Landmark Judgement : Assessee could not be held liable for levy of late filing charges under section 234E for the period prior to June, 2015 in the absence of amendment to section 200A

short overview: Assessee could not be held liable for levy of late filing charges under section 234E for the period prior to June, 2015 in the absence of amendment to section 200A, which was brought on Statute from 1-6-2015.

The moot issue arising in the instant appeal was against charging of late filing fees under section 234E while issuing intimation under section 200A, wherein TDS returns were filed after June, 2015, even intimation was issued after June, 2015. Contention of assessee was that late filing charges were not leviable under section 234E for the period prior to June, 2015 in the absence of amendment to section 200A.

it is held that Assessee could not be held liable for levy of late filing charges under section 234E for the period prior to June, 2015 in the absence of amendment to section 200A, which was brought on statute from 1-6-2015. Consequently, the appeals filed by assessee were in time since the period has to be reckoned from the date of order under section 154, and not from the date of issue of intimation under section 200A. Thus, the filing fees levied under section 234E for the period prior to June, 2015 was deleted, even though the returns of income were filed after June, 2015 and even order levying late filing fees under section 234E was passed after June, 2015.

Decision: In assessee’s favour.

Referred: CIT, West Bengal I v. Vegetable Products Limited (1973) 88 ITR 192 (SC) : 1973 TaxPub(DT) 421 (SC), Rajesh Kourani v. UOI, & 4 in (Special Civil Application No. 302 of 2014, dt. 20-6-2017), Fatheraj Singhvi & Ors. v. UOI & Ors. (2016) 289 CTR 602 (Karn-HC) : 2016 TaxPub(DT) 4175 (Karn-HC), Mr Rashmikant Kundalia & Anr. v. Union of India and others (2015) 373 ITR 268 (Bom-HC) : 2015 TaxPub(DT) 514 (Bom-HC), Bank of Baroda v. HC. Shrivatsava & Anr. (2002) 256 ITR 385 (Bom-HC) : 2002 TaxPub(DT) 501 (Bom-HC), Medical Superintendent Rural Hospital Dodi BK & Junagade Healthcare (P) Ltd. v. Deputy CIT, CPC (TDS) & The Asst. CIT, CPC (TDS), Ghaziabad in (ITA No 651/Pun/2018 To 661/Pun/2018 And ITA No. 1018PUN/2018 To 1028/Pun/2018, dt. 25-10-2018), Swami Vivekanand Vidyalaya v. DCIT (CPC) -TDS, Ghaziabad & Medical Superintendent Rural Hospital v. ACIT (CPC) -TDS, Ghaziabad in (No. 2377/Pun/2017 to 2386/Pun/2017, 2072/Pun/2017 & 2073/Pun/2017, dt. 21-12-2017), Vidya Vardhani Education and Research Foundation & Ors. v. DCIT (CPC) -TDS, Ghaziabad in (No. 1887/Pun/2016 to 1893/Pun/2016, 1894/Pun/2016 to 1896/Pun/2016, 1902/Pun/2016 To 1906/Pun/2016, 1872/Pun/2016, 1873/Pun/2016, 1874/Pun/2016, 1923/Pun/2016, 1924/Pun/2016, 1925/Pun/2016, 1939/Pun/2016, 1940/Pun/2016 & 1941/Pun/2016, 1942/Pun/2016, dt. 13-1-2017), Gajanan Constructions & Ors. v. DCIT, CPC (TDS), Ghaziabad, Uttarpradesh and ITO (TDS), Nashik in (ITA No(s). 1292 & 1293/PN/2015, 1229/PN/2015, 1813/PN/2014, 1742/PN/2014, 1741/PN/2014, 1413 to 1415/PN/2015, 1376 & 1377/PN/2015, 1445 & 1446/PN/2015, 1423, 1424 & 1428/PN/2015, ITA No(s). 192/PN/2016, 1746 & 1747/PN/2016, 1696 & 1697/PN/2015, dt. 23-9-2016) and Maharashtra Cricket Association, Pune v. DCIT, Ghaziabad in (ITA 560/PN/2016 & 561/PN/2016, 1018/PN/2016 to 1023/PN/2016, dt. 21-9-2016).

