the petitioner-assessee in terms of the judgment of the Division Bench quoted above. No order as to costs. Sd/- JUDGE Srl. "