The ITO-TDS-1, Rajkot V. State Bank of India (Savsar Plot), Morbi

MA 4/RJT/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9247 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 06-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS
• Section: 234E; 200A; 201; 27; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV , HON BLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HON BLE ACCOUNTANT MEMBER MISC. APPLICATION NOS.04 TO 14/RJT/201 9 WITH ITA NO. 327 TO 337 / RJT /201 7 / ASSTT. YEAR: 201 3 - 1 4, 2014 - 15 AND 2015 - 16 ITO, TDS - 1 RAJKOT. VS . STATE BANK OF INDIA SAVSAR PLOT, MORBI C/O. GAGLANI RACH MAKADIA & CO. KEVAL DHAM, 4, AFRICA COLONY 150 FT. RING ROAD, RAJKOT. PAN : AAACSS 8577 K ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI ANIL KUMAR DAS, DR ASSESSEE BY : SHRI CHETAN AGARWAL, AR / DATE OF HEARING : 18 / 0 9 / 201 9 / DATE OF PRONOUNCEMENT: 19 / 0 9 /201 9 / O R D E R PER BENCH: PRESENT ELEVEN MISC. APPLICATION S ARE DIRECTED AT THE INSTANCE OF THE REVENUE POINTING OUT APPARENT ERROR IN THE ORDER OF TRIBUNAL DATED 28.11.2018 VIDE WHICH THE TRIBUNAL HAS DECIDED ELEVEN APPEALS OF THE ASSESSEE BEARING ITA NOS.327 TO 3 37/RJT/2017. 2. IT IS PLEADED IN THE APPLICATIONS THAT PENALTY UNDER SECTION 234E OF THE INCOME TAX ACT, 1961 WAS IMPOSED UPON THE ASSESSEE FOR DIFFERENT QUA R TERS IN THE ASSTT.YEARS 2013 - 14, 2014 - 15 AND 2015 - 16. DISSATISFIED WITH THE LEVY OF MA NO. 04 TO 14 /RJT/201 9 WITH ITAS. 2 SUCH PENALTY , THE ASSESSEE WENT IN APPEAL BEFORE THE LD.C IT(A) , WHO HAS DECIDED THE APPEALS OF THE ASSESSEE VIDE ORDER DATED 27.7.2017. THE ORDERS OF THE LD.CIT(A) WITH RESPECT TO 11 APPEALS WERE CHALLENGED BEFORE THE TRIBUNAL IN ITA NOS.327 TO 337/RJT/2017. THE TRI BUNAL HAS ALLOWED ALL APPEALS VIDE ORDER DATED 28.11.2018 BY OBSERVING THAT WHILE MAKING ADJUSTMENT UNDER SECTION 200A, THE AO HAS NO POWER TO LEVY FEES UNDER SECTION 234E. THE TRIBUNAL HAS PUT RELIANCE UPON THE ORDER OF THE ITAT PASSED IN ITA NO.90/ASR/2 015 IN THE CASE OF SIBIA HEALTHCARE PVT. LTD. VS. DCIT. THE RELEVANT DISCUSSION IN THIS DECISION OF THE ITAT, WHICH H AS BEEN RELIED UPON BY THE ITAT, RAJKOT BENCH READS AS UNDER: 10. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSIDERED VIEW, THE ADJUSTME NT IN RESPECT OF LEVY OF FEES UNDER SECTION 234E WAS INDEED BEYOND THE SCOPE OF PERMISSIBLE ADJUSTMENTS CONTEMPLATED UNDER SECTION 200A. THIS INTIMATION IS AN APPEALABLE ORDER UNDER SECTION 246A(A), AND, THEREFORE, THE CIT(A) OUGHT TO HAVE EXAMINED LEGALIT Y OF THE ADJUSTMENT MADE UNDER THIS INTIMATION IN THE LIGHT OF THE SCOPE OF THE SECTION 200A. LEARNED CIT(A) HAS NOT DONE SO. HE HAS JUSTIFIED THE LEVY OF FEES ON THE BASIS OF THE PROVISIONS OF SECTION 234E. THAT IS NOT THE ISSUE HERE. THE ISSUE IS WHETHER SUCH A LEVY COULD BE EFFECTED IN THE COURSE OF INTIMATION UNDER SECTION 200A. THE ANSWER IS CLEARLY IN NEGATIVE. NO OTHER PROVISION ENABLING A DEMAND IN RESPECT OF THIS LEVY HAS BEEN POINTED OUT TO US AND IT IS THUS AN ADMITTED POSITION THAT IN THE ABSENC E OF THE ENABLING PROVISION UNDER SECTION 200A, NO SUCH LEVY COULD BE EFFECTED. AS INTIMATION