IN THE PUNE BENCH

SUSHMA CHOWLA, J.M. & ANIL CHATURVEDI, A.M.

Gangamai College of Engineering v. Asstt. CIT

ITA No. 1167/Pun/2018 to 1171/Pun/2018

6 November, 2018

Appellant by: Sanket Joshi

Respondent by: Rajesh Gawli

Sushma Chowla, J.M.

This bunch of five appeals filed by assessee are against consolidated order of Commissioner (Appeals)-3, Nashik, dated 20-4-2018, relating to different assessment years against orders passed under sections 200A read with section 154 of the Income Tax Act, 1961 (in short ‘the Act’).

2. This bunch of appeals relating to the same assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issue, we make reference to the facts and issues in ITA No. 1167/Pun/2018.

3. The assessee in ITA No. 1167/Pun/2018 has raised the following grounds of appeal :–

The following grounds are taken without prejudice to each other –

On facts and in law,

(1) The learned Commissioner (Appeals) erred in upholding the order under section 154 passed by the ACommissioner, CPC (TDS), Ghaziabad and thereby confirming the levy of late fee under section 234E of Rs. 43,920 in the intimation generated under section 200A passed in respect of the TDS statement filed in Form 24Q for Quarter 1 of assessment year 2014-15.

(2) The learned Commissioner (Appeals) failed to appreciate that the levy of late fee under section 234E in the intimation under section 200A passed against the TDS statement filed for the period prior to 1-6-201.5 was bad in law in view of the binding decisions of Hon’ble Jurisdictional ITAT Pune in the case of Gajanan Constructions & Ors. v. DCIT (2016) 161 ITD 313 (Pune-Trib) : 2016 TaxPub(DT) 4504 (Pune-Trib), dt. 23-9-2016 and Maharashtra Cricket Association v. DCIT (ITA No. 560/PN/2016) dt. 21-9-2016 and hence, the late fee under section 234E levied in the instant case ought to have been deleted.

(3) The learned Commissioner (Appeals) erred in not appreciating that the levy of late fee under section 234E in the intimation under section 200A was contrary to the law laid down by Jurisdictional Tribunal which was binding on the lower authority as per the decision of Hon’ble Bombay High Court in the case of Bank of Baroda v. H.C. Shrivastava (2002) 256 ITR 385 (Bom-HC) : 2002 TaxPub(DT) 501 (Bom-HC) and thus, the ACommissioner had in turn not followed the law laid down by Hon’ble Jurisdictional High Court while levying the late fee under section 234E in the intimation under section 200A and therefore, not following the decision of Hon’ble Jurisdictional H.C. was a mistake apparent from record which should have been rectified by way of an order under section 154 of the Act.

4. The assessee has filed this bunch of appeals against late filing fees charged under section 234E of the Act for the quarters No. 1, 3 of 4 of assessment year 2014-15 and quarters No. 1 and 2 of assessment year 2015-16 for late filing of TDS returns in Form No. 24Q.

5. The learned Authorised Representative for the assessee at the outset pointed out that the issue raised is squarely covered as argued in the appeals of Medical Superintendent Rural Hospital in ITA Nos. 651/Pun/2018 to 661/Pun/2018 and Junagade Healthcare (P) Ltd. in ITA Nos. 1018/Pun/2018 to 1028/Pun/2018.

6. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.

7. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against charging of late filing fees under section 234E of the Act while issuing intimation under section 200A of the Act, wherein TDS returns were filed after June, 2015, even intimation was issued after June, 2015.

8. The second issue raised is against order of Commissioner (Appeals) in dismissing appeals being filed after delay. The learned Authorised Representative for the assessee pointed out that there is no delay in filing the appeals before the Commissioner (Appeals) since the appeals were filed against order issued under section 154 of the Act and not against intimation issued under section 200A of the Act. The Commissioner (Appeals) has erred in computing the period for filing the appeals from the date of issue of intimation and not from the date of issue of order under section 154 of the Act. He further pointed out that appeals were filed in time from the date of order under section 154 of the Act.

