Citation Codes

Equivalent Citations

citation codes

Case Number

ITA 1021/CHNY/2015,ITA 1020/CHNY/2015,ITA 1019/CHNY/2015

Attorney(S)

Sridhar

Judges

N.R.S. GANESANA. MOHAN ALANKAMONY

Acts

Section 200A by the Finance Act, 2015 as under:- 7 I.T.A. Nos.1019 to 1021/Mds/15 I.T.A. Nos.1089 to 1092/Mds/15 In section 200A of the Income-tax Act, in sub-section (1), for clauses (c)
provisions of Indian Penal Code. Section 396 of Indian Penal Code
Section 200A by substituting sub-section (1) of clauses (c) to (e).
Section 234E of the Income-tax Act, 1961 (in short 'the Act')
section 200 or section 201 or section 234E
Section 396 of Indian Penal Code,
Section 408 of Indian Penal Code
section 200 and section 201,

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Smart Summary

Tribunal Opinion Summary

Factual and Procedural Background

These consolidated appeals were filed by different assessees against orders of the Commissioner of Income Tax (Appeals), Salem. The appeals were heard together by the Tribunal because they raised a common issue. The sole issue for consideration was whether a fee under Section 234E of the Income-tax Act, 1961 could be levied by the Assessing Officer while processing statements furnished under Section 200A of the Act. The Tribunal pronounced its order on 10 July 2015 at Chennai.

Legal Issues Presented

Whether the Assessing Officer could levy a fee under Section 234E of the Income-tax Act while processing a statement under Section 200A prior to the amendment made by the Finance Act, 2015 (effective 01.06.2015).
Whether the language of Section 234E stating that the "assessee shall be liable to pay" means that payment of the fee is purely voluntary and that the Assessing Officer has no authority to levy the fee by an order.

Arguments of the Parties

Assessees' Arguments (Ld. counsel Shri S. Sridhar)

Section 200A prescribes specific adjustments when processing a statement under Section 200 and does not include levy of fee under Section 234E; therefore, levy of fee while processing is beyond the scope of Section 200A.
The Finance Act, 2015 amended Section 200A with effect from 01.06.2015 to empower the Assessing Officer to compute fee under Section 234E while processing; hence, prior to 01.06.2015 the Assessing Officer had no authority to levy such fee while processing statements.
Section 234E uses the language "he shall be liable to pay" and Section 234E(3) contemplates payment "before delivery of statement under Section 200(3)"; therefore the fee must be paid by the assessee voluntarily before filing and the assessing authority cannot levy it.
Reliance was placed on a decision of the Amritsar Bench of the Tribunal in I.T.A. No.90/Asr/2015 dated 09.06.2015 to support the position that there was no enabling provision in Section 200A prior to 01.06.2015 to raise a demand for fee under Section 234E while processing.

Revenue's Arguments (Ld. Departmental Representative Sh. P. Radhakrishnan)

Section 234E provides for payment of fee where an assessee fails to deliver the statement as prescribed in Section 200(3); the Assessing Officer has authority to levy such fee.
The Assessing Officer may levy the fee either by a separate order or while processing the statement under Section 200A.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
I.T.A. No.90/Asr/2015 (Amritsar Bench of this Tribunal) dated 09.06.2015	That prior to 01.06.2015 there was no enabling provision in Section 200A to raise a demand by way of fee under Section 234E while processing the statement.	The decision was cited by the assessee's counsel to support the submission that Section 200A did not permit levy of Section 234E fee while processing prior to the 01.06.2015 amendment. The Tribunal's reasoning aligns with that position in concluding that such levy while processing before 01.06.2015 was beyond the scope of Section 200A.

Court's Reasoning and Analysis

The Tribunal examined the statutory text of Section 200A and the amendment effected by the Finance Act, 2015. It reproduced subsection (1) of Section 200A, which prescribes the specific adjustments that may be made when processing a statement of tax deducted at source: (a) correction of arithmetical errors and incorrect claims apparent from the statement; (b) computation of interest; (c) determination of sums payable or refunds after adjustment of amounts computed under clause (b) against amounts paid under sections 200 and 201 and any other tax or interest; and related procedures including issuance of intimation and grant of refunds.

