VEEDIYARASAMPALAYAM POWERLOOM WEAVERS CO-OP PRODUCTION AND SALES SOCIETY LTD.,NAMAKKAL vs. ITO, TDS WARD,, SALEM

3) The CIT(A) erred in dismissing the appeal for the reason that the same is filed beyond the limitation pried without looking into the reasonable cause for delay in filing.

Aggrieved by the levy of late fee u/s.234E of the Act, the assessee society filed appeals before the CIT(A) belatedly. The CIT(A) dismissed the appeals of the assessee without condoning the delay in filing appeals for AYs 2013-14 to 2014-15.

Aggrieved by the orders passed by the CIT(A) dismissing the appeals, the assessee has filed the present appeals before the Tribunal. The Ld.AR submitted that the assessee society was under the bonafide belief that since there existed no machinery provision in the Act for levying late fee u/s.234E of the Act, for the assessment years under appeal, the late fee would either be waived off or deleted by the AO himself. It was submitted by the Ld.AR only when assessee received communication from ITO, TDS (recovery notices) to pay the outstanding TDS demand on 18.08.2022, assessee society became aware that late fees levied to 3020/CHNY/2024 still persisted. On receipt of the recovery notice, assessee society immediately within a period of six days i.e., 24.08.2022, filed appeals before the CIT(A). Further, it was submitted that assessee become aware of favourable judicial pronouncements, which had resulted in the delay in filing the appeals before CIT(A). It was submitted by the Ld.AR, in such circumstances, the Chennai Bench of ITAT in the case of Shri Surya Kannan vs. ITO in (order dated 25.08.2022) had held that delay in filing the appeal is on account of ‘sufficient cause’ and had condoned delay of 1399 days. The Ld.AR also relied on various judicial pronouncements in support of his contention that a lenient view may be taken while considering the delay condonation application.

The Ld.DR on the other hand strongly supported the orders of the CIT(A). It was submitted by the Ld.DR that the delay in filing the appeals before the CIT(A) is inordinate and the CIT(A) is justified in not condoning the same.

We have heard rival submissions and perused the materials on record. Since there was no existing machinery provision in the Act for levying late fee u/s.234E of the Act for the assessment to 3020/CHNY/2024 years under appeal, the assessee could have been under a mistaken impression that late fees levied u/s.234E of the Act could be waived by AO himself. The assessee had received a recovery notice from ITO, TDS on 18.08.2022 directing it to pay the outstanding TDS demand. It is only at this point the assessee society became aware that late fees which was imposed u/s.234E of the Act still persisted. Thereafter, on receipt of the recovery notice on 18.08.2022, the appeals were filed immediately before the CIT(A) on 24.08.2022. It is also a matter of fact that many assessee’s had filed appeals belatedly challenging the levy of late fees u/s.234E of the Act after they became aware of the favourable decisions. The Chennai Benches of the Tribunal in the case of Surya Kannan vs. ITO in (order dated 25.08.2022) had condoned the delay of 1399 days. The Chennai Bench of the Tribunal had held that based on subsequent favourable decisions, if an appeal is filed belated, there is ‘sufficient cause’ warranting condonation of delay. The relevant finding of the Chennai Bench of the Tribunal reads as under:- “4…. According to the assessee, the assessee had filed appeals beyond due date for the reason that when the Department start levying late fee under section 234E, there was an ambiguity and no clear directions regarding levy of late filing fee under section 234E of the Act for belated filing of TDS returns. However, in the year 2018 various High Courts and Tribunals have taken a clear stand and held that amendment made under section 200A of the Act with effect from 01.06.2015 is held to be having prospective in to 3020/CHNY/2024 nature and hence, no late fee can be charged u/s.234E of the Act, while processing TDS returns filed prior to 01.06.2015. Based on subsequent judgments of various Courts and Tribunals, the assessee felt that appeal can be filed against intimation issued by the Assessing Officer levying late fee u/s.234E of the Act. ……………. In this case, on perusal of record, we find that the reasons given by the assessee for not filing the appeals within the time allowed under the Act comes under the expression “sufficient cause” and hence, we are of the considered view that learned CIT(A) erred in not condoning the delay in filing appeals. Therefore, we condone the delay in filing appeal before learned CIT(A) and restore the matter back to the file of the learned CIT(A) to decide the issue involved in the appeal on merits.”

