VARUN ATUL JAIN,MUMBAI vs. ITO, WARD 22(3)(1), MUMBAI, MUMBAI

The assessee has raised the following grounds of appeal: 1. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the levy of interest amounting to Rs 21,144/- imposed by the Ld. Assessing Officer u/s 201 of the Income Tax Act, 1961, without appreciating the fact that the appellant had substantially complied with the statutory provisions in good faith, and that the levy of such interest is unjustified and results in undue hardship to the appellant. 2. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the levy of late filing fees amounting to Rs 36,000/- imposed by the Ld. Assessing Officer u/s 234E of the Income Tax Act, 1961, without appreciating the fact that the appellant had substantially complied with the statutory provisions in good faith, and that the levy of such fees is unjustified and results in undue hardship to the appellant. 3. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the levy of interest u/s 201 and late filing fees u/s 234E of the Income- tax Act, 1961, without appreciating that such levies are compensatory in nature and should be levied benevolently based on the facts of each case and should not arise where delay in compliance is attributable to genuine and bona fide reasons in the interest of justice. 4. The appellant craves leave to add, alter, amend, modify, delete, vary and/or withdraw any or all of the grounds of appeal as may be necessary.

The assessee subsequently deposited TDS amounting to Rs.1,76,250/- and furnished the challan-cum-statement in Form No. 26QB on 29.03.2025. The Form No. 26QB was processed by the CPC-TDS under section 200A of the Act. By the intimation dated 02.04.2025 the AO charged interest of Rs.21,144/- under section 201(1A) of the Act for delayed payment of TDS and levied fee of Rs.36,000/- under section 234E of the Act for delayed furnishing of Form No. 26QB. After rounding off, the net demand was determined at Rs.57,140/-.

Aggrieved, the assessee preferred an appeal before the learned CIT(A). The assessee submitted that the delay was neither intentional nor wilful. It was explained that the assessee was unaware of the prescribed timelines and that the accountant handling the assessee’s income-tax matters was unavailable owing to medical exigencies in his family. It was submitted that upon noticing the lapse during the year-end verification, the assessee immediately deposited the TDS and furnished Form No. 26QB on 29.03.2025. It was further contended that the TDS was deposited

The learned CIT(A) did not accept the explanation of the assessee. In respect of the interest charged under section 201(1A), the learned CIT(A) held that such interest was statutory, mandatory and automatic upon the default being established and that there was no discretion to waive the same on equitable considerations. As regards the fee levied under section 234E, the learned CIT(A) observed that the TDS statement related to a period subsequent to 01.06.2015 and, therefore, the AO was empowered under section 200A to levy the fee while processing the statement. Holding that reasonable cause or hardship did not provide a basis for waiver of the statutory fee, the learned CIT(A) confirmed both the levies and dismissed the appeal.

Before us, the learned Authorised Representative reiterated the submissions made before the learned CIT(A). He submitted that the delay in depositing the TDS and furnishing Form No. 26QB was neither deliberate nor wilful, but occurred on account of the assessee’s lack of awareness regarding the prescribed timelines and the temporary unavailability of his accountant owing to medical exigencies in the latter’s family. Upon noticing the lapse, the assessee deposited TDS of Rs.1,76,250/- and furnished Form No. 26QB on 29.03.2025. The learned AR further submitted that the tax was deposited, and credit thereof was made available to the deductee, within the same financial year, resulting in no loss to the

Per contra, the learned Departmental Representative relied upon the orders of the authorities below and submitted that the levy of interest under section 201(1A) and fee under section 234E of the Act was in accordance with law. He, therefore, supported the order of the learned CIT(A).

We have considered the rival submissions and perused the material available on record. The controversy before us is confined to the levy of interest of Rs.21,144/- under section 201(1A) and fee of Rs.36,000/- under section 234E of the Act. The material facts are not in dispute. The assessee paid the consideration for the immovable property on 08.08.2024, whereas the corresponding TDS of Rs.1,76,250/- was deposited and Form No. 26QB was furnished only on 29.03.2025.

Section 201(1A) mandates the payment of interest where a person liable to deduct tax fails to deduct the whole or any part of the tax or, after deducting the tax, fails to pay the same to the credit of the Central Government within the prescribed period. The liability to pay interest is a statutory consequence of the delay. Once the foundational facts regarding the amount of tax and the period of delay are undisputed, the levy follows by operation of law.

Interest under section 201(1A) compensates the Revenue for the period during which the amount lawfully payable to the Central Government remained unpaid. The absence of mala fide intention or any allegation of personal utilisation of the amount is, therefore, not determinative of the liability. The assessee has also not demonstrated any error in the amount of interest or in the period for which it was computed. We, therefore, find no infirmity in the order of the learned CIT(A) confirming the interest of Rs.21,144/- under section 201(1A) of the Act. Ground No. 1 is accordingly dismissed.

Section 234E provides for the levy of a fee for every day during which the failure to furnish the prescribed TDS statement continues, subject to the statutory ceiling contained therein. The obligation is linked to the delay in furnishing the statement and

Section 200A, as applicable to the period under consideration, expressly permits computation of the fee payable under section 234E while processing a TDS statement. The statement in the present case pertains to the financial year 2024- 25, which is subsequent to 01.06.2015. The competence of the AO to compute the fee under section 234E while processing the statement under section 200A cannot, therefore, be faulted.

The contention that the delay was attributable to lack of awareness and the medical exigencies faced by the accountant cannot be accepted as a ground for deleting the fee. The statutory provision does not confer discretion upon the AO or the appellate authority to waive the fee merely on the basis of reasonable cause or hardship. Further, filing Form No. 26QB within the same financial year does not cure the delay in complying with the prescribed time limit.

The assessee has not pointed out any error in the period of default, the applicable daily rate or the computation of the fee. We, therefore, find no infirmity in the order of the learned CIT(A) confirming the fee of Rs.36,000/- levied under section 234E of the Act. Ground No. 2 is accordingly dismissed.

Ground No. 4 is general in nature and does not require separate adjudication.

In the result, the appeal of the assessee is dismissed.