The Tribunal noted that the Finance Act, 2015 substituted clauses (c) to (e) of Section 200A(1) with effect from 1 June 2015. The substituted clauses expressly provided for: (c) computation of the fee, if any, in accordance with Section 234E; (d) determination of sums payable or refunds after adjustment of amounts computed under clauses (b) and (c) against amounts paid under section 200, section 201 or section 234E and any tax, interest or fee; and related intimation and refund provisions. The Tribunal treated this amendment as the first time Parliament enabled the Assessing Officer to make adjustment by levying fee under Section 234E while processing statements under Section 200A.

Applying that statutory framework to the facts, the Tribunal concluded that the Assessing Officer is limited to the adjustments expressly prescribed in Section 200A. Because the scheme prior to 01.06.2015 did not include a provision for computing or adjusting a fee under Section 234E within Section 200A processing, levying fee under Section 234E while processing a statement before that date was beyond the scope of Section 200A and therefore unlawful.

The Tribunal also addressed the assessees' argument that the language of Section 234E ("he shall be liable to pay") implied only a voluntary obligation to pay the fee before delivery of the statement and that the Assessing Officer had no power to levy it. The Tribunal rejected that argument, observing by analogy to penal provisions in the Indian Penal Code that statutory language imposing liability to pay (for example, "shall also be liable to fine") does not preclude a competent authority from imposing the monetary liability. The Tribunal reasoned that:

Section 234E(1) contemplates payment of the fee before delivery of the statement under Section 200(3), but if the assessee fails to pay the fee, the assessing authority has power to levy the fee by passing an order.
Prior to 01.06.2015 the Assessing Officer could lawfully pass a separate order under Section 234E to levy fee for delay in filing the statement; what was impermissible was to levy the fee by way of adjustment while processing under Section 200A before the 01.06.2015 amendment.
After the 01.06.2015 amendment, the Assessing Officer is empowered to compute and adjust the fee under Section 234E while processing a statement under Section 200A.

Having applied these principles, the Tribunal concluded that in the present cases the Assessing Officer had exceeded jurisdiction by levying fee under Section 234E while processing the statements under Section 200A (i.e., prior to the 01.06.2015 amendment) and that such adjustment could not stand in law.

Holding and Implications

Holding: The Tribunal held that the Assessing Officer exceeded his jurisdiction in levying fee under Section 234E of the Income-tax Act while processing statements under Section 200A of the Act prior to the amendment effective 01.06.2015. Accordingly, the impugned intimations to the extent they levied fee under Section 234E were set aside and the fee levied was deleted.

Implications and immediate consequences:

The intimation under Section 200A as confirmed by the Commissioner of Income Tax (Appeals) is set aside insofar as it imposes fee under Section 234E; the fee levied is deleted.
Other adjustments made by the Assessing Officer in the impugned intimations remain intact and continue to stand.
The Tribunal clarified that the Assessing Officer may, subject to limitation period constraints, pass a separate order under Section 234E to levy fee for delay in filing the statement even prior to 01.06.2015; after 01.06.2015 the Assessing Officer is empowered to levy/compute the fee while processing the statement under Section 200A.
Result: All appeals filed by the assessees were allowed to the extent indicated above. No broader pronouncement of precedent beyond the statutory interpretation and application to these facts is expressly stated in the opinion.

Order pronounced on 10th July, 2015 at Chennai. Members: A. Mohan Alankamony (Accountant Member) and N.R.S. Ganesan (Judicial Member).

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G.Indhirani, Salem v. DCIT, Ghaziabad

PER N.R.S. GANESAN, JUDICIAL MEMBER: All these appeals of the different assessees are directed against the respective orders of the Commissioner of Income Tax (Appeals), Salem. Since common issue arises for consideration in all these appeals, we heard these appeals together and disposing the same by this common order.

3 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15

2. The only issue arises for consideration is with regard to levy of fee under Section 234E of the Income-tax Act, 1961 (in short 'the Act') while processing the statement furnished by the assessees under Section 200A of the Act.

