ITAT Amritsar-Raising of Demand u/s 200A for Late Fee u/s 234E Not Permissible before 01-06-2015 for want of Enabling Provisions
Landmark Judgement
ITAT Amritsar-Raising
of Demand u/s 200A for Late Fee u/s 234E Not Permissible before 01-06-2015 for
want of Enabling Provisions
The
Hon’ble Amritsar bench has given a landmark judgement on
the issue of 234E Fee levied prior to June,2015 in the case of Sibia
Healthcare Private Limited v./s Dy. Commissioner of Income-tax (TDS),
in I.T.A. No.90/Asr/2015 and has deleted the addition-
The Hon’ble Tribunal held as under:-
“ In view of the above discussions, in
our considered view, the adjustment 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 legality 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 absence 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.”
Full
Text of ITAT Order
IN THE INCOME TAX
APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
[Coram: Pramod Kumar AM
and A.D. Jain JM]
I.T.A. No.90/Asr /2015
Assessment year: 2013-14
Sibia Healthcare Private Limited ….………………….Appellant
St
No. 8, Ajit Road, Bhatinda 151 001 [TAN: PTLS15043A]
Vs.
Dy. Commissioner of Income-tax (TDS),
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…………………….…Respondent
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Centralized
Processing Cell, Ghaziabad
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Appearances by:
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Ashwani Kalia for the
appellant
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Tarsem
Lal for
the respondent
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Date of
concluding the hearing :
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June 09, 2015
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Date
of pronouncing the order :
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June 09, 2015
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O R
D E R
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Per Pramod
Kumar:
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1.
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By way of this appeal, the
assessee has called into question correctness of
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the
order dated 13th October 2014
passed by the learned CIT(A) upholding levy of fees, under section 234 E of the
Income Tax Act, 1961, on the assessee and by way of intimation dated 11th January 2014 issued under section 200A in respect of processing of TDS
statements the third quarter of the financial year 2012-13. The appeal is time
barred by 62 days but the assessee has filed a petition seeking condonation of
this delay. Having perused the condonation petition and having rival
contentions on the same, we are inclined to condone the delay and proceed to
take up the matter on merits. Delay condoned.
2.
During the course of this hearing,
learned representatives were asked to address us on the question as to whether
or not, so far as period prior to 1st June 2015 is concerned, fees under section 234 E of the Income Tax Act 1961
(hereinafter referred to as ‘the Act’), in respect of defaults in furnishing
TDS statements, could be levied in intimation under section 200A of the Act. It
is on this short issue, and for the reasons we will set out in a short while,
we propose to decide these appeals.
3.
To adjudicate on these appeals, only a
few material facts need to be taken note of. It is a case in which there was
admittedly a delay in filing of the TDS returns. In the course of the
processing of the TDS return, the Assessing Officer (TDS) raised a demand, by
way of an intimation dated 9th September 2013 issued under section 200A of the Act, for levy of fees under
section 234 E for delayed filing of TDS statement. Aggrieved by this levy of
fees, assessee carried the matter in appeal before the CIT(A) but without any
success. The assessee is not satisfied and is in further appeal before us.
4.
We
have heard the rival contentions, perused the material on record and duly
considered facts of the case in the light of the applicable legal position. In
addition to his argument on the merits, learned counsel has also invited our
attention to the reports about the decisions of various Hon’ble High Courts,
including Hon’ble Kerala High Court, in the case of Narath Mapila LP School Vs
Union of India [WP (C) 31498/2013(J)], Hon’ble Karanataka High Court in the
case of Adithya Bizor P Solutions Vs Union of India [WP No.
6918-6938/2014(T-IT), Hon’ble Rajasthan High Court in the case of Om Prakash
Dhoot Vs Union of India [WP No. 1981 of 2014] and of Hon’ble Bombay High Court
in the case of Rashmikant Kundalia Vs Union of India [WP No. 771 of 2014],
granting stay on the demands raised in respect of fees under section 234E. The
full text of these decisions were not produced before us. However, as
admittedly there are no orders from the Hon’ble Courts above retraining us from
our adjudication on merits in respect of the issues in this appeal, and as, in
our humble understanding, this appeal requires adjudication on a very short
legal issue, within a narrow compass of
material facts, we are proceeding to dispose of this appeal on merits.
