Allowed

Lingeswara Creations v. the Principal Chief Commissioner of Income Tax

Madras HC12 Sept 2024WP/4337/2024

Case brief

AI extract

What is this about?

This Court quashed the impugned Demand Intimation Letters dated 27.03.2019. Relying on M/s. True Blue Voice India, it held that Section 200A(1)(c), which mandates fee computation under Section 234E, was effective from 01.06.2015. Consequently, late fees charged while processing TDS statements for earlier assessment years constituted an error of law not found jurisdictional to impose, necessitating

What did the court decide?

Impugned Demand Intimation Letters dated 27.03.2019 are set aside. The Writ Petition is disposed of.

Lingeswara Creations Vs the Principal Chief Commissioner of Income… — Income Tax | Madras HC (2024)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated: 12.09.2024

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CORAM

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THE HONOURABLE MR. JUSTICE KRISHNAN RAMASAMY

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W.P.No. 4337 of 2024 And

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W.M.P.Nos. 4668 & 4670 of 2024

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Lingeswara Creations Represented by Proprietor Mr.P.Rathinasamy 244 Muthunampalayam Road Tirupur – 641 604. Tamil Nadu ... Petitioner

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..Vs..

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The Principal Chief Commissioner of Income Tax Administrative Block, 63, Race Course Road, Coimbatore, Tamil Nadu – 641 018.

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The Chief Commissioner of Income Tax (TDS) Administrative Block, 63, Race Course Road, Coimbatore, Tamil Nadu – 641 018.

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The Assistant Commissioner of Income Tax Centralized Processing Cell – TDS Aayakar Bhawan, Sector -3 Vaishali, Ghaziabad, U.P.-201010.

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https://www.mhc.tn.gov.in/judis

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The Deputy Commissioner of Income Tax Centralized Processing Cell – TDS Aayakar Bhawan, Sector -3, Vaishali, Ghaziabad, U.P.-201010.

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The Income Tax Officer, TDS Ward No.121, Adams Building, Sixty Feet Road Tiruppur. ... Respondents

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PRAYER: Petition under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari calling for the records on the files of the third and fourth respondents in impugned Demand Intimation Letter Nos. TDS/1213/26Q/D/100032980561, TDS/1213/26Q/D/100032980581, TDS/1213/26Q/D/100032980585, TDS/1314/26Q/D/100032980587,

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TDS/1314/26Q/D/100032980589 dated 27.03.2019 and quash the same as being illegal, void, arbitrary, unconstitutional, without jurisdiction, without authority of law and contrary to the principles of natural justice.

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For Petitioner :: Mr. B.Raveendran

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for Mr. K.Thyagarajan

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For Respondents :: Dr.B.Ramaswamy

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Additional Government Pleader

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https://www.mhc.tn.gov.in/judis

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ORDER

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The Writ Petition has been filed challenging the impugned Demand Intimation Letters, dated 27.03.2019, passed by the third respondent and to quash the same.

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The learned counsel appearing on either side would submit that the Judgment of this Court reported in 2023 (10) TMI 1141 [ M/s. True Blue Voice India Private Ltd., and another Vs. the Chief Commissioner of Income Tax – TDS, Chennai and others] would squarely apply to the facts of the present case.

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The relevant portion of the said Judgment is extracted below:-

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“10. There is no dispute on the aspect of validity of the Section 234E of the Act. The only issue that has to be decided in the present case is as to whether the late fee can be imposed under Section 234E of the Act, while processing the statement of TDS under Section 200A of the Act for the subject assessment years?

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https://www.mhc.tn.gov.in/judis

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11. On considering the submissions of both the learned counsel and while reading Section 234E of the Act, it appears that the Department/respondents can impose the late fee for the circumstances mentioned under Section 234E of the Act with effect from 01.07.2012, but not when they process the TDS under Section 200A of the Act. In the Finance Bill, 2015, Section 200A(1)(c) of the Act was introduced, which reads as follows:

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“200A. Processing of statements of tax deducted at source.—

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(1) ...................... (a)......................

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(b)........................

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(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;”

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12. Further, the objects and reasons for introduction of Section 200A(1)(c) of the Act are as follows:

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https://www.mhc.tn.gov.in/judis

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“Rationalisation of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS)

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Under Chapter XVII-B of the Act, a person is required to deduct tax on certain specified payment at the specified rate if the payment exceeds the specified threshold. The person deducting tax (‘the deductor’) is required to file a quarterly Tax Deduction at Source (TDS) statement containing the details of deduction of tax made during the quarter by the prescribed due date. Similarly, under Chapter XVII-BB of the Act, a person is required to collect tax on certain specified receipts at the specified rates. The person collecting tax (‘the collector’) also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Act to provide for levy of fee for late furnishing of TDS/TCS statement. The levy of fee under section 234E of the Act has proved to be an effective tool

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https://www.mhc.tn.gov.in/judis

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in improving the compliance in respect of timely submission of TDS/TCS statement by the deductor or collector.

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Finance (No.2) Act, 2009 inserted section 200A in the Act which provides for processing of TDS statements for determining the amount payable or refundable to the deductor. However, as section 243E was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fee payable under section 234E of the Act at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act.

