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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI BASKARAN BR & SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “B”, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA Nos.2409 & 2410/M/2021 Assessment Years: 2014-15 & 2015-16
M/s. Brandmark Solution TDS CPC/AO NFAC, Pvt. Ltd., CIT (Appeals)/AO – 17, Orbit Industrial NFAC, Premises, Vs. New Delhi – 110001 Opp. Hometel Hotel, Malad West, Mumbai – 400 064 PAN: AAECB4498G (Appellant) (Respondent)
Present for: Assessee by : Ms. Neha Anchaliya, A.R. Revenue by : Shri C.T. Mathews, D.R. Date of Hearing : 15 . 06 . 2022 Date of Pronouncement : 29 . 07 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: For the sake of brevity aforesaid cross appeals bearing common question of law and facts are being disposed of by way of composite order.
The appellant M/s. Brandmark Solution Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned orders even dated 24.11.2021for A.Y. 2014-
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15 & 2015-16 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years A.Y. 2014-15 & 2015-16 on the grounds inter alia that:- “1) On the facts and circumstances of the case and in law, the Assessing Officer/CPC TRACES/Authorities below has erred in levying the late fees/penalty u/s 234E of the I T Act amounting to Rs.2,65,480/- & Rs.1,18,230/- for A.Y. 2014-15 & 2015-16 and particularly when the matter is sub-judice which is wholly wrong and against the provisions of Income Tax Act and rules made thereunder. 2) The appellant craves leave to add, alter, modify and delete all or any of the aforesaid grounds of appeals on or before the date of hearing.”
Briefly stated facts necessary for adjudication of the controversy at hand are : the Assessing Officer (AO) passed the order under section 200A of the Income Tax Act, 1961 (for short ‘the Act’) against the assessee company by levying late fees for different amounts for different quarters of A.Y. 2014-15 and 2015- 16 on account of late filing of TDS returned under section 234E of the Act.
Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has upheld the levy of late fee under section 234E of the Act by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
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At the very outset, it is brought to the notice of the Bench by the Ld. A.R. for the assessee that the present appeals are filed late with the delay of 3 years and six months (approximately) before the Ld. CIT(A) who has declined to condone the delay and dismissed the appeal on grounds of limitation as well as on merits.
Assessee moved an application for condonation of delay supported with an affidavit of Naveel Ahmed Khan, Director of the assessee company on the ground inter alia that physical copy of the order has never been received by the assessee till date and he has only come to know about the order on 25.06.2020 on receipt of demand notice on TRACES; that the accountant who was looking after TDS related matter has left the job without uploading the returns on TRACES and then new chartered accountant was hired who has generated new ID and password after receipt of demand on 25.06.2020; that the delay has not been caused due to negligence or on account of any deliberate act.
However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application.
Keeping in view the law laid down by Hon’ble Supreme Court in case of Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC) wherein it has been held that “it is on contention of delay that when substantial justice and technical considerations are pitted against each other, the case of substantial justice deserves to be preferred, for the other side cannot claim to
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have a vested right in injustice being done because of a non deliberate delay”, we are of the considered view that when the assessee has come up with the specific reasons supported with affidavit for not filing the appeal before the Ld. CIT(A) within the prescribed period of limitation due to non receipt of physical copy of the orders but came to know about the orders on receipt of demand notice only and that his chartered accountant has left the job and only newly hired chartered accountant could generate the necessary ID and password for filing the appeal, it is a sufficient ground to condone the delay. Even otherwise to enhance the cause of substantial justice the assessee must be provided with an opportunity of being heard which cannot be denied merely on the ground of delay in seeking the relief, hence the order passed by the Ld. CIT(A) dismissing the appeal on ground of delay is not sustainable in the eyes of law, hence set aside.
