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ITA 06/AGR/2018

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clause (c) to sub Section Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors 8 (1) of Section 200A
u/s 234E of the Income Tax Act, 1961(hereinafter short the Act).
clause (c) to (f) of sub-section (1) of Section 200A

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Smart Summary

Concise Analytical Summary of the Opinion — Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 & Ors. (Pronounced 31/05/2018)

Bench: A.D. Jain (Judicial Member) & Dr. Mitha Lal Meena (Accountant Member).
Date of Hearing: 24.05.2018. Date of Pronouncement: 31.05.2018.

Factual and Procedural Background

These consolidated appeals for assessment year 2013-14 arise from the order of the learned CIT(A), Gwalior, which upheld levy of late filing fee under section 234E of the Income Tax Act, 1961. The appeals relate to 88 branches; in respect of 37 of those branches appeals were filed with a delay of 24 days. The assessee (group of SBI and others) had deposited TDS and filed quarterly TDS returns. Section 234E (late fee for delay in filing TDS statements) and clause (c) to section 200A (mechanism for processing TDS statements / adjustments) were introduced with effect from 1.06.2015 by the Finance Act, 2015.

The appellants challenged the levy of fee under section 234E for periods prior to 1.06.2015 on the ground that before insertion of clause (c) to section 200A there was no enabling provision to process TDS statements and raise demands for section 234E. The learned CIT(A) rejected this contention by relying on the decision in Rajesh Kaurani v. Union of India (Gujarat), and confirmed the levy. These appeals were brought to the Tribunal; the Tribunal condoned the delay in filing for the 37 branches and proceeded to decide the common legal issue.

Legal Issues Presented

Whether the late filing fee under section 234E of the Income Tax Act, 1961 can be levied for TDS returns/statements filed for periods prior to 1.06.2015, when clause (c) to sub‑section (1) of section 200A (the processing/adjustment machinery) was inserted only w.e.f. 1.06.2015?
Whether the absence of an enabling provision in section 200A prior to 1.06.2015 renders demands under section 234E for pre‑1.6.2015 periods invalid?
Procedural: Whether the delay of 24 days in filing appeals in respect of 37 branches is liable to be condoned because of internal hierarchical approval processes followed by the assessee?

Arguments of the Parties

Appellant's Arguments

The TDS returns/statements for which fee was levied relate to periods prior to 1.06.2015 (the effective date of insertion of clause (c) to section 200A and section 234E), as shown in the statement of TDS returns placed on record.
Section 234E is a substantive/charging provision and cannot be applied retrospectively; there was no enabling provision in section 200A before 1.06.2015 to process statements and make adjustments for imposing section 234E late fee.
Accordingly, in the absence of enabling provisions in section 200A prior to 1.06.2015, levy of fee under section 234E for the period before insertion of clause (c) to section 200A is not valid. The assessee relied on several decisions (including CIT vs. Vatika Township (SC), Sudarshan Goyal v. DCIT, Fatehraj Singhvi v. UOI (Karnataka HC), Sibia Healthcare v. DCIT, Shri Kaur Chand Jain v. DCIT and Gajanan Constructions v. DCIT) in support.
On the procedural point, the delay in filing appeals for 37 branches was explained by hierarchical approvals (from branches to regional heads to zonal heads and back), and a reasonable cause for delay was asserted.