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Currently, the provisions of sub-section (3) of section 200 of the Act enable the deductor to furnish TDS correction statement and consequently, section 200A of the Act allows processing of the TDS correction statement. However, currently, there does not exist any

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https://www.mhc.tn.gov.in/judis

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provision for allowing a collector to file correction statement in respect of TCS statement which has been furnished. It is, therefore, proposed to amend the provisions of section 206C of the Act so as to allow the collector to furnish TCS correction statement. Currently, there does not exist any provision in the Act to enable processing of the TCS statement filed by the collector as available for processing of TDS statement. As the mechanism of TCS statement is similar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act.”

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13. A reading of the above makes it clear that since no mechanism was available for determination of late fee payable under Section 234E of the Act at the time of processing TDS statements. Thus it was proposed to amend the provisions of Section 200A of the Act, so as to enable the computation of fee payable under

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https://www.mhc.tn.gov.in/judis

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Section 234E of the Act at the time of processing of TDS statement under Section 200A of he Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015.

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14. Now the dispute is with regard to the assessment years 2012- 13, 2013-14, 2014-15 and the applicability of Section 200A(1)(c) of the Act for relevant assessment years. There is no dispute on the aspect that the TDS statement was filed under Section 200A of the Act and the respondent had also issued the intimation under Section 200A of the Act, which means the respondents have processed the returns under Section 200A of the Act. When the respondent had started to process the returns of the petitioner under Section 200A of the Act, obviously they have to follow the requirements under Section 200A of the Act. Section 200A(1)(c) of the Act was introduced with effect from 01.06.2015. A reading of the objects and reasons of the same makes it clear that since no mechanism was available, Section 200A(1)(c) of the Act was introduced for imposing late fee for the delay in filing statement of TDS. Therefore,

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https://www.mhc.tn.gov.in/judis

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from the introduction of the said Sub-Section it is clear that prior to the same, though Section 234E of the Act was introduced with effect from 01.07.2012, the Authorities were not empowered to impose the late fee while processing the statement of TDS under Section 200A of the Act.

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15. The learned counsel for the respondent advanced his arguments on the aspect of the imposition of late fee by applying Section 200A(1)(c) of the Act retrospectively. This Court is not in agreement with the said submissions of the respondent. Since, there was no provision for imposing the late fee under Section 234E of the Act while filing and processing the TDS returns under Section 200A of the Act, clause (c) to Sub-Section (1) to Section 200A was introduced with effect from 01.07.2012. Therefore, the aforesaid submission made by the learned counsel for the respondent is rejected by this Court.

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16. Further it was stated by the respondent that they have no power to waive the late fee and only the Commissioner of Income Tax is empowered to pass the revised order by proper application of provision of Section 264C of the Act.

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https://www.mhc.tn.gov.in/judis

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17. In view of the above, it is made clear that the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015-2015. However, Section 200A(1)(c) of the Act was not introduced during the said assessment years. In the absence of any provisions under Section 200A of the Act, when they have processed the application for TDS under Section 200A, no late fee can be imposed under Section 234E. Hence, in such view of the matter, this Court feels that the impugned orders are liable to be set aside.

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18. Accordingly, the impugned orders dated 24.09.2021 are set aside and the Department is directed to consider the reply of the petitioner dated 16.04.2019 as a revision application, which was earlier considered as a waiver application, and pass appropriate orders by taking into consideration of the order passed by this Court within a period of eight weeks from the date of receipt of copy of this order.”

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https://www.mhc.tn.gov.in/judis

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In the present case, the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 20132014. However, Section 200A of the Act was not introduced during the said assessment years and it was introduced only with effect from 01.06.2015 . Therefore, in the absence of any provisions under Section 200A of the Act, the respondents ought not to have imposed late fee under Section 234E while processing the applications for TDS under Section 200A. Hence, in such view of the matter, this Court is of the opinion that the impugned Demand Intimation Letters are liable to be set aside.

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Accordingly, the impugned demand Intimation Letters dated

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27.03.2019 are set aside and the Writ Petition stands disposed of. No costs.

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12.09.2024

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vsg (7/8) Index: Yes/No Internet: Yes/No Speaking / Non Speaking Order

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https://www.mhc.tn.gov.in/judis

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1.	The Principal Chief Commissioner of Income Tax Administrative Block, 63, Race Course Road, Coimbatore, Tamil Nadu – 641 018.
2.	The Chief Commissioner of Income Tax (TDS) Administrative Block, 63, Race Course Road, Coimbatore, Tamil Nadu – 641 018.
3.	The Assistant Commissioner of Income Tax Centralized Processing Cell – TDS Aayakar Bhawan, Sector -3 Vaishali, Ghaziabad, U.P.-201010.
4.	The Deputy Commissioner of Income Tax Centralized Processing Cell – TDS Aayakar Bhawan, Sector -3, Vaishali, Ghaziabad, U.P.-201010.
5.	The Income Tax Officer, TDS Ward No.121, Adams Building, Sixty Feet Road Tiruppur.

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https://www.mhc.tn.gov.in/judis

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KRISHNAN RAMASAMY, J.,

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vsg

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W.P.No. 4337 of 2024 And W.M.P.Nos. 4668 & 4670 of 2024

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12.09.2024 (7/8)

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https://www.mhc.tn.gov.in/judis

Lingeswara Creations v. the Principal Chief Commissioner of Income Tax

Case brief

What is this about?

What did the court decide?

Lingeswara Creations v. the Principal Chief Commissioner of Income Tax

Case brief

What is this about?

What did the court decide?

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