So in these circumstances, present appeal is being decided on merits. Co-ordinate Bench of the Tribunal in case of Shri Sanjay Gopal Pandit vs. National Faceless Appeal Centre, Delhi in ITA No.1902/M/2021, ITA No.1903/M/2021 & ITA No.1904/M/2021 order dated 26.04.2022 decided the identical issue by thrashing the facts and by considering the decision of Hon’ble Gujarat High Court in case of Rajesh Kourani vs. Union of India (2017) 83 taxmann.com 137 (Guj.) and by following the decision rendered by Hon’ble Kerala High Court in case of Olari Little Flower Kuries Pvt. Ltd. vs. Union of India (2022) 134 taxmann.com 111 (Ker.) and Hon’ble Karnataka High Court in case of Fatheraj Singhvi vs. Union of India (2016) 73 taxmann.com 252 (Kar.) in favour of the assessee by returning following findings:
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“4. In these appeals, assessee is aggrieved with (i) levy of fee under section 234E of the Act vide intimation issued under section 200A(1) of the Act for the period prior to 01.06.2015; and (ii) dismissal of its appeals by the learned CIT(A) on the ground of delay.
The assessee filed separate appeals before the learned CIT(A) for assessment years under consideration against the purported order/intimation dated 09.01.2020 under section 200A of the Act passed by the ITO, TDS Ward 2, Thane, levying fee under section 234E of the Act for late filing of TDS return for relevant financial years. As per the facts available on record, the said order dated 09.01.2020 was claimed to have been served on the assessee on 15.01.2020. However, in the appeals before the learned CIT(A), assessee did not file the copy of said purported order/intimation under section 200A(1) levying fee under section 234E of the Act and instead filed copy of default summary of TDS statements along with Form No. 35. The learned CIT(A), vide separate impugned orders, noted that the default summary statements are issued by the TDS CPC along with the intimation/order under section 200A of the Act and copy of such orders under section 200A along with default summary are sent directly to the registered email id of the deductor and the details are also accessible on the departmental portal, which can also be accessed by the deductor. The learned CIT(A) further noted that the assessee has wrongly treated the default summary issued by the TDS CPC as an order under section 200A and has filed appeals enclosing same. Treating such appeals as defective, deficiency letters were issued to the assessee for rectification of such defects. However, as noted by the learned CIT(A), the assessee neither rectified the defects nor sought any further time for same. The learned CIT(A) further noted that the assessee has counted the number of days of delay from the date on which the default summary was downloaded by the assessee and not from the date of intimation/order under section 200A whereby the fee under section 234E of the Act was levied. The learned CIT(A) rejected the contention of the assessee that the assessee has not received any intimation of such outstanding dues and only upon initiation of recovery proceedings, assessee came to know about the outstanding demand. The learned CIT(A) vide separate impugned orders held that the assessee did not adduce any reasonable cause which prevented it from filing a valid appeal within the 30 days’ time limit under section 249(2) of the Act against the intimation issued under section 200A(1) of the Act. Accordingly, the learned CIT(A) dismissed the appeals, vide separate orders, treating the same to be not admissible in law and facts and to have been instituted belatedly on the basis of default summary without intimation under 200A of the Act.
During the course of hearing, learned departmental representative vehemently relied upon the impugned orders passed by the learned
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CIT(A) and submitted that the appeals were filed belatedly by the assessee.
We have considered the submissions and perused the material available on record. In the impugned orders, it is evident that the learned CIT(A) has not denied that fee under section 234E of the Act has been levied on the assessee for the financial years under consideration. The learned CIT(A) dismissed the appeals on the basis that same have been filed belatedly and no sufficient cause for condoning the delay has been put forth by the assessee. Further, the assessee has also not filed the copy of intimation/order issued under section 200A of the Act whereby the fee under section 234E of the Act was levied. Thus, only on the basis of above technicalities the learned CIT(A) dismissed the appeals filed by the assessee.
From the Form 35, forming part of the appeal set before us, it is evident that the assessee has raised following ground of appeal before the learned CIT(A):
“Income Tax Department (TRACES) erred in levy fees u/s 234E in its intimation (Default Summary) without verifying the fact that Power to levy fees u/s 234E in default summary statement u/s 200A was made applicable w.e.f. 01.06.2015 (Finance Act, 2015).”
