The CIT(A) has confirmed my pre-June-2015 s.234E fee by following the Gujarat High Court, even though my jurisdictional High Court has decided the other way. Is the Tribunal bound to follow my own High Court?
Yes. The Bangalore Bench held that the Karnataka High Court's decision in Fatheraj Singhvi is the binding decision of the jurisdictional High Court, and deleted the s.234E fee for all nine quarters, notwithstanding that the CIT(A) had preferred the Gujarat High Court's contrary decision in Rajesh Kourani. The fee under s.234E cannot be levied without the machinery provision of s.200A.
Decided by the ITAT (George George K, Judicial Member and Padmavathy S, Accountant Member) on 2022-03-25, reported as ITA Nos.82 to 90/Bang/2022, assessment years 2013-14 and 2014-15 (ITAT Bangalore 'C' Bench). It bears on section 234E, section 200A, section 200A(1)(c), section 271H, section 271H(3), section 272A(2)(k), section 200(3), section 206C(3) of the Income Tax Act 1961, in TDS Defaults, How Tax Law Is Read, Appeals and Penalty matters.
Where the High Courts are split, the Tribunal follows the High Court whose jurisdiction it sits in, and that is the whole argument before a Bench in a State that has decided the point. It is worth knowing what happens in a State whose own High Court is silent — this order does not decide that, and the answer usually urged is the rule that where two views are possible the one favourable to the assessee is taken. The second value of this order is what it preserves: it reproduces paragraphs 17 to 24 of Fatheraj Singhvi in full, which is the fullest text of that judgment I was able to retrieve anywhere. That extract contains the Karnataka Court's reasoning on s.271H, which is the reasoning the Gujarat High Court rejected: that s.234E, s.271H and the second proviso to s.272A(2) were enacted together, that under s.271H(3) no penalty is levied where the deductor proves he paid the tax with fee and interest and delivered the statement within one year, and that the fee is therefore the price of the s.271H escape and satisfies the quid pro quo test. On that reading s.200A(1)(c) is not regulatory but confers substantive power, and so is prospective. Third, the order shows the Supreme Court's suo motu limitation order at work: the period 15 March 2020 to 28 February 2022 was excluded, so what looked like an 84-day delay was no delay at all.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a private limited company. The DCIT, CPC passed orders under s.200A(1) levying late fee under s.234E for delay in filing TDS returns for assessment years 2013-14 and 2014-15, covering nine quarters across forms 24Q and 26Q for financial years 2012-13 and 2013-14, the individual levies ranging from Rs 4,200 to Rs 57,000. Before the CIT(A) the assessee contended that prior to 1 June 2015 there was no enabling provision for the payment and levy of fee under s.234E. The CIT(A) (NFAC) confirmed the orders by relying on the Gujarat High Court in Rajesh Kourani v. Union of India, that s.234E is a charging provision and that the fee could be levied even without a regulatory provision in s.200A for computation. Before the Tribunal there was an apparent delay of 84 days, the CIT(A)'s order having been received on 13 August 2021 and the appeals filed on 5 January 2022.
The appeals were allowed. Following the binding decision of the jurisdictional High Court in Fatheraj Singhvi, the Bench held that the fee under s.234E cannot be levied without the machinery provision of s.200A, and the levies for the pre-June-2015 quarters were deleted (paras 9 to 11). On limitation, the period from 15 March 2020 to 28 February 2022 stood excluded under the Supreme Court's suo motu order in W.P. No.3 of 2020 read with M.A. 21 of 2022, so the period from 12 October 2021 to 5 January 2022 was covered by the exclusion and the appeals were held to be filed in time with no delay to condone (para 2).
The Bench recorded the assessee's submission that s.200A as it then stood permitted computation only after adjustment for arithmetical error, an incorrect claim apparent from information in the statement, and sums taxable as computed in the statement, and that no other adjustment was permissible, so the enabling provision for the fee could not be used without the machinery provision (para 6). It then reproduced paragraphs 17 to 24 of the Karnataka High Court's judgment in Fatheraj Singhvi (para 9): that s.234E cannot be read in isolation but must be read with the mechanism and mode provided for its enforcement; that s.234E, s.271H and the second proviso to s.272A(2) were introduced together, so that the fee under s.234E gives the defaulter the privilege of coming out of the rigour of s.271H(1)(a), subject to the one-year outer limit in s.271H(3), and on that footing satisfies the quid pro quo test; that the mechanism for computation and demand of the fee introduced in s.200A with effect from 1 June 2015 is therefore not merely regulatory but confers substantive power on the authority; and that on the settled principle that a statute is read prospectively unless expressly or impliedly made retrospective, the substitution in s.200A(1) is prospective, so that no demand or intimation for fee under s.234E could be made under s.200A for a period prior to 1 June 2015 — with the express caveat that a deductor who has already paid the fee on such an intimation cannot reopen the question unless he paid under protest. The Bench then applied that as the binding decision of its jurisdictional High Court (para 10).
We respectfully following the binding decision of the jurisdictional High Court in the case of Shri Fatheraj Singhvi (Supra) hold that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A.