3. Shri S. Sridhar, the Ld.counsel for the assessees, submitted that under Section 200A of the Act, the statement filed by the assessee has to be processed in the manner in which it was laid down. Levy of fee under Section 234E of the Act cannot be a subject matter of process, while processing the statement under Section 200A of the Act. Referring to Finance Act, 2015, the Ld.counsel pointed out that with effect from 01.06.2015, the Parliament by way of amendment to Section 200A of the Act empowered the Assessing Officer to levy fee under Section 234E of the Act while processing under Section 200A of the Act. Therefore, according to the Ld.counsel, prior to 01.06.2015, the Assessing Officer had no authority to levy fee, if any, under Section 234E of the Act. Referring to the decision of Amritsar Bench of this Tribunal in I.T.A. No.90/Asr/2015 dated 09.06.2015, the Ld.counsel pointed out that prior to 01.06.2015, there was no enabling provision in Section 200A for raising a demand in respect of levy of fee under Section 234E of the Act. Therefore, according to the Ld. counsel,

4 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 the fee levied under Section 234E of the Act, while processing the statement filed under Section 200A of the Act is not justified. According to the Ld. counsel, levy of fee under Section 234E of the Act while processing the statement is beyond the scope of Section 200A of the Act.

4. The Ld.counsel invited our attention to Section 234A of the Act and submitted that when an assessee fails to deliver the statement within the prescribed time, the assessee is liable to pay by way of fee a sum of `200/- for every day during such a period the failure continues. Referring to the word used in the section 234E he shall be liable to pay, the Ld.counsel pointed out that the assessee is liable to pay fee. However, it does not empower the Assessing Officer to levy the fee. Section 234E(3) of the Act provides for payment of the fee before delivery of statement under Section 200(3) of the Act. Therefore, the fee has to be paid by the assessee voluntarily before filing the statement under Section 200(3) of the Act and the assessing authority has no power to levy the fee.

5. On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that Section 234E of the Act provides for payment of fee, if the assessee fails to deliver the statement as

5 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 prescribed in Section 200(3) of the Act. Therefore, the Assessing Officer has every authority to levy fee either by a separate order or while processing the statement under Section 200A of the Act.

6. We have considered the rival submissions on either side and perused the relevant material on record. Section 200A of the Act provides for processing of the statement of tax deducted at source by making adjustment as provided in that Section. For the purpose of convenience, we are reproducing the provisions of Section 200A of the Act:- 200A. (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 ;

6 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 (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. The Assessing Officer cannot make any adjustment other than the one prescribed above in Section 200A of the Act. By Finance Act, 2015, with effect from 01.06.2015, the Parliament amended Section 200A by substituting sub-section (1) of clauses (c) to (e). For the purpose of convenience, we are reproducing the amendment made in Section 200A by the Finance Act, 2015 as under:-

7 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 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); (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor. Therefore, it is obvious that prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fee under Section 234E of the Act with effect from 01.06.2015. Therefore, as rightly submitted by the Ld.counsel for the assessees, while processing statement under Section 200A of the Act, the Assessing Officer cannot make any

8 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 adjustment by levying fee under Section 234E prior to 01.06.2015. In the case before us, the Assessing Officer levied fee under Section 234E of the Act while processing the statement of tax deducted at source under Section 200A of the Act. Therefore, this Tribunal is of the considered opinion that the fee levied by the Assessing Officer under Section 234E of the Act while processing the statement of tax deducted at source is beyond the scope of adjustment provided under Section 200A of the Act. Therefore, such adjustment cannot stand in the eye of law.

8. The next contention of the assessee is that Section 234E of the Act says that the assessee shall be liable to pay by way of fee, therefore, the assessee has to voluntarily pay the fee and the Assessing Officer has no authority to levy fee. The argument of the Ld.counsel for the assessee is very attractive and fanciful. However, we do not find any substance in that argument. When Section 234E clearly says that the assessee is liable to pay fee for the delay in delivery of the statement with regard to tax deducted at source, the assessee shall pay the fee as provided under Section 234E(1) of the Act before delivery of the statement under Section 200(3) of the Act. If the assessee fails to pay the fee for the periods of delay, then the assessing authority has all the powers to levy fee

9 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 while processing the statement under Section 200A of the Act by making adjustment after 01.06.2015. However, prior to 01.06.2015, the Assessing Officer had every authority to pass an order separately levying fee under Section 234E of the Act. What is not permissible is that levy of fee under Section 234E of the Act while processing the statement of tax deducted at source and making adjustment before 01.06.2015. It does not mean that the Assessing Officer cannot pass a separate order under Section 234E of the Act levying fee for the delay in filing the statement as required under Section 200(3) of the Act.

