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I.T.A. Nos.3226 to 3267/Ahd/2016 State Bank of India group case

7. Briefly stated, the relevant material facts are like this. There is admittedly delay in filing of TDS returns by the assessees and it is for this delay that the Assessing Officer has levied fee under section 234E of the Act by way of intimation under section 200A. The matter was taken up in appeal and it was explained by the assessees that section 200A, as it stood at the relevant point of time, did not permit levy of fee under section 234E and, therefore, the fee so levied in the course of processing of return under section 200A is bad in law. When this pleas were raised by the assessees before the learned CIT(A), the learned CIT(A) declined to deal with the matter on merits since the appeals before the learned CIT(A) were delayed and the learned CIT(A) did not find it appropriate to condone the delay. In the impugned orders, the learned CIT(A) has dismissed the appeals as time barred without adjudicating on merits. The assessees are aggrieved and are in appeal before the Tribunal.

(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:

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 234 E 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."

10. Respectfully following the stand so taken by the Tribunal in the above case, I hold that the levy of fee under section 234E in the course of processing under section 200A was indeed bad in law. I, therefore, vacate the orders of the authorities below, and the levy of fees under section 234E in processing under section 200A thus stands deleted. The assessees get the relief accordingly.

11. In the result, all these appeals are allowed. Pronounced in the open court today on the 5th day of July, 2017.