Lions Club Of North ... v. Income Tax Officer T..., Income Tax Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

ITA Nos. 3274, 3275 & 3276.Ahd/2014 Assessment Years: 2013-14

Attorney(S)

None
B.L. Sharma

Judges

Pramod Kumar, A.M.

Acts

section 200A of the Income-tax Act, in sub-section (1), for clauses (c)
sub-section (3) of section 206C.(4) The provisions of this section
INCOME TAX ACT 1961
section 200 or section 201 or section 234E
sub-section (3) of section 200
section 200 and section 201,
Section 200A(1)(b)9.
FINANCE ACT 2009
FINANCE ACT 2015
FINANCE ACT 2012

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Smart Summary

Factual and Procedural Background

The appeals arise from challenges by the assessee to three separate orders, all dated 29 September 2014, passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] which upheld the levy of fees under section 234E of the Income Tax Act, 1961. The levy was imposed by way of an intimation issued under section 200A in respect of processing of TDS for Assessment Year 2013-14. The assessee filed a total of sixteen grounds across the three appeals, but the principal grievance, as recorded in the opinion, was that the CIT(A) erred in upholding the late filing fees charged in the course of processing the TDS return under section 200A.

No representative appeared for the assessee at the hearing before the court; the learned Departmental Representative was heard. The court noted that the issue in these appeals was squarely covered in the assessee's favour by a Division Bench decision of the ITAT Amritsar Bench in Sibia Healthcare Private Limited v. DCIT, ITA No. 90/Asr/2015 (order dated 9 June 2015), and that decision was relied upon in the disposal of the present appeals. On the basis of the reasoning in that precedent and the statutory position as it stood prior to 1 June 2015, the court deleted the levy of late filing fees under section 234E in all three appeals and granted relief to the assessee.

Legal Issues Presented

Whether, prior to the amendment to section 200A effective 1 June 2015, an intimation under section 200A could validly include an adjustment or demand for the fee levied under section 234E.
Whether the levy of fees under section 234E, when raised by intimation under section 200A for a TDS statement filed on 19 February 2014, was within the temporal and substantive scope of section 200A as it stood at the relevant time.

Arguments of the Parties

Assessee's Arguments

The core grievance (as recorded) was that the CIT(A) erred in upholding the levy of late filing fees under section 234E in the course of processing a TDS return by way of an intimation under section 200A.
The opinion records that the assessee had raised multiple grounds (16 in total) but does not set out detailed pleadings beyond the short grievance noted above.
At the hearing before the court, no one appeared for the assessee and no additional oral arguments from the assessee were recorded.

Revenue's Arguments

The learned Departmental Representative placed reliance on the orders of the authorities below (i.e., the CIT(A) and possibly the assessing officer) which had upheld the levy of fees.
The Departmental Representative did not dispute that provisions for accepting levy of late filing fees under section 234E were introduced into the statute with effect from 1 June 2015, and that the impugned order under challenge was passed prior to that date.
The CIT(A), in the impugned orders, had justified the levy on the basis of the provisions of section 234E; however, the court observed that justification on the merits under section 234E was not the dispositive question—rather whether such levy could be effected through a section 200A intimation prior to the statutory amendment was the issue.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sibia Healthcare Private Limited v. DCIT, ITA No. 90/Asr/2015 (Order dated 9 June 2015)	Held that adjustment or levy of fee under section 234E could not be effected by way of intimation under section 200A as it stood prior to 1 June 2015; section 200A then permitted only certain limited adjustments (arithmetical errors, incorrect claims apparent from the statement, and interest).	The present court followed the Sibia decision, reproduced relevant statutory provisions and reasoning, and applied the principle to delete the impugned levy of fees under section 234E in the three appeals before it.
Narath Mapila LP School v. Union of India, WP (C) 31498/2013 (Kerala High Court) — as cited in Sibia	Cited as an instance where the High Court granted stay on demands raised in respect of fees under section 234E (full text not produced to the tribunal).	Cited by counsel in the Sibia proceedings as part of supporting material; the tribunal noted the stay but also that no higher court order restrained the tribunal from adjudicating on the merits.
Adithya Bizor P Solutions v. Union of India, WP No. 6918-6938/2014 (Karnataka High Court) — as cited in Sibia	Cited as an instance where the High Court granted stay on demands raised in respect of fees under section 234E (full text not produced to the tribunal).	Cited by counsel in the Sibia proceedings; the tribunal recorded the citation but proceeded to decide the appeal on merits in absence of any restraining order from a higher court.
Om Prakash Dhoot v. Union of India, WP No. 1981 of 2014 (Rajasthan High Court) — as cited in Sibia	Cited as an instance where the High Court granted stay on demands raised in respect of fees under section 234E (full text not produced to the tribunal).	Cited by counsel in the Sibia proceedings; tribunal observed the existence of such stay orders but noted no order prevented adjudication on merits.
Rashmikant Kundalia v. Union of India, WP No. 771 of 2014 (Bombay High Court) — as cited in Sibia	Cited as an instance where the High Court granted stay on demands raised in respect of fees under section 234E (full text not produced to the tribunal).	Cited by counsel in the Sibia proceedings; tribunal proceeded to hear the appeal because no higher court order was produced that restrained adjudication on merits.