However, the learned CIT(A) did not deal with merits of the case and proceeded to dismissed the appeals on the ground of delay and also defects in filing the appeals by the assessee. The learned CIT(A) also rejected the submission of the assessee seeking condonation of delay that the assessee has not received any intimation of such outstanding dues and only upon initiation of recovery proceedings, assessee came to know about the outstanding demand.
Further, on merits, we find that the issue whether clause (c) of section 200A(1), as substituted by Finance Act, 2015, w.e.f. 01.06.2015, whereby the A.O. was enabled to compute the fee under section 234E of the Act while processing of statement of tax deducted at source, is prospective in nature has came up for adjudication before the Hon’ble High Courts of various States. The first decision was rendered by the Hon’ble Karnataka High Court in Fatheraj Singhvi v/s Union of India, [2016] 73 taxmann.com 252 (Kar.), whereby the Hon’ble High Court held that such an amendment is prospective in nature and thus intimation issued under section 200A of the Act for computation and intimation of payment of fee under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable.
However, the Hon’ble Gujarat High Court in Rajesh Kourani v/s Union of India, [2017] 83 taxmann.com 137 (Guj.), did not concur with the views expressed by the Hon’ble Karnataka High Court in
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Fatheraj Singhvi (supra), and held that the aforesaid amendment by Finance Act, 2015, w.e.f. 01.06.2015, is retrospective in nature. 11. Recently, the Hon’ble Kerala High Court had an occasion to deal with this issue in Olari Little Flower Kuries Pvt. Ltd. v/s Union of India, [2022] 134 taxmann.com 111 (Ker.), wherein the Hon’ble High Court had taken into consideration both the aforesaid decisions passed by the Hon’ble Karnataka High Court as well as Hon’ble Gujarat High Court. The Hon’ble Kerala High Court concurring with the decision passed by the Hon’ble Karnataka High Court in Fatheraj Sanghvi (supra) held that the provisions of section 200A of the Act as amended by Finance Act, 2015, enable computation of fee payable under section 234E of the Act at the time of processing of statement of TDS, is prospective in nature from 01.06.2015 and thus intimation issued under section 200A of the Act dealing with the fee under section 234E for belated filing of TDS return for the period prior to 01.06.2015, are invalid. 12. Further, we also find that the Co–ordinate Bench of the Tribunal in Permanent Magnets Ltd. v/s DCIT, ITA no.6436 to 6442/Mum./2018, order dated 07.08.2019, following the aforesaid decision of the Hon’ble Karnataka High Court in Fatheraj Sanghvi (supra) directed deletion of fee under section 234E of the Act levied vide intimation under section 200A of the Act for the period prior to 01.06.2015. 13. It is well established that rules of procedure are handmaid of justice. Further, when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred. Thus, in view of the above, as the learned CIT(A) has dismissed the appeals filed by the assessee, on delay and on defects in filing the appeal, without dealing with merits of the case, we in the substantial interest of justice deem it appropriate to restore the appeals before the learned CIT(A) for adjudication on merits after condoning the delay in filing the appeals. The assessee is also directed to obtain the copy of intimation issued under section 200A(1) for financial years under consideration from the AO(TDS) and provide the same to the learned CIT(A) for adjudication of its appeals. Needless to mention that adequate opportunity of hearing shall be granted to the assessee before passing the order and the CIT(A) shall have the liberty to call for remand report, if any, from the concerned Assessing Officer while deciding this issue.”
Following the order passed by the co-ordinate Bench of the Tribunal in case of Sanjay Gopal Pandit (supra), we are of the considered view that the late fee levied by the AO and confirmed
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by the Ld. CIT(A) in all the aforesaid cases is not sustainable being pertained to the period prior to 01.06.2015. Hence, all the appeals filed by the assessee are allowed and AO is directed to delete the late fee levied in these cases. Resultantly, aforesaid appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 29.07.2022.
Sd/- Sd/- (BASKARAN BR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29.07.2022. * Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.