M/S. ENNAR ESTATES & HOLDINGS PVT. LTD.,CHENNAI vs. ITO, CORP. WARD-4,, CHENNAI

The assessee is a company and is required to file quarterly returns of period for the relevant Financial Year. However, the assessee filed the quarterly returns with a delay due to which the CPC-TDS issued an intimation u/s. 200A of the Act levying late fee u/s. 234E of the Act. Aggrieved, the assessee filed further appeal before the CIT(A). There was a delay of more than six years in filing the appeal before the CIT(A). The CIT(A) therefore dismissed the appeal in limine. The assessee is in appeal before the Tribunal against the order of the CIT(A).

There is a delay of 61 days in filing the appeals by the assessee. The assessee has filed condonation petitions/affidavits stating the reasons for delay in filing the appeals. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeals before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC), we condone the delay in filing the appeal and admit all the appeals for adjudication.

We have heard the parties, and perused the material available on record. The assessee submitted an affidavit before us contending the reasons for delay in filing the appeal before the CIT(A). The main contention of the assessee as the reason for delay is that the company had to discontinue its operations since 2017 due to unfortunate demise of the Director of the company and the audit consultant. The assessee further submitted that the strike off proceedings was initiated in the year 2023 since the assessee was not carrying on any activity since 2017 and all the assets were disposed of. The assessee had also stated in the affidavit that only during the strike off

The ld AR reiterated the submissions of the assessee made in the affidavit. The ld AR further submitted that the impugned issue on merits is already covered by various judicial precedence and dismissing the appeal on the ground of technicality is not correct. Before proceeding further, it is imperative to consider the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) where the Apex Court laid down the following six principles which are reproduced hereunder – (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, common sense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

From the above it is clear that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. We notice that the merits in assessee's case, is covered by judicial precedents, including the decisions of the Hon’ble jurisdictional High Courts and coordinate benches of the Tribunal, that prior to 01.06.2015, there was no enabling provision under section 200A of the Act to levy fees under section 234E while processing TDS statements. Accordingly, as observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, in our opinion, by preferring the substantial justice, the delay in filing the appeal before the CIT(A) has to be condoned.

On merits we notice that the coordinate bench in an identical situation in the case of Paul System Technologies Private Limited vs ITO (ITA Nos.59 to 67/CHNY/2026 dated 10.04.2026) has held that –

We have heard the case, perused the materials on record,and gone through orders of the authorities below.The issues arising in the present bunch of appeals are twofold, viz., (i) whether the delay in filing the appeals before the ld. CIT(A) deserves to be condoned, and (ii) whether the levy of late fees under section 234E of the Act in the facts of the present case is sustainable in law. At the outset, it is noticed that the ld. CIT(A) has dismissed all the nine appeals in limine on account of inordinate delay ranging from 8 to 10 years, without

Considering the explanation furnished, we find that the delay has occurred due to bonafide reasons and circumstances beyond the control of the assessee. It is a settled proposition of law that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the ld. CIT(A) has not examined the explanation for delay in a judicious and liberal manner. Therefore, in the interest of justice, we are inclined to condone the delay in filing all the appeals before the ld. CIT(A).

Having condoned the delay, we now proceed to examine the issue on merits. The undisputed facts are that the late fees under section 234E of the Act have been levied while processing the TDS statements under section 200A of the Act for the relevant assessment years. It is also not in dispute that the TDS returns pertaining to F.Y. 2014-15 and part of F.Y. 2015-16 relate to the period prior to 01.06.2015, i.e., before the amendment enabling levy of fee under section 234E through processing under section 200A came into effect.