Court's Reasoning and Analysis

Statutory framing — the court set out the statutory text of section 234E (inserted by Finance Act, 2012, effective 1 July 2012) which prescribes a fee of Rs. 200 per day for failure to deliver a statement within the time prescribed under section 200(3), subject to specified caps and conditions, and reproduced section 200A (inserted by Finance Act, 2009 with effect from 1 April 2010) which prescribes the manner of processing TDS statements and the limited adjustments permissible during that processing.
Amendment and its effect — the court identified that section 200A was amended by the Finance Act, 2015 with effect from 1 June 2015 to expressly include clause (c) that the fee, if any, shall be computed in accordance with section 234E and to permit adjustment for such fee during processing. The court emphasized that prior to 1 June 2015, section 200A did not contain any enabling provision permitting adjustment for fees under section 234E.
Scope of permitted adjustments pre-amendment — the court analysed the limited mandate of section 200A as it stood at the relevant time (before 1 June 2015) and noted that processing could only make adjustments for (a) arithmetical errors and incorrect claims apparent from the statement (section 200A(1)(a)) and (b) interest computed on the basis of the sums deductible as computed in the statement (section 200A(1)(b)). No other adjustments were permissible under the law as it then existed.
Application to the impugned intimation — the court concluded that the adjustment in respect of levy of fees under section 234E was beyond the scope of permissible adjustments contemplated under section 200A prior to its amendment. Therefore the intimation that raised a demand by making such an adjustment was not authorised by the statutory scheme in force at the time the intimation was issued.
Temporal limitation — the court observed that an intimation under section 200A must be issued within one year from the end of the financial year in which the statement is filed. The relevant TDS statement was filed on 19 February 2014, so any valid intimation effecting such a levy could, at the latest, have been passed by 31 March 2015. That period had elapsed by the time of the impugned intimation and could not be cured retrospectively by the later statutory amendment.
On the role of the CIT(A) and merits — the court noted that the CIT(A) had justified the levy by reference to section 234E itself, but emphasised that the legal question before the appellate process was narrower: whether such a levy could be effected by way of a section 200A intimation given the statutory scope at the relevant time. The CIT(A) did not examine the legality of the adjustment in light of the limited mandate of section 200A, and thus his approach was found to be incorrect for that reason.
Reliance on precedent — the court expressly followed the Division Bench decision in Sibia Healthcare (supra), which had addressed the identical legal issue and had concluded that the impugned levy of fees under section 234E was unsustainable when effected via a section 200A intimation issued prior to the amendment effective 1 June 2015.
Departmental stance at hearing — the Departmental Representative accepted that the statutory provisions authorising levy via section 234E were introduced effective 1 June 2015 and did not dispute that the impugned intimation was issued before that date; he relied primarily on the orders of the authorities below.

Holding and Implications

Holding (core ruling): The levy of late filing fees under section 234E effected by way of intimation under section 200A is deleted in these appeals.

Implications:

Direct effect: The impugned levy of fees under section 234E contained in the section 200A intimations (issued in relation to the TDS statement filed on 19 February 2014) is held to be unsustainable and is deleted in all three appeals; the assessee is granted relief accordingly.
Rationale limiting broader application: The court's decision is grounded on the statutory scheme as it existed prior to the Finance Act, 2015 amendment to section 200A (effective 1 June 2015). Because the amendment post-dates the impugned intimations, the court held that the earlier statutory scheme did not permit such a levy via section 200A and that the time bar for issuance of an intimation had also expired.
Precedential posture: The opinion follows an earlier Division Bench decision of the ITAT (Sibia Healthcare v. DCIT). The court does not purport to establish a new departure from existing law beyond applying that precedent and the statutory text; the opinion does not assert the creation of a novel, overarching precedent beyond the facts and statutory period before it.

This summary is strictly limited to the information contained in the provided opinion and does not infer facts or arguments beyond the opinion's text.

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Lions Club Of North Surat Charitable Trust Lalji Nagar, Near Lions Community Hall, Near Sardar Bridge, Surat. v. Income Tax Officer Tds-2, Surat (New). .

1. By way of these appeals, the assessee appellant has challenged correctness of the three separate orders, all dated 29th September, 2014, passed by the ld. CIT(A) upholding levy of fees, under section 234E of the Income Tax Act, 1961 (‘the Act’ hereinafter), on the assessee and by way of intimation issued under section 200A in respect of processing of TDS for the Assessment Years 2013-14.

2. Although the assessee has raised as many as 16 grounds of appeal in all these three appeals, the short grievance of the assessee is that on the facts and circumstances of the case the ld. CIT(A) has erred in upholding the levy of late filing fees in the course of processing TDS return under section 200A of the Act.

3. None appeared for the assessee but I have heard the ld. Departmental Representative, perused the material on record and duly considered the facts of the case in the light of the applicable legal position.

4. I find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited v. DCIT ITA No. 90/Asr/2015, vide order dated 9th June, 2015, wherein the Division Bench has inter alia observed as under:—

“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 v. Union of India [WP (C) 31498/2013(J)], Hon'ble Karanataka High Court in the case of Adithya Bizor P Solutions v. Union of India [WP No. 6918-6938/2014(T-IT), Hon'ble Rajasthan High Court in the case of Om Prakash Dhoot v. Union of India [WP No. 1981 of 2014] and of Hon'ble Bombay High Court in the case of Rashmikant Kundalia v. 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 subsection (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 subsection.

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 the 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 234E 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”

5. When the above judicial precedent was brought to the notice of the ld. Departmental Representative, he did not have much to say except to place his reliance on the orders of the authorities below. He fairly did not dispute that the provisions accepting levy of late filing fees under section 234E have indeed been brought to the statute w.e.f. 1st June, 2015 and the impugned order was passed much before that date.

6. In view of the above discussions and bearing in mind entirety of the case, I hereby delete the levy of late filing fees in all these three appeals under section 234E of the Act by way of impugned intimation issued. The assessee gets the relief accordingly.

Lions Club Of North ... v. Income Tax Officer T...