| COURT: | ITAT Amritsar |
| CORAM: | A. D. Jain (JM), Pramod Kumar (AM) |
| SECTION(S): | 200A, 234E |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Recovery of tax, TDS deduction |
| COUNSEL: | Ashwani Kalia |
| DATE: | June 9, 2015 (Date of pronouncement) |
| DATE: | June 15, 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 | |
(i) Section 200A was amended by the Finance Act 2015 with effect from 1st June 2015 to provide that 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 computed in accordance with the provisions of section 234E. 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 adjustments (a) on account of “arithmetical errors” and “incorrect claims apparent from any information in he statement” and (b) interest computed on the basis of sums deductible as computed in the statement. 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. Accordingly, the adjustment in respect of levy of fees under section 234E was beyond the scope of permissible adjustments contemplated under section 200A.
(ii) 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. The 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.
ITAT has erred grossly in this. Was the intimation u/s 200A appealable as on the date of CIT (A) order ? Finance Act 2015 has made 200A intimation appealable w.e.f. 01-06-15 and not before it. ITAT should have dismissed the matter in limine. Apart from this, does levy 234E depend on the provisions of Sec. 200A ? It is like charging section is being read as dependent on procedural section, which cannot be done
Calm!
Finance Act 2012 amended the law as follows:
Amendment of section 246A.
94. In section 246A of the Income-tax Act, in sub-section (1),—
(i) for the words “Any assessee aggrieved”, the words “Any assessee or any deductor aggrieved” shall be substituted with effect from the 1st day of July, 2012;
(ii) in clause (a),—
(I) for the words and figures “section 143, where the assessee objects”, the words, figures, brackets and letter “section 143 or sub-section (1) of section 200A, where the assessee or the deductor objects” shall be substituted with effect from the 1st day of July,2012;
See: http://www.itatonline.org/info/wp-content/files/finance_act_2012_as_approved_by_president.pdf
The Explanatory statement states as follows:
IV. Intimation after processing of TDS statement
Vide finance (No.2) Act, 2009, section 200A was inserted in the Income-tax Act to provide for processing of TDS statement.
After processing of TDS statement, an intimation is generated specifying the amount payable or refundable. The intimation generated after processing of TDS statement is not
(i) subject to rectification under section 154;
(ii) appealable under section 246A; and
(iii) deemed as notice of demand under section 156.
In order to reduce the compliance burden of the deductor and also to rationalise the provisions of processing of TDS statement, it is proposed to provide that the intimation generated after processing of TDS statement shall be
(i) subject to rectification under section 154;
(ii) appealable under section 246A; and
(iii) deemed as notice of demand under section 156.
These amendments will take effect from 1st July, 2012.
Whether 234E fee can be charged or not, when it cannot be charged in the course of a particular proceedings, it cannot be charged in those proceedings. Section 200A intimation does not allow ley of 234E fee and, therefore, ITAT held so.
No, Sher Singh, you are not right. The amendment in 2015 is that the scope of Section 200A now includes the adjustments in respect of 234E levy also. There is no amendment in 2015 w.r.t the appeal.
The law is settled that if there is no machinery provision to implement the law, the law is not enforceable. In B C Srinivas Shetty’s case, the Supreme Court has observed that “When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion” (128 ITR 294). But that is not the issue. Point is that such a levy cannot be recovered under section 200A till 1.6.2015 and the levy under section 200A was cancelled. Could it be confirmed?