It is by now well settled by various judicial precedents, including the decisions of the Hon’ble jurisdictional High Courts and coordinate benches of the Tribunal, that prior to 01.06.2015, there was no enabling provision under section 200A of the Act to levy fees under section 234E while processing TDS statements. Therefore, any such levy for the period prior to 01.06.2015 is not sustainable in law. Our view is supported by the Hon’ble jurisdictional Madras High Court decision M/s.Sri Rujula International vs. PCIT (WP Nos. 4307 of 2024, WMP Nos.4619 & 4621 of 2024) dated 12.09.2024 by following the earlier decisions of the Hon’ble High Court in the case of 2023(10) TMI 1141 [M/s.True Blue Voice India Private Limited vs. Chief CIT, TDS [2024] 158 taxmann.com 67 (Madras) held as under:-

Accordingly, the impugned demand Intimation Letters dated 28.03.2019 are set aside and the Writ Petition stands disposed of. No costs.”

Further, we note that the issue is already covered by the decision of the coordinate bench of the tribunal in the case of Gopuram Enterprises Private Limited vs. ACIT, ITA No.1002-1007/Chny/2024 dated 26.06.2024 by holding as under:-

On considering the submissions of both the learned counsel and while reading Section 234E of the Act, it appears that the Department/respondents can impose the late fee for the circumstances mentioned under Section 234E of the Act with effect from 01.07.2012, but not when they process the TDS under Section 200A of the Act. In the Finance Bill, 2015, Section 200A(1)(c) of the Act was introduced, which reads as follows:

Further, the objects and reasons for introduction of Section 200A(1)(c) of the Act are as follows:

A reading of the above makes it clear that since no mechanism was available for determination of late fee payable under Section 234E of the Act at the time of processing TDS statements. Thus it was proposed to amend the provisions of Section 200A of the Act, so as to enable the computation of fee payable under Section 234E of the Act at the time of processing of TDS statement under Section 200A of he Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015.

Now the dispute is with regard to the assessment years 2012- 13, 2013-14, 2014-15 and the applicability of Section 200A(1)(c) of the Act for relevant assessment years. There is no dispute on the aspect that the TDS statement was filed under Section 200A of the Act and the respondent had also issued the intimation under Section 200A of the Act, which means the respondents have processed the returns under Section 200A of the Act. When the respondent had started to process the returns of the petitioner under Section 200A of the Act, obviously they have to follow the requirements under Section 200A of the Act. Section 200A(1)(c) of the Act was introduced with effect from 01.06.2015. A reading of the objects and reasons of the same makes it clear that since no mechanism was available, Section 200A(1)(c) of the Act was introduced for imposing late fee for the delay in filing statement of TDS. Therefore, from the introduction of the said Sub-Section it is clear that prior to the same, though Section 234E of the Act was introduced with effect from 01.07.2012, the Authorities were not empowered to impose the late fee while processing the statement of TDS under Section 200A of the Act.

The learned counsel for the respondent advanced his arguments on the aspect of the imposition of late fee by applying Section 200A(1)(c) of the Act retrospectively. This Court is not in agreement with the said submissions of the respondent. Since, there was no provision for imposing the late fee under Section 234E of the Act while filing and processing the TDS returns under Section 200A of the Act, clause (c) to Sub-Section (1) to Section 200A was introduced with effect from 01.07.2012. Therefore, the aforesaid submission made by the learned counsel for the respondent is rejected by this Court.

Further it was stated by the respondent that they have no power to waive the late fee and only the Commissioner of Income Tax is empowered to pass the revised order by proper application of provision of Section 264C of the Act.

In view of the above, it is made clear that the respondent had had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015-2015. However, Section 200A(1)(c) of the Act was not introduced during the said assessment

In the result, all six these appeals filed by the assessee are allowed.

Respectfully following the binding judicial precedents relied upon by the ld.AR, we hold that the levy of late fees u/s.234E of the Act in respect of TDS statements pertaining to the period prior to 01.06.2015 is invalid and liable to be deleted. Accordingly, the eight (8) appeals for A.Ys. 2014-15 and 2015-16 and corresponding demands raised u/s.234E of the Act as detailed beloware hereby deleted.

It can be seen that the quarterly returns under dispute in the present appeals pertain to period prior to 01.06.2015 and therefore respectfully following the judicial precedence we hold that the levy of late fees u/s.234E

In result the appeals in AY 2013-14 to AY 2015-16 are allowed.