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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI BASKARAN BR & SHRI KULDIP SINGH
O R D E R Per Bench: For the sake of brevity aforesaid appeals bearing common question of law and facts are being disposed of by way of composite order.
& ors. 2 M/s. Blue Spot Equipment Company Pvt. Ltd.
The appellant, M/s. Blue Spot Equipment Company Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned order even dated 01.12.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years 2013-14, 2014-15 & 2015-16 on the identical grounds inter alia that:- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) not condoning delay in filing First appeal whereas there was bonafide reason was there. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred confirming penalty u/s 234E for late filing tds return which is bad in law.
The assesses craves leave to add, alter or amend the existing grounds of appeal on or before the date of hearing”
3. Briefly stated facts necessary for adjudication of the controversy at hand are : 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 amount for different quarters of A.Y. 2013-14 to A.Y. 2015-16 on account of late filing of TDS return under section 234E of the Act.
4. 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 & ors. 3 M/s. Blue Spot Equipment Company Pvt. Ltd.
of the facts and circumstances of the case and law applicable thereto.
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 two years and sought to condone the same by moving an application for condonation of delay supporting with an affidavit on the grounds inter alia that the assessee received the intimation about levying of the late fees, which was shown to its chartered accountant namely Shri Kamlesh Sanghvi who has advised not to file the appeal; that when the assessee met his counsel in some other case, on discussion, it was transpired that the late fee is not applicable in the relevant years; that delay in filing the appeal is not motivated and intentional one but due to the wrong advice of chartered accountant.
7. 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 have a vested right in injustice being done because of a non deliberate delay”, we are of the considered view that when assessee & ors. 4 M/s. Blue Spot Equipment Company Pvt. Ltd.
has come up with a specific reason for not filing the appeals within a period of limitation that due to ill advice of his chartered accountant the appeals could not be filed, there is no ground to decline the application for condonation of delay as the assessee cannot be punished for the negligence or ill advice of his chartered accountant. 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. So we find sufficient cause to condone the delay. Hence, two years delay in filing appeals is hereby condoned and the appeals are ordered to be registered and are being disposed of accordingly.
9. The Ld. A.R. for the assessee contended that the late fee levied by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law as clause ‘c’ to section 200A(1) of the Act was specifically inserted to be effective from 01.06.2015 which are not applicable to the facts and circumstances of the case being prior to 01.06.2015.
10. On the other hand, the Ld. D.R. for the Revenue relied upon the order passed by the AO as well as the Ld. CIT(A) and in the alternative contended that at the most, issue be remitted back to the Ld. CIT(A) to be decided on merits.
11. We are not inclined to agree with the contentions raised by the Ld. D.R. because when the legal issue has already been settled by the Hon’ble Bombay High Court and co-ordinate Benches of the Tribunal no purposes would be served to remit the case back to the Ld. CIT(A) except to multiply the litigation. & ors. 5 M/s. Blue Spot Equipment Company Pvt. Ltd.
Co-ordinate Bench of the Tribunal in case of Shri Sanjay Gopal Pandit vs. National Faceless Appeal Centre, Delhi in 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:
“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.
5. 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.
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, & ors. 6 M/s. Blue Spot Equipment Company Pvt. Ltd.
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.
6. During the course of hearing, learned departmental representative vehemently relied upon the impugned orders passed by the learned 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.
8. 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 & ors. 7 M/s. Blue Spot Equipment Company Pvt. Ltd. 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 Fatheraj Singhvi (supra), and held that the aforesaid amendment by Finance Act, 2015, w.e.f. 01.06.2015, is retrospective in nature.
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, 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.
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 & ors. 8 M/s. Blue Spot Equipment Company Pvt. Ltd.
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.”
13. 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 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.
Order pronounced in the open court on 22.06.2022.