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Handle my notice → Ask a CA on WhatsAppYes. The Bangalore Bench held that the Karnataka High Court's decision in Fatheraj Singhvi is the binding decision of the jurisdictional High Court, and deleted the s.234E fee for all nine quarters, notwithstanding that the CIT(A) had preferred the Gujarat High Court's contrary decision in Rajesh Kourani. The fee under s.234E cannot be levied without the machinery provision of s.200A. This was decided by the ITAT (George George K, Judicial Member and Padmavathy S, Accountant Member) and bears on section 234E, section 200A, section 200A(1)(c), section 271H, section 271H(3), section 272A(2)(k), section 200(3), section 206C(3) of the Income Tax Act 1961. It is reported as ITA Nos.82 to 90/Bang/2022, assessment years 2013-14 and 2014-15 (ITAT Bangalore 'C' Bench). Where the High Courts are split, the Tribunal follows the High Court whose jurisdiction it sits in, and that is the whole argument before a Bench in a State that has decided the point. It is worth knowing what happens in a State whose own High Court is silent — this order does not decide that, and the answer usually urged is the rule that where two views are possible the one favourable to the assessee is taken. The second value of this order is what it preserves: it reproduces paragraphs 17 to 24 of Fatheraj Singhvi in full, which is the fullest text of that judgment I was able to retrieve anywhere. That extract contains the Karnataka Court's reasoning on s.271H, which is the reasoning the Gujarat High Court rejected: that s.234E, s.271H and the second proviso to s.272A(2) were enacted together, that under s.271H(3) no penalty is levied where the deductor proves he paid the tax with fee and interest and delivered the statement within one year, and that the fee is therefore the price of the s.271H escape and satisfies the quid pro quo test. On that reading s.200A(1)(c) is not regulatory but confers substantive power, and so is prospective. Third, the order shows the Supreme Court's suo motu limitation order at work: the period 15 March 2020 to 28 February 2022 was excluded, so what looked like an 84-day delay was no delay at all. If it applies to you, the first step is this: Find out whether your jurisdictional High Court has decided the point before you argue anything else, and lead with that. A CIT(A) who follows a non-jurisdictional High Court in the teeth of the jurisdictional one is making a reviewable error, and this order says so.
The assessee is a private limited company. The DCIT, CPC passed orders under s.200A(1) levying late fee under s.234E for delay in filing TDS returns for assessment years 2013-14 and 2014-15, covering nine quarters across forms 24Q and 26Q for financial years 2012-13 and 2013-14, the individual levies ranging from Rs 4,200 to Rs 57,000. Before the CIT(A) the assessee contended that prior to 1 June 2015 there was no enabling provision for the payment and levy of fee under s.234E. The CIT(A) (NFAC) confirmed the orders by relying on the Gujarat High Court in Rajesh Kourani v. Union of India, that s.234E is a charging provision and that the fee could be levied even without a regulatory provision in s.200A for computation. Before the Tribunal there was an apparent delay of 84 days, the CIT(A)'s order having been received on 13 August 2021 and the appeals filed on 5 January 2022. The matter was decided on 2022-03-25 by the ITAT (George George K, Judicial Member and Padmavathy S, Accountant Member). On those facts the ITAT held as follows. The appeals were allowed. Following the binding decision of the jurisdictional High Court in Fatheraj Singhvi, the Bench held that the fee under s.234E cannot be levied without the machinery provision of s.200A, and the levies for the pre-June-2015 quarters were deleted (paras 9 to 11). On limitation, the period from 15 March 2020 to 28 February 2022 stood excluded under the Supreme Court's suo motu order in W.P. No.3 of 2020 read with M.A. 21 of 2022, so the period from 12 October 2021 to 5 January 2022 was covered by the exclusion and the appeals were held to be filed in time with no delay to condone (para 2).
The Bench recorded the assessee's submission that s.200A as it then stood permitted computation only after adjustment for arithmetical error, an incorrect claim apparent from information in the statement, and sums taxable as computed in the statement, and that no other adjustment was permissible, so the enabling provision for the fee could not be used without the machinery provision (para 6). It then reproduced paragraphs 17 to 24 of the Karnataka High Court's judgment in Fatheraj Singhvi (para 9): that s.234E cannot be read in isolation but must be read with the mechanism and mode provided for its enforcement; that s.234E, s.271H and the second proviso to s.272A(2) were introduced together, so that the fee under s.234E gives the defaulter the privilege of coming out of the rigour of s.271H(1)(a), subject to the one-year outer limit in s.271H(3), and on that footing satisfies the quid pro quo test; that the mechanism for computation and demand of the fee introduced in s.200A with effect from 1 June 2015 is therefore not merely regulatory but confers substantive power on the authority; and that on the settled principle that a statute is read prospectively unless expressly or impliedly made retrospective, the substitution in s.200A(1) is prospective, so that no demand or intimation for fee under s.234E could be made under s.200A for a period prior to 1 June 2015 — with the express caveat that a deductor who has already paid the fee on such an intimation cannot reopen the question unless he paid under protest. The Bench then applied that as the binding decision of its jurisdictional High Court (para 10). In the words reproduced by the source cited on this page: "We respectfully following the binding decision of the jurisdictional High Court in the case of Shri Fatheraj Singhvi (Supra) hold that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A." The decision followed or applied Fatheraj Singhvi v. Union of India (Karnataka High Court) — followed as the binding jurisdictional High Court decision, paras 17 to 24 reproduced; Rajesh Kourani v. Union of India (2017) 85 taxmann.com 137 (Gujarat) — relied on by the CIT(A), not followed; In Re: Cognizance for Extension of Limitation, Suo Motu W.P. No.3 of 2020 with M.A. 21 of 2022 (SC) — applied on limitation.