UNDER SECTION 200A, RAISING A DEMAND OR DIRECTING A REFUND TO THE TAX DEDUCTOR, CAN ONLY BE PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR WITHIN WHICH THE RELATED TDS STATEMENT IS FILED, AND AS THE RELATED TDS STATEMENT WAS FILED ON 19TH FEBRUARY 2014, SUCH A LEVY COULD ONLY HAVE BEEN MADE AT BEST WITHIN 31ST MARCH 2015. THAT TIME HAS ALREADY ELAPSED AND THE DEFECT IS THUS NOT CURABLE EVEN AT THIS STAGE . IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, THE IMPUGNED LEVY OF FEES UNDER SECTION 234 E IS UNSUSTAINABLE IN LAW. WE, THEREFORE, UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DELETE THE IMPUGNED LEVY OF FEE UNDER SECTION 234E OF THE ACT. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. MA NO. 04 TO 14 /RJT/201 9 WITH ITAS. 3 3 . REVENUE HAS CONTENDED THAT THIS VIEW OF THE TRIBUNAL DID NOT MEET APPROVAL OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJESH KOUIRANI VS. UNION OF INDIA, 83 TAXMANN.COM 137 (GUJ). HE PLACED ON RECORD COPY OF THE HON BLE HIGH COURT S DECISION. HON BLE COURT HAS HELD THAT SECTION 234E IS CHARGIN G SECTION CREATING CHARGE FOR LEVYING FEES FOR CERTAIN DEFAULTS IN FILING STATEMENTS, AND THESE FEES COULD BE LEVIED EVEN WITHOUT A REGULATORY P ROV ISION BEING FOUND IN SECTION 200A FOR COMPUTATION OF FEES. THE DISCUSSION MADE BY HON BLE HIGH COURT FROM PARA 17 READS AS UNDER: 16. WE NOW COME TO THE PETITIONER'S CENTRAL CHALLENGE VIZ. OF NON PERMISSIBILITY TO LEVY FEE UNDER SECTION 234E OF THE ACT TILL SECTION 200A OF THE ACT WAS AMENDED WITH EFFECT FROM 01.06.2015. WE HAVE NOTICED THE RELEVANT STATUTORY PROVISIONS. THE PICTURE THAT EMERGES IS THAT PRIOR TO 01.07.2012, THE ACT CONTAINED A SINGLE PROVISION IN SECTION 272A PROVIDING FOR PENALTY IN CASE OF DEFAULT IN FILING THE STATEMENTS IN TERMS OF SECTION 200 OR PROVISO TO SECTION 206C. SUCH PENALTY WAS PRESCRIBED AT THE RATE OF RS.100 FOR EVERY DAY DURING WHICH THE FAILURE CONTINUED. WITH EFFECT FROM 01.06.2012, THREE MAJOR CHANGES WERE INTRODUCED IN THE ACT. SECTION 234E AS INTRODUCED FOR THE FIRST TIME TO PROVIDE FOR CHARGING OF FEE FOR LATE FILING OF THE STATEMENTS. SUCH FEE W OULD BE LEVIED AT THE RATE OF RS.200/ - FOR EVERY DAY OF FAILURE SUBJECT TO THE MAXIMUM AMOUNT OF TAX DEDUCTIBLE OR COLLECTIBLE AS THE CASE MAY BE. SECTION 271H WAS ALSO INTRODUCED FOR THE FIRST TIME FOR LEVYING PENALTY FOR FAILURE TO FURNISH THE STATEMENTS . SUCH PENALTY WOULD BE IN THE RANGE OF RS.10,000/ - AND RS.1 LAKH. NO PENALTY WOULD BE IMPOSED IF THE TAX IS DEPOSITED WITH FEE AND INTEREST AND THE STATEMENT IS FILED WITHIN ONE YEAR OF THE DUE DATE. WITH ADDITION TO THESE TWO PROVISIONS PRESCRIBING FEE A ND PENALTY RESPECTIVELY, CLAUSE (K) OF SUB - SECTION (2) OF SECTION 272A BECAME REDUNDANT AND BY ADDING A PROVISO TO THE SAID SECTION, THIS EFFECT WAS THEREFORE LIMITED UPTO 01.07.2012. 17. IN ESSENCE, SECTION 234E THUS PRESCRIBED FOR THE FIRST TIME CHARGING OF A FEE FOR EVERY DAY OF DEFAULT IN FILING OF STATEMENT UNDER SUB - SECTION (3) OF SECTION 200 OR ANY PROVISO TO SUB - SECTION (3) OF SECTION 206C. THIS PROVISION WAS APPARENTLY ADDED FOR MAKING THE COMPLIANCE OF DEDUCTION AND COLLECTION OF TAX AT SOURCE, DE POSITING IT WITH GOVERNMENT REVENUE AND FILING OF THE STATEMENTS MORE STRINGENT. 