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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI N.V VASUDEVAN & MS. PADMAVATHY S
IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDENT AND MS. PADMAVATHY S, ACCOUNTANT MEMBER
ITA No.2620/Bang/2019 Assessment year : 2013-14
M/s Vth Source Components Pvt. Vs. The Commissioner of Income-tax Ltd., (Appeals)-3, No.67, 1st Floor, Govindappa Road, Bengaluru. Bengaluru-560004. PAN – AACCV 3462 A APPELLANT RESPONDENT
Assessee by : Shri V Sudheendranath, AR Revenue by : Shri Priyadarshini Mishra, Addl. CIT(DR)
Date of hearing : 28.04.2022 Date of Pronouncement : 03.05.2022
O R D E R Per Padmavathy S, Accountant Member
This appeal is against the order of the Commissioner of Income Tax (Appeals) – 3, dated 08.07.2019 for the assessment year 2013-14
The assessee filed statement of tax deducted at source (TDS) for Q2 to Q4 quarters in Form No.24Q & 26Q for FY 2012-13 (AY 2013- 14). The statement was processed by the Assessing Office (AO).
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There was a delay in filing the above TDS statement and therefore the AO vide a rectification order u/s.154 of the Income-Tax Act, 1961 [“the Act”] levied late fee u/s. 234E r.w.s 200A the Act. Under Sec.234E of the Act, 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. Section 234E of the Act inserted by the Finance Act, 2012 w.e.f. 1.7.2012. reads as follows:- “Fee for default in furnishing statements 234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.”
Aggrieved by the aforesaid orders, the assessee filed appeals before the CIT(A). The assessee’s contention before CIT(A) was that the provisions of section 234E of the Act was inserted by the Finance
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Act, 2012 w.e.f. 1.7.2012. Section 200A of the Act is a provision which deals with how a return of TDS filed u/s.200(3) of the Act has to be processed and it reads as follows:- Processing of statements of tax deducted at source 200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:— (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement; (c) the fee, if any, shall be computed in accordance with the provisions of section 234E; (d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; (e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor: Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.— For the purposes of this sub-section, "an incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement—
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(i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act. (2) For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.”
Clause (c) to (f) of section 200A(1) was substituted by the Finance Act, 2015 w.e.f. 1.6.2015. The assessee contended that AO could levy fee u/s.234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by virtue of the provisions of Sec.200A(1)(c), (d) & (f) of the Act and those provisions came into force only from 1.6.2015 and therefore the authority issuing intimation u/s. 200A of the Act while processing return of TDS filed u/s.200(3) of the Act, could not levy fee u/s. 234E of the Act in respect of statement of TDS filed prior to 1.6.2015. The assessee, thus, challenged the validity of charging of fee u/s. 234E of the Act. The assessee relied on the decision of the Hon’ble High Court of Karnataka in the case of Fatehraj Singhvi v. UOI [2016] 73 taxmann.com 252 wherein the Hon’ble Karnataka High Court held that amendment made u/s. 200A providing that fee u/s. 234E of the Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee u/s.234E of the Act for delayed filing of return of TDS while processing a return of TDS u/s.234E of the Act could have
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been made for tax deducted at source for the assessment years prior to 1.6.2015.
The CIT(Appeals) found that the appeals were filed by the assessee on 14.02.2019 with a delay of 122 days in filing the appeal. The assessee filed an application for condonation of delay in filing the appeals. The assessee claimed before CIT(A) that the controversy regarding levy of interest u/s.234-E of the Act was not clear and clarity emerged only after the decision of the Hon’ble High Court of Karnataka in the case of Fatheraj Singhvi (supra) and that the assessee was not given a proper advise the legal counsel of the assessee. The CIT(A) found that there was inordinate delay in filing the appeals and those details have been set out in the order of CIT(A).
The CIT(A) refused to condone the delay in filing appeals stating that the delay is nothing but negligence and inaction on the part of the assessee which could have been avoided by the exercise of due care and attention. The CIT(A) dismissed the appeal observing that the Assessee has not brought sufficient cause for delay. The CIT(A) thereafter observed that there was a difference between marginal delay and inordinate delay and made reference to a Third Member decision of ITAT Chennai in the case of Jt.CIT vs Tractors & Farms Equipments Ltd (2007) 104 ITD 149 and held that ‘sufficient cause’ within the contemplation of the limitation provision must be a case which is beyond the control of the party invoking the aid of the
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provisions. The CIT(A) went on rely on other judicial pronouncements in support of his decision not to condone the delay in filing the appeal before him.