It was decided by the ITAT on 2022-03-25 and is reported as ITA Nos.82 to 90/Bang/2022, assessment years 2013-14 and 2014-15 (ITAT Bangalore 'C' Bench). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 234E, section 200A, section 200A(1)(c), section 271H, section 271H(3), section 272A(2)(k), section 200(3), section 206C(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were allowed. Following the binding decision of the jurisdictional High Court in Fatheraj Singhvi, the Bench held that the fee under s.234E cannot be levied without the machinery provision of s.200A, and the levies for the pre-June-2015 quarters were deleted (paras 9 to 11). On limitation, the period from 15 March 2020 to 28 February 2022 stood excluded under the Supreme Court's suo motu order in W.P. No.3 of 2020 read with M.A. 21 of 2022, so the period from 12 October 2021 to 5 January 2022 was covered by the exclusion and the appeals were held to be filed in time with no delay to condone (para 2). It arises in TDS Defaults, How Tax Law Is Read, Appeals and Penalty matters, on section 234E, section 200A, section 200A(1)(c), section 271H, section 271H(3), section 272A(2)(k), section 200(3), section 206C(3) of the Income Tax Act 1961, and was decided by George George K, Judicial Member and Padmavathy S, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If your High Court has not decided it, argue the two-views rule and cite Fatheraj Singhvi as the view favourable to the assessee; do not assume Rajesh Kourani binds you merely because it is later. Attach the quarter-wise table. The Bench set out each form (24Q or 26Q), quarter, financial year and fee amount, which is what let it dispose of nine appeals together and is the exhibit the Bench will want. Check limitation against the Supreme Court's suo motu order in W.P. No.3 of 2020 before conceding delay for any appeal filed between March 2020 and February 2022 — the exclusion may mean there is no delay to condone at all. Keep the s.271H analysis separate. The Karnataka reasoning that the fee buys out the penalty was expressly rejected by the Gujarat High Court, so do not rely on it to resist a s.271H penalty; work the s.271H(3) conditions on their own terms.
High Courts differ on this point. The rule this order applies — that the Tribunal follows its jurisdictional High Court — is not in doubt; what is in doubt is the underlying question, on which Karnataka and Kerala go one way and Gujarat, Rajasthan and Madras the other. A Bench sitting in Gujarat, Rajasthan or Tamil Nadu would be obliged to reach the opposite result on the same facts. I did not check later treatment of this particular order, and no check was made for any appeal against this order under s.260A, nor for any special leave petition against Fatheraj Singhvi or Rajesh Kourani. I could not retrieve Fatheraj Singhvi itself to confirm the extract against the original. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
I was not able to retrieve Fatheraj Singhvi v. Union of India in its own text. It is not on indiankanoon (a title search returns nothing), casemine returns 403 and the itatonline copy is a scanned PDF. What this entry says about Fatheraj is drawn from the extract reproduced inside this Tribunal order, which I fetched twice and which came back identical on both passes. That extract is itself OCR-damaged in places and a reader quoting from it should know: it reads 'with effect from 17.2012' for 1.7.2012, '1.6.20 15' for 1.6.2015, '3ecticn. 272A(2)' for section 272A(2), 'section 28513' for section 285BA, 'for TDS after, 101.0 7.2012' for 1.7.2012, and 'Section 271(1)(a)' in para 17 where s.271H(1)(a) is plainly meant. Two further oddities in the order itself: the paragraph numbering skips 7 (it runs 6 then 8), and para 9 reads 'in the case of Shri Fatheraj Singhvi Vs. Union of India citation' with the word 'citation' left standing where the citation should be. The quarter table in para 3 lists nine rows against nine appeals but shows form 26Q Q1 of FY 2013-14 at Rs 4,200 twice. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed. Following the binding decision of the jurisdictional High Court in Fatheraj Singhvi, the Bench held that the fee under s.234E cannot be levied without the machinery provision of s.200A, and the levies for the pre-June-2015 quarters were deleted (paras 9 to 11). On limitation, the period from 15 March 2020 to 28 February 2022 stood excluded under the Supreme Court's suo motu order in W.P. No.3 of 2020 read with M.A. 21 of 2022, so the period from 12 October 2021 to 5 January 2022 was covered by the exclusion and the appeals were held to be filed in time with no delay to condone (para 2).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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