5. We may produce, for ready reference,
section 234E of the Act, which was inserted by the Finance Act 2012 and was
brought into effect from 1st July 2012. This statutory provision is as follows:
234E. Fee for defaults 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, by way
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.
(4)
The provisions of this section shall
apply to a statement referred to in sub-section (3) of section 200 or the
proviso to sub-section (3) of section 206C which is to be delivered or caused
to be delivered for tax deducted at source or tax collected at source, as the
case may be, on or after the 1st day of July, 2012
6.
We may also reproduce the Section 200A
which was inserted by the Finance Act 2009 with effect from 1st April 2010. This statutory provision, as it stood at the relevant point of
time, was as follows:
200A: Processing of statements of
tax deducted at source
(1)
Where a statement of tax deduction at source, 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) the
amount of refund due to the deductor in pursuance of the determination under
clause (c) shall be granted to the deductor:
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 or some other
item in such statement;
(ii) in
respect of rate of deduction of tax at source, where such rate is not 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. By way of Finance Act 2015, and with
effect from 1st June 2015, there
is an amendment in Section 200A and this amendment, as stated in the Finance
Act 2015, is as follows:
In section 200A of the Income-tax Act, in
sub-section (1), for clauses (c) to (e), the following clauses shall be
substituted with effect from the 1st day of June, 2015, namely:—
“(c) the fee, if any, shall be computed
in accordance with the provisions of section 234E;
(d)
the sum payable by, or the amount of
refund due to, the deductor shall be determined after adjustment of the amount
computed under clause (b) and clause (c) against any amount paid under section
200 or section 201 or section 234E and any amount paid otherwise by way of tax
or interest or fee;
(e)
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 (d); and
(f)
the amount of refund due to the
deductor in pursuance of the determination under clause (d) shall be granted to
the deductor.
8.
In
effect thus, post 1st June 2015, in the course of processing of a TDS
statement and issuance of intimation under section 200A in respect thereof, an
adjustment could also be made in respect of the “fee, if any, shall be
computed in accordance with the provisions of section 234E”. There
is no dispute that what is impugned in appeal before us is the
intimation under section 200A of the Act, as stated in so many words in the impugned intimation itself, and, as the law stood, prior to 1st June 2015, there was no enabling
provision therein for raising a demand in respect of levy of fees under section
234E. While examining the correctness of the intimation under section 200A, we
have to be guided by the limited mandate of Section 200A, which, at the
relevant point of time, permitted computation of amount
recoverable from,
or payable to,
the tax deductor
after making the
following
adjustments:
(a).
after making adjustment on account of “arithmetical errors” and “incorrect
claims apparent from any information in he statement”
- Section 200A(1)(a)
(b).
after making adjustment for ‘interest, if any, computed on the basis of sums
deductible as computed in the statement”.
-
Section 200A(1)(b)
9.
No other adjustments in the amount
refundable to, or recoverable from, the tax deductor, were permissible in
accordance with the law as it existed at that point of time.
10.
In
view of the above discussions, in our considered view, the adjustment 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 legality 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 absence 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.
11. In
the result, the appeal is allowed. Pronounced in the open court on 9th day
of
June, 2015.
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Sd/-
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Sd/-
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A D Jain
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Pramod Kumar
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(Judicial
Member)
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(Accountant
Member)
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Dated: the 9th
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day
of June 2015
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*aks/-
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Copies
to:
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(1)
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The appellant
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(2)
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The respondent
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(3)
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Commissioner
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(4)
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CIT(A)
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(5)
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Departmental Representative (6)
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Guard File
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By order
Assistant Registrar
Income Tax Appellate
Tribunal
Amritsar Bench, Amritsar
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