Respondent's (Departmental Representative) Arguments

The learned Departmental Representative supported the impugned order and relied on a brief synopsis of case law (the impugned order before CIT(A) had relied on Rajesh Kaurani v. Union of India).
Specific details of the DR's legal submissions in support of the levy are not set out in detail in the opinion; the opinion notes only that the DR's relied‑upon cases were distinguishable as they pertained to interest under sections 201(1) / 201(1A) rather than fee under section 234E.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Rajesh Kaurani v. Union of India, 83 Taxmann.com 137 (Guj.)	Held that section 200A is a machinery provision providing mechanism for processing TDS statements and for making adjustments.	The learned CIT(A) relied on this decision to uphold the levy. The Tribunal considered this authority but declined to follow it in view of other High Court/Tribunal decisions favourable to the assessee and principles about conflicting High Court views.
CIT vs. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC)	Relied upon by assessee for the proposition that charging/substantive provisions are not to be given retrospective effect (as cited in the opinion).	The Tribunal treated this Supreme Court authority as supporting the assessee's contention that section 234E (a charging provision) cannot be applied retrospectively to periods before 1.06.2015.
Sudarshan Goyal v. DCIT (TDS), ITA No.442/Agra/2017 (order dated 09.04.2018)	Held (on similar facts) that levy of fee under section 234E cannot be sustained for periods prior to the insertion of the enabling machinery provision; reproduced reasoning in the present order.	The Tribunal followed its own earlier decision in Sudarshan Goyal (authored by one of the members) and applied that reasoning to allow the appeals and cancel the fee.
Fatehraj Singhvi & Others v. Union of India, 73 Taxmann.com 252 (Ker) / (2016) 289 CTR 602 (Karnataka HC)	Held that substitution of clause (c) to (f) of sub‑section (1) of section 200A must be read as having prospective effect; demands under section 200A for periods prior to 1.6.2015 cannot be made to levy section 234E fee.	The Tribunal respectfully followed Fatehraj Singhvi and treated it as directly applicable: the substitution is prospective and pre‑1.6.2015 demands for fee under section 234E cannot be sustained.
Sibia Healthcare Pvt. Ltd. v. DCIT (TDS), ITA No.90/ASR/2015 (Amritsar Bench, order dated 09.06.2015)	Held that in absence of enabling provisions under section 200A the levy of late fee under section 234E is not valid (as relied upon by the assessee).	The Tribunal followed Sibia Healthcare as one of the authorities supporting cancellation of the fee for pre‑1.6.2015 periods.
Shri Kaur Chand Jain v. DCIT, ITA No.378/ASR/2015 (order dated 15.09.2016)	Relied upon by the assessee in support of the contention that section 234E cannot be levied for periods prior to the machinery provision insertion.	The Tribunal treated this Tribunal authority as supportive and followed it in canceling the fee.
Gajanan Constructions v. DCIT (2016) 161 ITD 313 (Pune)	Listed by the assessee among authorities relied upon (no additional rule statement in the opinion).	Included among the precedents relied upon in support of the assessee's contention; the Tribunal's outcome is consistent with these authorities.
CIT v. Vegetable Products Ltd., 88 ITR 192 (SC)	Establishes the principle that where there is a cleavage of opinion between different High Courts on an issue, the view in favour of the assessee should be followed.	The Tribunal invoked this settled law to justify following the line of authority favourable to the assessee in the presence of conflicting High Court/Tribunal decisions.

Court's Reasoning and Analysis

The Tribunal proceeded in stages:

Procedural determination: It first addressed the delay in filing appeals for 37 branches. The assessee explained that internal hierarchical approvals (branch → regional head → zonal head → back) caused delay. The Tribunal found this to be a reasonable cause and condoned the delay.
Identification of the common legal issue: A common question in the appeals was whether fee under section 234E could be levied for TDS returns for periods prior to 1.06.2015, given that the enabling machinery provision in section 200A (clause (c)) was inserted only from that date.
Examination of submissions and authorities: The Tribunal noted that the learned CIT(A) had relied on Rajesh Kaurani (Gujarat) which treated section 200A as a machinery provision enabling processing and adjustment of TDS statements. The Tribunal acknowledged that Rajesh Kaurani had considered various ITAT and High Court decisions, but it rejected the learned CIT(A)'s view as incorrect in law on the present facts.
Prospectivity / retrospective application analysis: The Tribunal accepted the assessee's contention that section 234E is a charging/substantive provision and, absent an express provision for retrospective application, it could not be applied retrospectively to periods before its effective date (1.06.2015). The Tribunal relied on Fatehraj Singhvi (Karnataka HC) which held that the substitution in section 200A should be read prospectively and cannot be used to make demands for periods prior to 1.6.2015; it also relied on other authorities (Sibia, Kaur Chand Jain, Sudarshan Goyal, Vatika) that supported the assessee's position.
Distinguishing the Department's authorities: The Tribunal observed that the decisions relied upon by the Department/DR were distinguishable because those cases dealt with interest under sections 201(1) / 201(1A) on TDS amounts, whereas the present issue concerned liability to pay late fee under section 234E for delay in filing TDS statements inserted with effect from 1.6.2015.
Application of binding/precedential principles: The Tribunal invoked the principle from Vegetable Products Ltd. (SC) that where there is a cleavage of opinion between High Courts, the view favourable to the assessee should be followed. Given the line of authorities favouring the assessee, the Tribunal found that the fee imposed for pre‑1.6.2015 periods could not be sustained.
Outcome reasoning: Following Fatehraj Singhvi and the Tribunal's own earlier decision in Sudarshan Goyal, the Tribunal concluded that the appeals are maintainable in favour of the assessee, the CIT(A) orders are liable to be reversed, and the fee levied under section 234E must be cancelled. One appeal (ITA No.42/Agr/2018) involved a different issue (short payment of TDS and interest) which was wrongly treated by the CIT(A) as a section 234E issue; that appeal was restored to the CIT(A) for fresh adjudication after affording opportunity to the assessee.