18. IN THIS CONTEXT, WE MAY NOTICE THAT SECTION 200A WHICH PERTAINS TO PROCESSING OF STATEMENTS OF TAX DEDUCTED AT SOURCE PROVIDES FOR THE PROCEDURE ONCE A STATEMENT OF DEDUCT ION OF TAX AT SOURCE IS FILED BY THE MA NO. 04 TO 14 /RJT/201 9 WITH ITAS. 4 PERSON RESPONSIBLE TO DO SO AND AUTHORIZES THE ASSESSING OFFICER TO MAKE CERTAIN ADJUSTMENTS WHICH ARE PRIMA - FACIE OR ARITHMETICAL IN NATURE. THE OFFICER WOULD THEN SEND AN INTIMATION OF A STATEMENT TO THE ASSESSEE. PRI OR TO 01.06.2015, THIS PROVISION DID NOT INCLUDE ANY REFERENCE TO THE FEE PAYABLE UNDER SECTION 234E OF THE ACT. BY RECASTING SUB - SECTION (1), THE NEW CLAUSE - C PERMITS THE AUTHORITY TO COMPUTE THE FEE, IF ANY, PAYABLE BY THE ASSESSEE UNDER SECTION 234E OF THE ACT AND BY VIRTUE OF CLAUSE - D, ADJUST THE SAID SUM AGAINST THE AMOUNT PAID UNDER THE VARIOUS PROVISIONS OF THE ACT. 19. IN PLAIN TERMS, SECTION 200A OF THE ACT 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 01.06.2015, THIS PROVISION SPECIFICALLY PROVIDES FOR COMPUTING THE FEE PAYABLE UNDER SECTION 234E OF THE ACT. ON THE OTHER HAND, SECT ION 234E IS A 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. WE ARE UNABLE TO SEE THAT SECTION 200A OF THE ACT CREATES ANY CHARGE IN ANY MANNER. IT ONLY PROVIDES A MECHANISM FOR PROCESSING A 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 BEEN NECESS ARY TO HAVE YET ANOTHER PROVISION CREATING THE SAME CHARGE. VIEWING SECTION 200A AS CREATING A NEW CHARGE WOULD BRING ABOUT A DICHOTOMY. IN PLAIN TERMS, THE PROVISION IN OUR UNDERSTANDING IS A MACHINERY PROVISION AND AT BEST PROVIDES FOR A MECHANISM FOR PR OCESSING AND COMPUTING BESIDES OTHER, FEE PAYABLE UNDER SECTION 234E FOR LATE FILING OF THE STATEMENTS. 20. EVEN IN ABSENCE OF SECTION 200A OF THE ACT WITH INTRODUCTION OF SECTION 234E, IT WAS ALWAYS OPEN FOR THE REVENUE TO DEMAND AND COLLECT THE FEE FOR L ATE FILING OF THE STATEMENTS. SECTION 200A WOULD MERELY REGULATE THE MANNER IN WHICH THE COMPUTATION OF SUCH FEE WOULD BE MADE AND DEMAND RAISED. IN OTHER WORDS, WE CANNOT SUBSCRIBE TO THE VIEW THAT WITHOUT A REGULATORY PROVISION BEING FOUND FOR SECTION 20 0A FOR COMPUTATION OF FEE, THE FEE PRESCRIBED UNDER SECTION 234E CANNOT BE LEVIED. ANY SUCH VIEW WOULD AMOUNT TO A CHARGING SECTION YIELDING TO THE MACHINERY PROVISION. IF AT ALL, THE RECASTED CLAUSE (C) OF SUB - SECTION (1) OF SECTION 200A WOULD BE IN NATUR E OF CLARIFICATORY AMENDMENT. EVEN IN ABSENCE OF SUCH PROVISION, AS NOTED, IT WAS ALWAYS OPEN FOR THE REVENUE TO CHARGE THE FEE IN TERMS OF SECTION 234E OF THE ACT. BY AMENDMENT, THIS ADJUSTMENT WAS BROUGHT WITHIN THE FOLD OF SECTION 200A OF THE ACT. THIS WOULD HAVE ONE DIRECT EFFECT. AN ORDER MA NO. 04 TO 14 /RJT/201 9 WITH ITAS. 5 PASSED UNDER SECTION 200A OF THE ACT IS RECTIFIABLE UNDER SECTION 154 OF THE ACT AND IS ALSO APPEALABLE UNDER SECTION 246A. IN ABSENCE OF THE POWER OF AUTHORITY TO MAKE SUCH ADJUSTMENT UNDER SECTION 200A OF THE ACT, A NY CALCULATION OF THE FEE WOULD NOT PARTAKE THE CHARACTER OF