The Bangalore bench of Income Tax Appellate Tribunal (ITAT) has recently held the National Faceless Appeal Centre (NFAC) bound by decisions of the jurisdictional High Court where the Assessing Officer (AO) is situated.
Balram R. Rao appeared for the assessee and Dr. Shankar Prasad K appeared for the revenue.
The assessee Nagesh Consultants, filed statement of tax deducted at source (TDS) for various quarters in Form No.26Q for Quarter 4 of Assessment Year 2013-14 Financial Year 2012-13. There was a delay in filing the above TDS statement and therefore the AO by intimation under section 200A of the Income-Tax Act, 1961 levied late fee under section 234E of the Income-Tax Act, 1961.
Under Sec.234E of the Income-Tax Act, 1961 if there is a delay in filing statement of TDS within the prescribed time then the person responsible for making payment and filing return of TDS is liable to pay by way of fee a sum of Rs.200/- per day during which the failure continues.
Aggrieved by the aforesaid order, the assessee filed application under section 154 of the Income-Tax Act, 1961 before the AO.
Assessee’s contention before the AO was that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 with effect from 1.7.2012. Section 200A of the Income Tax Act, 1961 is a provision which deals with how a return of TDS filed under section 200(3) of the Income Tax Act, 1961 has to be processed.
When the matter is considering the first appellate authority NFAC assessee contended that they could levy fee under Section 234E of the Income Tax Act, 1961 while processing a return of TDS filed under section 200(3) of the Income Tax Act, 1961 only by virtue of the provisions of Section 200A(1)(c), (d) and (f) of the Income Tax Act, 1961 and those provisions came into force only from 1.6.2015
Therefore the authority issuing intimation under section 200A of the Income Tax Act, 1961 while processing return of TDS filed under section 200(3) of the Income Tax Act, 1961 could not levy fee under section 234E of the Income Tax Act, 1961 in respect of statement of TDS filed prior to 1.6.2015.
Even though NFAC/CIT (A) upheld the levy of interest under section 234E of the Income Tax Act, 1961 on the ground that if return of TDS is filed after 1.6.2015, then levy of interest Income Tax Act, 1961 on 234-E is valid.
Against the order of NFAC assesee filed an appeal before the ITAT.
While considering the contentions of the both parties the tribunal relied upon the decision of the Bombay High Court in the case of Subramaniam Vs Siemens India Ltd held that in the case where there is conflict of views between different High Courts, authorities must follow the decision of the High Court within whose jurisdiction he is functioning.
The Court further added that in cases where there is a conflict between the decisions of non-jurisdictional High Courts, the ITO must take the view which is in favor of the assessee and not against him.
N.V. Vasudevan, (Vice President) and Laxmi Prasad Sahu, (Accountant Member) of the division bench of the Tribunal after considering the submissions held that the NFAC was bound by the binding decision of the jurisdictional High Court, where the AO was situated.
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