Holding and Implications

Holding: The Tribunal allowed the consolidated appeals (except as noted below) and set aside the CIT(A)'s orders that had upheld the levy of late filing fee under section 234E.

Core Ruling: The levy of the late filing fee under section 234E of the Income Tax Act for periods prior to 1.06.2015 (i.e., before the insertion of clause (c) to sub‑section (1) of section 200A) is not sustainable; the CIT(A) orders are reversed and the fee so levied is cancelled.

Direct consequences / implications:

The appeals relating to levy of fee under section 234E (for the periods in question) are allowed and the fee is cancelled for the assessees in these consolidated matters.
Delay of 24 days in filing appeals for 37 branches was condoned on the stated grounds of internal hierarchical processing of approvals.
ITA No.42/Agr/2018 (which pertains to short payment of TDS and interest) was restored to the learned CIT(A) for fresh adjudication on the correct issue after giving the assessee an opportunity of hearing.
The Tribunal applied and followed earlier Tribunal and High Court authorities favourable to the assessee (Fatehraj Singhvi, Sibia Healthcare, Kaur Chand Jain, Sudarshan Goyal etc.) and distinguished the authorities relied upon by the Department as inapposite on facts (pertaining to interest under sections 201(1)/201(1A)).

Precedential effect: The Tribunal's decision follows and applies prior High Court and Tribunal decisions that support prospectivity of the machinery amendment and non‑retrospective application of section 234E; the opinion does not claim to establish a new legal principle beyond applying those authorities. The immediate, direct effect is reversal of the CIT(A) orders and cancellation of the fee for the affected assessment year/periods.

Disposition

ITA No.42/Agr/2018: restored to the learned CIT(A) to decide afresh after affording opportunity of hearing to the assessee (allowed for statistical purpose).
All other consolidated appeals: allowed; levy under section 234E cancelled; CIT(A) orders reversed. Order pronounced in open court on 31/05/2018.

Prepared from the text of the provided opinion only. No information has been added beyond what appears in the opinion.

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STATE BANK OF INDIA, GWALIOR v. CIT A , GWALIOR

PER BENCH: This bunch of appeals for AY 2013-14 are directed against the order of ld. CIT(A), Gwalior against upholding levy of fee u/s 234E of the Income Tax Act, 1961(hereinafter short the Act).

2. There was a delay of 24 days in filing appeals in respect of

37 branches out of 88 branches located at distant places.

3. The counsel for the assessee has submitted that after receipt of the intimation/statement of levy of late fee u/s 234E of the Act, the branches had to report to the respective regional head offices for seeking necessary approval and therefore it is forwarded to the regional head and further to the Zonal head in the respective hierarchy. After giving the necessary approval, the Date of Hearing 24.05.2018 Date of Pronouncement 31.05.2018 Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors matter travels back to the respective branches to the same hierarchy. Thus, this process takes considerable time causing which caused delay in filing these appeals by the concerned appellate branches. We find that the assessee has reasonable cause for delay in filing the aforesaid 37 appeals out of 88 appeals. Therefore, the delay in filing these appeals is condoned accordingly.

4. Since a common issue is involved in all these appeals relating to levy of late filing fee u/s 234E of the Act, they are being disposed of by this consolidated order for the sake of convenience.