THE INTIMATION UNDER SAID PROVISION AND IT COULD BE ARGUED THAT SUCH AN ORDER WOULD NOT BE OPEN TO ANY RECTIFICATION OR APPEAL. UPON INTRODUCTION OF THE RECASTED CLAUSE (C), THIS SITUATION ALSO W OULD BE OBVIATED. EVEN PRIOR TO 01.06.2015, IT WAS ALWAYS OPEN FOR THE REVENUE TO CALCULATE FEE IN TERMS OF SECTION 234E OF THE ACT. THE KARNATAKA HIGH COURT IN CASE OF FATHERAJ SINGHVI (SUPRA) HELD THAT SECTION 200A WAS NOT MERELY A REGULATORY PROVISION, BUT WAS CONFERRING SUBSTANTIVE POWER ON THE AUTHORITY. THE COURT WAS ALSO OF THE OPINION THAT SECTION 234E OF THE ACT WAS IN THE NATURE OF PRIVILEGE TO THE DEFAULTER IF HE FAILS TO PAY FEES THEN HE WOULD BE RID OF RIGOR OF THE PENAL PROVISION OF SECTION 27 1H OF THE ACT. WITH BOTH THESE PROPOSITIONS, WITH RESPECT, WE ARE UNABLE TO CONCUR. SECTION 200A IS NOT A SOURCE OF SUBSTANTIVE POWER. SUBSTANTIVE POWER TO LEVY FEE CAN BE TRACED TO SECTION 234E OF THE ACT. FURTHER THE FEE UNDER SECTION 234E OF THE ACT IS NOT IN LIEU OF THE PENALTY OF SECTION 271H OF THE ACT. BOTH ARE INDEPENDENT LEVIES. SECTION 271H ONLY PROVIDES THAT SUCH PENALTY WOULD NOT BE LEVY IF CERTAIN CONDITIONS ARE FULFILLED. ONE OF THE CONDITIONS IS THAT THE TAX WITH FEE AND INTEREST IS PAID. THE ADDITIONAL CONDITION BEING THAT THE STATEMENT IS FILED LATEST WITHIN ONE YEAR FROM THE DUE DATE. 4 . WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUN S EL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT SUBMISS IONS OF THE REVENUE THAT HON BLE HIGH COURT HAS REVERSED THE VIEW TAKEN BY THE ITAT IN TH ESE APPEALS. IT IS A SETTLED PROPOSITION THAT IF ON INTERPRETATION OF LAW , TRIBUNAL S VIEW HELD TO BE CONTRARY TO THE VIEW EXPRESSED BY THE HON BLE HIGH COURT, EVEN I N SUBSEQUENT DECISION, THEN VIEW TAKEN BY THE TRIBUNAL WILL BE CONSIDERED AS SUFFERING FROM APPARENT ERROR. A RELIANCE CAN BE MADE TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE, 262 ITR 146 ( GUJ). THUS, IN VIEW OF THE DECISION OF THE HON BLE GUJARAT HIGH COURT WHICH RENDERED ON 20.6.2017, MUCH BEFORE THE DECISION OF ITAT, ORDER OF THE ITAT IS SUFFERING WITH PATENT ERROR BECAUSE IT FAILED TO TAKE NOTE OF THE DE CISION OF MA NO. 04 TO 14 /RJT/201 9 WITH ITAS. 6 HON BLE JURISDICTIONAL HIGH COURT ON INTERPRETATION OF SCOPE OF SECTION 234E OF THE ACT. THEREFORE, THE ORDE R OF THE TRIBUNAL DESERVES TO BE RECALLED. WE ALLOW ALL THESE MAS., AND RECALL ORDER OF THE TRIBUNAL DATED 28.11.2018. WE RES T ORE ALL THESE APPEALS TO THEIR ORIGINAL NUMBERS. 5 . WE HAVE PUT TO THE LD.REPRESENTATIVES, AS TO WHY KEEP THESE APPEALS PENDING AND NOT TO DISPOSE OF AT THIS STAGE. BOTH LEARNED REPRESENTATIVES HAVE AGREED FOR TAKING UP THESE APPEALS ALSO BECAUSE THE ISSUE HAS BEEN SETTLED BY THE HON BLE GUJAR AT HIGH COURT. THE LD.COUNSEL FOR THE ASSESSEE CONCEDED THAT IN VIEW OF THIS DECISION OF THE HON BLE GUJARAT HIGH COURT ALL THE APPEALS FILED BY THE ASSESSEE DESERVE TO BE DISMISSED. WE ORDER ACCORDINGLY. 6 . IN THE RESULT, MAS ARE ALLOWED; ALL THE APPE ALS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH SEPTEMBER, 201 9 AT RAJKOT . SD/ - SD/ - (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER