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G. Indhirani vs. DCIT (ITAT Chennai)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: July 10, 2015 (Date of pronouncement)
DATE: July 16, 2015 (Date of publication)
AY: 2013-14
FILE: Click here to download the file in pdf format
CITATION:
S. 234E: Prior to the amendment to s. 200A w.e.f. 01.06.2015, the fee for default in filing TDS statements cannot be recovered from the assessee-deductor while processing the s. 200A statement. However, the AO is entitled to pass a separate order u/s 234E to levy the fee within the limitation period

(i) 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). 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. 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 counsel for the assessees, while processing statement under Section 200A of the Act, the Assessing Officer cannot make any 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.

(ii) However, the contention of the assessee that as 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 has no substance. 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 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.

(iii) The contention of the counsel that merely because the Parliament has used the language “he shall be 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.

(iv) 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 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.

See also Sibia Healthcare Private Limited vs. DCIT (ITAT Amritsar) on the same point
3 comments on “G. Indhirani vs. DCIT (ITAT Chennai)
  1. Sher Singh says:

    Again blatant disregard to the judicial discipline. Matter must have been referred to the special bench. Division bench has no power to differ with another without referring to Special Bench. Morale of the story, if you are in Amritsar, you have a chance to get some relief, if you are in Chennai, you have NO such chance and if you are not in either of the City, you are left to the whims of Members

  2. ashok says:

    case are also pending for validity of 234E . time is extended to govt deductor.

  3. Pramod Kumar Panda says:

    The Chennai ITAT has referred to the Provision of India Penal Court for imposing fine and penalty. But in case of taxing statute, the power for imposing any tax, penalty, interest or fee should be expressly provided under the statue empowering the Assessing Officer to do so. The Assessing Officer are discharging their duty as a quasi judicial authority. Can the Indian Penal Code by invoked under any provision of the Income Tax Act to pass an order imposing fee U/S 234E. In my opinion, the judgement need to be challenged before the High Court before any further mischief is created by the Department.

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