5. In these cases, the appellants have deposited TDS in Central Government account as per TDS provisions of the Act. They are required to file quarterly TDS returns (statements) intimating the tax deducted at source from various payments made to various persons in each quarters for the financial relevant. To ensure timely compliance on the part of the deductors, the provisions for late filing fee u/s 234E has been inserted in clause (c) to section 200A of the Act by the Finance Act, 2015, w.e.f. 1.06.2015. Before the ld. CIT(A), these Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors appellants contended that before making necessary amendment in Section 200A of the Act w.e.f. 01.06.2015, there was no enabling provisions u/s 200A of the Act for raising demand in respect of levy of penalty u/s 234E of the Act and thus in the absence of enabling provision for making such adjustment for levying late fee u/s 234E, no such late fee could be imposed by the AO. In support, the counsel for the applicants placed reliance on the decision in the cases of Sibia Healthcare Pvt. Ltd. Vs. DCiT (TDS) (2015) 121 DTR 81 (ASR) (Trib) and G Indhirani Vs. DCIT (2015) 43 CCH 511 (Chen-Trib) wherein it was held that in the absence of enabling provisions u/s 200A of the Act, such levy of late fee is not valid. The ld. CIT(A) has rejected this contention of the appellants by relying on the decision in the case of Rajesh Kaurani vs. Union of India, 83 Taxmann.com 137(Guj) and confirmed the levy of late fee u/s 234E of the Act. Aggrieved, appellants are in appeal before us.

6. The counsel for the assessee has submitted a statement of TDS returns (APB, Pge. 5-9) contending that all the TDS returns statements has been filed are in respect of the period prior to the date 01.06.2015 i.e. the date from which clause (c) to sub Section Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors (1) of Section 200A was inserted and incorporating Section 234E of the Act, 1961. He further submitted that prior 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E of the Act. The provision of Section 234E of the Act is charging provision i.e. substantive provision which could not be applied retrospectively, unless it is expressely provided in the Act, to levy the late fee for any delay in filing the TDS statement for the period prior to 01.06.2015. For this purpose, the appellant rely on the following decisions:

i) CIT vs. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC). ii) Sudarshan Goyal vs DCIT (TDS) ITA No.442/Agr/2017. iii) Fatehraj Singhvi Vs. UOI (2016) 289 CTR 0602 (Karn) (HC) iv) Sibia Healthcare Pvt. Ltd. Vs. DCIT (TDS) ITA No.90/Asr/2015.

v) Shri Kaur Chand Jain vs. DCIT, ITA No.378/ASR/2015. vi) Gajanan Constructions vs. DCIT (2016) 161 ITD 313 (Pune).

7. Per contra, the Ld. DR supported the impugned order with the support of a brief synopsis of case laws. Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors

8. Heard the rival contention and perused the material relevant. We find that while deciding the issue against the appellant assessee the ld. CIT(A) has placed reliance on Rajesh Kaurani vs. Union of India, 83 Taxmann.com 137 (Guj.) wherein it was held that Section 200A of the Act is a machinery provision providing the mechanism for processing a TDS statement of deduction of tax at source and for making adjustment. The Ld. CIT(A) has further held that this decision was delivered after considering numerous ITAT and High Court decisions and therefore this decision in Rajesh Kaurani (Supra), holds the fields.

9. It is seen that prior 01.06.2015, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E of the Act. The provision of Section 234E of the Act is charging provision i.e. substantive provision which could not be applied retrospectively, unless it is expressly provided in the Act, to levy the late fee for any delay in filing the TDS statement for the period prior to 01.06.2015. The counsel for the assessee has rightly contended that in the absence of enabling provisions u/s 200A of the Act, such levy of late fee is not valid relying on Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors the decisions in the cases of CIT vs. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC), Sudarshan Goyal vs DCIT (TDS) ITA No.442/Agr/2017 and Fatehraj Singhvi Vs. UOI (2016) 289 CTR 0602 (Karn) (HC). The decisions relied on by the Ld. DR are distinguishable on facts, as the issue involved in those cases pertains to interest u/s 201(1) and 201(1A) on the amount of TDS whereas in the present cases the issue were pertains to liability of late fee u/s 234E of the Act for delay in filing TDS statement which was inserted from 01.06.2015.