Aggrieved by the aforesaid order of the CIT(A), the Assessee has filed the present appeal before the Tribunal. There is a delay in filing the appeal before the Tribunal. The assessee in the petition filed for condonation of delay has stated that the assessee’s managing director (MD) Mr.Ampalli Thyaga Raju Changama Raju was going through difficult times with mental stress due to the family and business turmoil. The assessee had also stated that the MD was not well undergoing treatment for a long period of time due to which he could not involve in the business activities for a while. The assessee has mentioned that a doctor’s certificate could be produced if required by the Tribunal. The learned AR therefore prayed for condonation considering these facts. On the other hand the learned DR opposed the condonation.
We heard the rival submissions and perused the materials on record. We notice that the coordinate bench of the Tribunal in the case of Equipment Fabricators vs DCIT (ITA No.386/Bang/2021) in a case of delayed payment of employee contribution of PF and ESI, had taken a view favourable to the assessee in condoning the delay of 508 days. The Hon’ble Tribunal in this case held that when substantial justice and technical consideration are pitted against each other, the cause of
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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. The Hon’ble Tribunal held that
“7. On merits, the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit before the CIT(A) saying that the appeal was not filed because of the Accountant’s inability to file the appeal. The Revenue has not filed any counter-affidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court 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.
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(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 8. 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 nondeliberate delay. In the case on our hand, the issue on merits regarding allowability of deduction u/s. 36(1)(va) r.w.s. 43B of the Act was covered in favour of the assessee by the order of the Tribunal. Moreover, no counter- affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. 9. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 508 days has to be condoned. 10. The next question may arise whether 508 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor.
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In fact, the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. 12. When compared to 21 years, 508 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM ) condoned more than six hundred days delay. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member. 13. The Madras High Court in the case of Sreenivas Charitable Trust (supra) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression “sufficient cause” should receive a liberal construction. 14. In this case, the issue on merit regarding granting of deduction u/s. 36(1)(va) r.w.s. 43B of the Act is covered in favour of the assessee by the Judgment of the Madras High Court. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression “sufficient cause” should receive a liberal construction. In our opinion, the above Judgment is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad). 15. The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) has condoned the delay
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of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counteraffidavit opposing the application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. 16. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 508 days. 17. In case the delay is not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. 18. Therefore, when this Tribunal is empowered and capable of removing injustice, in our opinion, the delay of 508 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merits. In view of the above, we condone the delay of 508 days in filing the appeal and admit the appeal for adjudication”.
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Considering the principles laid down by the decision of the coordinate bench that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. In our considered view the ill health of the MD of the assessee due to which he could not concentrate on the business matter is a ‘sufficient cause’ for delay in filing the appeal before us.. We therefore condone the delay of 108 days in filing the appeal and admit the appeal for further adjudication on merits.
While arguing on merits the learned AR reiterated the submissions made before the lower authorities and the learned DR supported the stand of the revenue as reflected in the order of the CIT(A).
We have considered the submissions of the learned DR and also the grounds of appeal filed by the Assessee. It is not in dispute that if the ratio laid down by the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra) is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015. The decision of the Hon’ble Karnataka High Court in the case of Fateeraj Singhvi (supra) was rendered on 26.8.2016. It has been held by the ITAT Hyderabad Bench in the case of MSV IT Solutions Ltd. Vs. ITO, Ward 16(4) ITA
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Nos. 177 & 178/Hyd/2018 order dated 26.10.2018 wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A).
Considering the peculiar facts and circumstances of the case and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that interest of justice would be met if the delay in filing appeals by the Assessee before CIT(A) is condoned and the issue with regard to levy of interest u/s.234-E of the Act be remanded to the CIT(A) for fresh consideration in accordance with the observations made in this order. We hold and direct accordingly.
In the result, the appeal by the assessees is treated as allowed for statistical purpose.
Order pronounced in court on 3rd day of May, 2022
Sd/- Sd/- (N.V VASUDEVAN) ( PADMAVATHY S) Vice President Accountant Member Bangalore, Dated, 3rd May, 2022 / vms /
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore.
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Date of Dictation …………………………………… 2. Date on which the typed draft is placed before the dictating Member ……………………. 3. Date on which the approved draft comes to Sr.P.S .……………………………. 4. Date on which the fair order is placed before the dictating Member ……………….. 5. Date on which the fair order comes back to the Sr. P.S. ………………….. 6. Date of uploading the order on website…………………………….. 7. If not uploaded, furnish the reason for doing so ………………………….. 8. Date on which the file goes to the Bench Clerk ………………….. 9. Date on which order goes for Xerox & endorsement…………………………………… 10. Date on which the file goes to the Head Clerk ……………………. 11. The date on which the file goes to the Assistant Registrar for signature on the order ………………………………. 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order …………………………. 13. Date of Despatch of Order. ……………………………………………..