9. We find that the issue raised in the present bunch of appeals is similar to issue before Tribunal of levy of late filing fees under section 234E of the Act for the period prior to 1-6-2015 and it also addressed the delay in filing the appeals as alleged by Commissioner (Appeals) while counting the period of filing appeals from the date of issue of intimation under section 200A of the Act and not from the date of issue of order under section 154 of the Act, in bunch of appeals in the case of Medical Superintendent Rural Hospital in ITA Nos. 651/Pun/2018 to 661/Pun/2018 and Junagade Healthcare (P) Ltd. in ITA Nos. 1018/Pun/2018 to 1028/Pun/2018, Order, dt. 25-10-2018. The relevant findings of Tribunal are 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 (P) 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, dt. 21-9-2016 with lead Order in ITA Nos. 560/PN/2016 & 561/PN/2016, 1018/PN/2016 to 1023/PN/2016 in Maharashtra Cricket Association v. DCIT (CPC)-TDS, Ghaziabad, 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 1-6-2015, 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 and Research Foundation in ITA Nos. 1887 to 1893/Pun/2016 and others relating to assessment years 2013-14 and 2014-15 vide Order, dt. 13-1-2017 and also in Swami Vivekanand Vidyalaya v. DCIT(CPC)-TDS (supra) and Medical Superintendant Rural Hospital v. ACIT (CPC)-TDS in ITA Nos. 2072 & 2073/Pun/2017, Order, dt. 21-12-2017, which has been relied upon by the learned Authorised Representative for the assessee.

13. The Hon’ble High Court of Karnataka in the case of Fatheraj Singhvi v. Union of India (supra) had also laid down similar proposition that the amendment to section 200A of the Act with effect from 1-6-2015 has prospective effect and is not applicable for the period of respective assessment years prior to 1-6-2015. 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 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 1-6-2015, 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 1-6-2015 were being set aside.

15. In other words, the Hon’ble High Court of Karnataka explained the position of charging of late filing fees under section 234E of the Act and the mechanism provided for computation of fees and failure for payment of fees under section 200A of the Act which was brought on Statute with effect from 1-6-2015. The said amendment was held to be prospective in nature and hence, notices issued under section 200A of the Act for computation and intimation for payment of late filing fees under section 234E of the Act relating to the period of tax deduction prior to 1-6-2015 were not maintainable and were set aside by the Hon’ble High Court. In view of said proposition being laid down by the Hon’ble High Court of Karnataka (supra), there is no merit in observations of Commissioner (Appeals) that in the present case, where the returns of TDS were filed for each of the quarters after 1-6-2015 and even the order charging late filing fees was passed after June, 2015, then the same are maintainable, since the amendment had come into effect. The Commissioner (Appeals) has overlooked the fact that notices under section 200A of the Act were issued for computing and charging late filing fees under section 234E of the Act for the period of tax deducted prior to 1-6-2015. The same cannot be charged by issue of notices after 1-6-2015 even where the returns were filed belatedly by the deductor after 1-6-2015, where it clearly related to the period prior to 1-6-2015.

16. We hold that the issue raised in the present bunch of appeals is identical to the issue raised before the Tribunal in different bunches of appeals and since the amendment to section 200A of the Act was prospective in nature, the assessing officer while processing TDS returns/statements for the period prior to 1-6-2015 was not empowered to charge late filing fees under section 234E of the Act, even in cases where such TDS returns were filed belatedly after June, 2015 and even in cases where the assessing officer processed the said TDS returns after June, 2015. Accordingly, we hold that intimation issued by assessing officer under section 200A of the Act in all the appeals does not stand and the demand raised by charging late filing fees under section 234E of the Act is not valid and the same is deleted.