It is a settled law that it is not the period of delay which should be the central to the decision as to whether the delay is to be condoned or not but the reasons adduced for said delay. The assessee is a co-operative society and delay had occurred due to the ambiguity and no clear directions regarding levy of late filing fee u/s.234E of the Act for the AY's under consideration. The Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Kauji reported in [1987] 66 STC 228 (SC) held that a lenient view may be taken while considering the delay condonation petition. The gist of the findings of Hon’ble Apex Court reads as under: 4.When substantial justice and technical considerations 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 non-deliberate delay. to 3020/CHNY/2024 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.

The Hon’ble Jurisdictional Madras High Court in the case of Sreenivas Charitable Trust vs. DCIT reported in [2006] 280 ITR 357 (Madras) has observed as under; 6....As held by the Apex Court, no hard and fast rule can be laid down in the matter of condonation of delay and the Courts should adopt a pragmatic approach and the Courts 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.

In the case of CIT vs. Sanmac Motor Finance Ltd. [2010] 322 ITR 309 (Madras), the Hon'ble Madras High Court has held as under:- 9..The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). The idea is that every legal remedy must be kept alive fora legislatively fixed period of time. The condonation of delay is the discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within certain limit. Length of delay is not the matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation there of is satisfactory. In every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala to 3020/CHNY/2024 fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor.

The rationale from the above decisions is that the matter of condonation of delay is to be considered liberally and it is the reason for delay which deserves consideration rather the period of delay. Especially, when the very jurisdiction to levy the late fee is under challenge, the delay in filing the appeal should not be a ground to deny the remedy available to the assessee society. In this context, we rely on the judgment of the Hon’ble Kerala High Court, in the case of Jiji Varghese vs. ITO (TDS) reported in [2022] 433 ITR 267 (Kerala). The Hon’ble Kerala High Court was considering a factual situation where the orders levying late fee u/s.234E of the Act was passed between 2013 and 2016 and were subjected to challenge in the year 2022. The Hon’ble High Court held that when there is total lack of jurisdiction for the Revenue to levy late fee u/s.234E of the Act, delay cannot be relied upon as a ground to deny the relief. The relevant finding of the Hon’ble High Court of Kerala reads as follows:- “8. As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of jurisdiction of the respondents to impose late fee. Since in matters where total lack of jurisdiction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis.” to 3020/CHNY/2024 13. It is relevant to note that Ld.AR had cited two judgment of Hon’ble Jurisdictional High Court, wherein the Hon’ble Court has decided the issue on merits in favour of assessee. The Hon’ble Jurisdictional High Court had held that in absence of any provision to levy late fee u/s.234E of the Act during relevant assessment years, the impugned orders passed by the Revenue are liable to be set aside. The judgements of Hon’ble Jurisdictional High Court relied by the Ld.AR are as follows:- i) In the case of Sri Rujula International vs. PCIT reported in [2024] 167 taxmann.com 367 (Madras) ii) In the case of True Blue Voice India (P) Ltd., vs. CCIT reported in [2024] 158 taxmann.com 67 (Madras)

Since there are two judgments of Hon’ble Jurisdictional High Court on merits in favour of assessee, it is all the more the reason to condone the delay in filing the appeals before the CIT(A). (Since, no contrary judgment has been brought to our notice during the course of hearing of these appeals.)

In light of aforesaid reasoning and considering the judicial pronouncements cited supra, we condone the delay in filing the appeals before the CIT(A) subject to the condition that assessee to 3020/CHNY/2024 society pays cost of Rs.5,000/- in each of the years (totaling to Rs.15,000/-) to be paid to Tamil Nadu State Legal Services Authority at the Hon’ble High Court of Madras within a period of one month from the date of receipt of this order. Accordingly, we restore these cases to the files of the CIT(A) and direct him to consider the issue on merits subject to assessee society producing challan for having paid Rs.15,000/- to Tamil Nadu State Legal Services Authority at the Hon’ble High Court of Madras. It is ordered accordingly.

In the result, the appeals filed by the assessee in to 3020/CHNY/2024 are allowed for statistical purposes.