9. The contention of the assessee can also be examined in the light of the provisions of Indian Penal Code. Section 396 of Indian Penal Code provides for punishment for dacoity with murder. The punishment is imprisonment for life or rigorous imprisonment for a term which may be extended to ten years and also liable to fine. For the purpose of convenience, we are reproducing Section 396 of Indian Penal Code, hereunder:-

396. Dacoity with murder If any one of five or more persons, who are conjointly committing dacoity, commits murder in so committing dacoity, every one of those persons shall be punished with death, or imprisonment for life, or rigorous imprisonment for a

10 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 term which may extend to ten years, and shall also be liable to fine. Similarly, Section 408 of Indian Penal Code provides for criminal breach of trust by a clerk or servant. In addition to imprisonment which may extend to seven years, the accused who is found to be guilty shall also be liable to fine. Similarly, the other provisions of Indian Penal Code also say that in addition to imprisonment, the accused shall be liable to pay fine. The language used by the Parliament in Indian Penal Code is shall also be liable to fine. This means that the Magistrate or Sessions Judge, who tries the accused for an offence punishable under the provisions of Indian Penal Code, in addition to punishment of imprisonment, shall also levy fine. If the contention of the Ld.counsel for the assessees is accepted, then the Magistrate or Sessions Judge, as the case may be, who is trying the accused for the offence punishable under Indian Pencal Code, may not have authority to levy fine.

10. It is well known principle that the fine prescribed under the Indian Penal Code has to be levied by the concerned Magistrate or Sessions Judge who is trying the offence punishable under the Indian Penal Code. Therefore, the contention of the Ld.counsel that merely because the Parliament has used the language he shall be

11 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 liable to pay by way of fee, the assessee has to pay the fee voluntarily and the Assessing Officer has no authority to levy fee could not be accepted. No one would come forward to pay the fee voluntarily unless there is a compulsion under the statutory provision. The Parliament welcomes the citizens to come forward and comply with the provisions of the Act by paying the prescribed fee before filing the statement under Section 200(3) of the Act. However, if the assessee fails to pay the fee before filing the statement under Section 200(3) of the Act, the assessing authority is well within his limit in passing a separate order levying such a fee in addition to processing the statement under Section 200A of the Act. In other words, before 01.06.2015, the assessing authority could pass a separate order under Section 234E levying fee for delay in filing the statement under Section 200(3) of the Act. However, after 01.06.2015, the assessing authority is well within his limit to levy fee under Section 234E of the Act even while processing the statement under Section 200A and making adjustment.

11. In view of the above discussion, this Tribunal is of the considered opinion that the Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the

12 I.T.A. Nos.1019 to 1021/Mds/15

I.T.A. Nos.1089 to 1092/Mds/15 statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in sofar as levy of fee under Section 234E is set aside and fee levied is deleted. However, the other adjustment made by the Assessing Officer in the impugned intimation shall stand as such.

12. In the result, all the appeals filed by the assessees are allowed as indicated above. Order pronounced on 10th July, 2015 at Chennai. sd/- sd/- (. ) (... ) (A. Mohan Alankamony) (N.R.S. Ganesan) /Accountant Member /Judicial Member /Chennai, 4/Dated, the 10th July, 2015. Kri. . ,56 76/Copy to: +/Appellant / ,-+/Respondent / 8 ()/CIT(A), Salem / 8/CIT, TDS, Chennai / 6 , /DR / ' /GF.

G.Indhirani, Salem v. DCIT, Ghaziabad

Tribunal Opinion Summary

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Assessees' Arguments (Ld. counsel Shri S. Sridhar)

Revenue's Arguments (Ld. Departmental Representative Sh. P. Radhakrishnan)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

G.Indhirani, Salem v. DCIT, Ghaziabad

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