No Late Fee 234E when challan cum statement Form 26QB filed within the due date

No Late Fee 234E can be levied when challan cum statement Form 26QB filed within the due date as required u/s 200(3) rwr 31A(4A) – ITAT

ABCAUS Case Law Citation:
ABCAUS 2566 (2018) (10) ITAT

Important Case Laws Cited/relied upon by the parties:
Mahavir AGENCY vs. Income Tax OFFICER 58 ITD 386
Income Tax Officer vs. Alhusain Constructions (P) ltd. 68 ITD 390 (Mumbai)
Fatheraj Singhvi & Ors vs. Union of India

The assessee has filed this appeal against the order passed by CIT (Appeals) in confirming the order of the Assessing Officer (AO) levying fee / penalty u/s 234E and holding the assessee as assessee in default u/s 201 and charging interest u/s 201 and section 220 of the Income Tax Act, 1961 (the Act)

The appellant alongwith other co-owners of the family had purchased a property from eight persons for sums aggregating to Rs. 3,35,00,000/-; and each seller was paid less than Rs.  lakhs.

Later on income tax department issued intimation-cum-demand notice u/s 200A raising demands u/s 201, u/s 234E and under section 220(2), As per the order passed by AO/CPC, it was alleged that statement of TDS u/s 194 IA had not been filed within time by the assessee.

Before the CIT (A), the assessee’s contention has been that, firstly, each of the sellers were paid less than amount of Rs. 50 lacs in respect of the shares and therefore, provision of section 194IA was not applicable; and secondly, assessee had purchased the property on 6.12.2013 and as per judicial view late fee u/s 234E is not leviable for the period prior to 1.4.2015.

CIT (A) dismissed the assessee’s appeal on the ground that even if property was purchased from eight persons but the consideration paid was Rs. 3,35,00,000/- which was for a single sale deed, therefore, assessee was liable to deduct u/s 194IA and once assessee has failed to do so, then charging of interest u/s 201 and 220(2) was justified. As regards the issue of levy fee u/s 234E, he held that the same had been levied on a date which was after 1.4.2015.

Before the Tribunal, the assessee submitted that she had paid the TDS from her own pocket even though she was not required to deduct TDS u/s 194IA. From No. 26QB and challan of tax deposited were generated on 5.4.2014 from the electronic system. Thus, levy of fee u/s 234E was not applicable at all, because there was no delay in filing of the said statement as the same was filed alongwith the tax deposited.  

It was also submitted that from the plain reading of section 234E, section 200(3) r.w. Rule-31A (4A), fee u/s 234E is leviable only when the statement is not filed as prescribed u/s 200(3), which in turn provides the statement is to be filed after payment of tax to the prescribed authority as per prescribed Rule 31A(4A). The said Rule provides for filing of ‘challan cum statement’ within seven days from the date of deduction. Since, challan cum statement had been filed by the assessee on the same day after paying the tax as required u/s 200(3), therefore, there was no default so as to warrant levy fee u/s 234E.

In other words, the case of the assessee was that Rule-31A(4A) merely refers to challan cum statement that means that filing of the statement after the tax stands paid. It was submitted that had the filing of the statement was envisaged with reference to the date of deduction, then how could the word ‘challan’ appear in the said sub Rule. ‘Challan’ word indicates that tax must stand paid and in fact form 26QB is generated simultaneously with the tax paid challan.

It was further submitted that the tax had been paid and statement 26QB had been filed immediately, thus, there was no loss to the revenue; and even if it was taken that there was delay in filing the statement, then it was at best a technical or venial breach, which should be ignored.

The Tribunal observed that the TDS in 26QB mentions date of filing of ‘challan cum statement’ as 5.4.2014, wherein late filing of ‘challan cum statement’ u/s 234E was levied.  

The Tribunal noted that the fee for default u/s 234E provides that, when a person fails to deliver or cause to be delivered a statement within the time prescribed u/s 200(3), then that person shall be liable to pay fee in the manner provided therein. Thus, fee u/s 234E is leviable if the statement is not filed as prescribed u/s 200(3) which in turn provides that the statement to be filed after the payment of tax to the prescribed authority.

It was further observed that the relevant rule 31A(4A) provides for furnishing of the ‘challan cum statement’ within seven days from the date of deduction. In the instant case the demand had been raised purely on the ground that statement had not been furnished for the tax deduction at source. The assessee had duly deposited the tax and on the same date, statement had also been filed. The relevant provision of section 200(3) read with rule 31A (4A) only refers to filing of ‘challan cum statement’ after the tax has been paid.

The Tribunal opined that the word “challan” in the rule 31A(4A) indicates that the tax must stand paid and that is how form 26QB is generated. Thus, it could not be held that there was any violation of section 200(3).

The Tribunal further opined that in any case, the levy of fee u/s 200A in accordance with the provision of section 234E had come into the statute w.e.f. 1.6.2015. Since the challan and statement had been filed much prior to this date, therefore, no such tax could be be levied u/s 200A.

The Tribunal held that

  • no fee was leviable to the assessee u/s 234E in violation of section 200(3), because assessee had furnished the statement immediately after depositing all the tax without any delay.
  • interest u/s 220(2) could not be levied when fee u/s 234E itself was not leviable. Interest u/s 201(IA) could not be charged as admittedly no order u/s 201(1) had been passed holding the assessee to be “assessee in default”

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