17. Before parting, we may also refer to the order of Commissioner (Appeals) in relying on the decision of Hon’ble High Court of Gujarat in Rajesh Kourani v. Union of India (supra). On the other hand, the learned Authorised Representative for the assessee has pointed out that the issue is settled in favour of assessee by the Hon’ble High Court of Karnataka in the case of Fatheraj Singhvi v. Union of India (supra). Since we have already relied on the said ratio laid down by the Hon’ble High Court of Karnataka, the Commissioner (Appeals) has mis-referred to both decisions of Hon’ble High Court of Karnataka and Hon’ble High Court of Gujarat; but the Commissioner (Appeals) has failed to take into consideration the settled law that where there is difference of opinion between different High Courts on an issue, then the one in favour of assessee needs to be followed as held by the Hon’ble Supreme Court in CIT v. M/s. Vegetable Products Ltd. (supra), in the absence of any decision rendered by the jurisdictional High Court. The Hon’ble Bombay High Court in Rashmikant Kundalia v. Union of India (2015) 54 taxmann.com 200 (Bom) had decided the constitutional validity of provisions of section 234E of the Act and had held them to be ultra vires but had not decided the second issue of amendment brought to section 200A of the Act with effect from 1-6-2015. In view thereof, respectfully following the ratio laid down by the Hon’ble High Court of Karnataka and Pune Bench of Tribunal in series of cases, we delete the late filing fees charged under section 234E of the Act for the TDS returns for the period prior to 1-6-2015.

18. Further before parting, we may also refer to the order of Commissioner (Appeals) in the case of Junagade Healthcare (P) Ltd., where the Commissioner (Appeals) had dismissed appeals of assessee being delayed for period of December, 2013 and July, 2014. The Commissioner (Appeals) while computing delay had taken the date of intimation under section 200A of the Act as the basis, whereas the assessee had filed appeals before Commissioner (Appeals) against the order passed under section 154 of the Act. The Commissioner (Appeals) had noted that rectification application was filed in February, 2018 which was rejected by CPC on the same day. The Commissioner (Appeals) was of the view that there was no merit in condonation of delay, wherein appeals were filed beyond the period prescribed. The assessee had filed appeals against the order passed under section 154 of the Act, hence the time period of appeals filed by assessee before the Commissioner (Appeals) have to be computed from the date of order passed under section 154 of the Act and not from the date of issue of intimation. Thus, there is no merit in the order of Commissioner (Appeals) in dismissing the appeals of assessee on this issue.

19. We find similar issue has been decided by us in the case of Medical Superintendent Rural Hospital v. ACIT(CPC)-TDS (supra) and vide para 15, Order, dt. 21-12-2017 it was held as under :–

“15. Further, before parting, we may also refer to the order of the Commissioner (Appeals) in these two appeals. The Commissioner (Appeals) had dismissed the appeals of the assessee being delayed for a period of two and half years. The Commissioner (Appeals) had taken the date of intimation under section 200A(3) dated 7-8-2014 and computed the delay in filing the appeal late before him. However, the assessee had filed the appeal before the Commissioner (Appeals) against the order passed under section 154 of the Act. The said application for rectification under section 154 was filed on 8-6-2017/9-3-2017 in the respective years. The said application was decided by the assessing officer on 9-6-2017. The assessee filed an appeal against the dismissal of the rectification application filed under section 154 of the Act. The said fact is clear from the perusal of Form No. 35 with special reference to Column 2(a) and 2(b). In the entirety of the above said facts and circumstances, we find no merit in the order of Commissioner (Appeals) in the case of Medical Superintendent Rural Hospital, Surgana in dismissing the appeal in-limine being filed beyond the period of limitation. We have already decided the issue on merits in favour of assessee.”

20. We have already decided the issue on merits in favour of assessee. Accordingly, the grounds of appeal raised by assessee in all appeals are allowed.”

10. Since the issue arising in the present bunch of appeals is similar to the issue before the Tribunal in the cases of Medical Superintendent Rural Hospital and Junagade Healthcare (P) Ltd. (supra) and we have decided both the issues in favour of assessee, we hold that the assessee is not liable for levy of late filing charges under section 234E of the Act for the period prior to June, 2015 in the absence of amendment to section 200A of the Act, which was brought on Statute from 1-6-2015. Consequently, we also hold that the appeals filed by assessee were in time since the period has to be reckoned from the date of order under section 154 of the Act and not from the date of issue of intimation under section 200A of the Act. Accordingly, we delete late filing fees levied under section 234E of the Act for the period prior to June, 2015 though the returns of income were filed after June, 2015 and even order levying late filing fees under section 234E of the Act was passed after June, 2015. The grounds of appeal raised by assessee are thus, allowed.

11. In the result, all the appeals of assessee are allowed.