10. On similar facts, we have decided the same issue in the assessees own case Sudershan Goyal vs. DCIT (TDS), in ITA No. 442/Agra/2017 dtd. 09.04.2018 authored by one of us (the Ld. J.M.). The relevant part of the order is reproduced as follows:

3. Heard. The ld. CIT(A), while deciding the matter against the assessee, has placed reliance on Rajesh Kaurani vs. UOI, 83 Taxmann.com 137 (Guj), wherein, it has been held that section 200A of the Act is a machinery provision providing the mechanism for processing a statement of deduction of tax at source and for making adjustments. The ld. CIT(A) has held that this decision was delivered after considering numerous ITAT/High Court decisions and so, this decision in Rajesh Kaurani (supra) holds the field.

4. We do not find the view taken by the ld. CIT(A) to be correct in law. As against Rajesh Kaurani (supra), Shri Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors Fatehraj Singhvi and Others vs.UOI, 73 Taxmann.com 252 (Ker), as also admitted by the ld. CIT(A) himself, decides the issue in favour of the assessee. The only objection of the ld. CIT(A) is that this decision and others to the same effect have been taken into consideration by the Honble Gujarat High Court while passing Rajesh Kaurani (supra). However, while observing so, the ld. CIT(A) has failed to take into consideration the settled law that where there is a cleavage of opinion between different High Courts on an issue, the one in favour of the assessee needs to be followed. It has so been held by the Honble Supreme Court in CIT vs. Vegetable Products Ltd., 88 ITR 192 (SC). It is also not a case where the decision against the assessee has been rendered by the Jurisdictional High Court qua the assessee.

5. In Shri Fatehraj Singhvi and Others (supra) it has been held, inter alia, as follows:

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 Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors deductor to reopen the said question unless he has made payment under protest.

6. In view of the above, respectfully following Shri Fatehraj Singhvi and Others (supra), Sibia Healthcare Pvt. Ltd. vs. DCIT (TDS), order dated 09.06.2015 passed in ITA No.90/ASR/2015, for A.Y.2013-14, by the Amritsar Bench of the Tribunal, and Shri Kaur Chand Jain vs. DCIT, CPC (TDS) Ghaziabad, order dated 15.09.2016, in ITA No.378/ASR/2015, for A.Y. 2012-13, the grievance of the assessee is accepted as justified. The order under appeal is reversed. The levy of the fee is cancelled.

11. In the above view, respectfully following Shri Fatehraj Singhvi and Ors (Supra), Sibia Healthcare Pvt. Ltd. Vs. DCIT (Supra), Shri Kaur Chand Jain vs. DCIT, (Supra), and our own finding in the case of Sudershan Goyal (Supra), we accept the grievance of the assessees as genuine. Accordingly, the orders of the CIT(A) are reversed and the fee so levied under section 234E of the Act is cancelled.

12. In ITA No. 42/Agr/2018, the issue is related to short payment of tax deducted and interest on short payment of TDS as per the ground of appeal raised before the Ld. CIT(A). Whereas, the ld. CIT(A) has wrongly disposed of the issue as related to levy of late fee u/s 234E of the Act. Therefore, this issue is restored back to the Ld. CIT(A) to decide a fresh as per Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors law after affording proper opportunity of being heard to the assessee.

13. In the result, ITA No.42/Agr/2018 is allowed for statistical purposes and all other appeals are allowed. (Order pronounced in the open court on 31/05/2018) Sd/- Sd/- (A.D. Jain) (Dr. Mitha Lal Meena) Judicial member Accountant Member Dated 31/05/2018 Aks/-DOC Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT ASSISTANT REGISTRAR Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 and Ors Date

1. Draft dictated (DNS) 25.05.2018 PS

2. Draft placed before author 28.05.2018 PS

3. Draft proposed & placed before the second member JM/AM

4. Draft discussed/approved by Second Member. JM/AM

5. Approved Draft comes to the Sr.PS/PS PS/PS

6. Kept for pronouncement on PS

7. File sent to the Bench Clerk PS

8. Date on which file goes to the AR

9. Date on which file goes to the Head Clerk.

10. Date of dispatch of Order.

STATE BANK OF INDIA, GWALIOR v. CIT A , GWALIOR

Concise Analytical Summary of the Opinion — Group of SBI and Ors. ITA Nos.03,06 and 07/Ag/2018 & Ors. (Pronounced 31/05/2018)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's (Departmental Representative) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Disposition

STATE BANK OF INDIA, GWALIOR v. CIT A , GWALIOR

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