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Facts
The assessee, Shree Vindhya Cast Coaters Limited, faced delays in filing TDS returns and appeals. These delays were attributed to the company being under Corporate Insolvency Resolution Process (CIRP) and subsequent issues with e-filing account credentials. The Assessing Officer levied late fees under Section 234E and interest under Section 201(1A) of the Income Tax Act. The CIT(A)/NFAC dismissed the appeals for non-condonation of delay without deciding on merits.
Held
The Tribunal held that there was sufficient cause for the delay in filing appeals before the CIT(A)/NFAC and that the CIT(A)/NFAC's dismissal on technical grounds without considering merits was unjustified. Citing Supreme Court judgments, the Tribunal emphasized preferring substantial justice over technicalities.
Key Issues
Whether the delay in filing appeals before the CIT(A)/NFAC and the delay in filing TDS returns were sufficiently explained due to the company's CIRP status and e-filing issues, and whether the CIT(A)/NFAC erred in dismissing the appeals on technical grounds without considering the merits.
Sections Cited
234E, 201(1A), 249, 200A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: MS. ASTHA CHANDRA & SHREE DR. DIPAK P. RIPOTE
to 1121/PUN/2025 धििाारण वर्ा / Assessment Years : 2020-21 to 2022-23 Shree Vindhya Cast Coaters Limited, Deputy Commissioner of Income Tax, Somani Nagar, Duskheda B.O., CPC-TDS Bhusawal, Jalgaon-425203 Vs. PAN : AAACS8089A अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Anand Karnani (Virtual) Department by : Smt. Indira R. Adakil Date of hearing : 01-12-2025 Date of 19-12-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The above six appeals filed by the assessee are directed against the separate orders dated 20.02.2025 and 21.02.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Years (“AYs”) 2020-21, 2021-22 and 2022-23. Since identical issues are involved in all the six appeals, for the sake of convenience, all these appeals were heard together and are being disposed of by this common order.
The assessee has filed the following grounds of appeal :
AY 2020-21 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 15,400/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2019-20 (Q4) without considering that the delay is due to the fact that the company was Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 15,400/- AY 2021-22 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 50,800/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2020-21 (Q1) without considering that the delay is due to the fact that the company was under Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 50,800/- AY 2021-22 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 7,200/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2020-21 (Q3) without considering that the delay is due to the fact that the company was under Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 7,200/- AY 2021-22 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 76,070/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2020-21 (Q4) without considering that the delay is due to the fact that the company was under Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 76,070/- AY 2022-23 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 43,100/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2021-22 (Q2) without considering that the delay is due to the fact that the company was under Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 43,100/- AY 2022-23 Ground Grounds of Appeal
Tax effect No. relating to each Ground of appeal (Rs.)
1. That on the facts and in the circumstances of the case, - the Ld. CIT(A) was not justified and erred in dismissing the appeal of the appellant by rejecting the condonation petition filed for delay in filing of appeal in Form 35 without considering submissions of the appellant.
2. That on the facts and in the circumstances of the case, 43,100/- the Ld. A.O. was not justified and erred in levying late fees u/s 234E for FY 2021-22 (Q2) without considering that the delay is due to the fact that the company was under Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code, 2016.
3. That the appellant craves leave, to add, to amend, - modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal. Total Tax Effect 43,100/-
The sole grievance of the assessee in all the captioned six appeals is that the Ld. Assessing Officer (“AO”) has levied late fee u/s 234E of the Income Tax Act, 1961 (the “Act”) and interest u/s 201(1A) of the Act for delay in filing the respective TDS returns. The Ld. AR has submitted a brief overview of the facts involved in the above six appeals which is reproduced below :
The assessee filed appeals for all the six AYs before the Ld. CIT(A)/NFAC challenging the action of the Ld. AO in levying fee u/s 234E and interest u/s 201(1A) of the Act. The Ld. CIT(A)/NFAC has dismissed the appeals of the assessee for non-condonation of delay in filing the appeals before him without deciding the issue(s) on merits on the ground that the assessee has failed to substantiate that there was sufficient cause for filing the appeals belatedly.
Dissatisfied, the assessee is in appeals before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the assessee had filed an application for condonation of delay before the Ld. CIT(A)/NFAC providing the detailed reasoning for delay in filing the appeals (pages 1 to 63 of the paper book refers). The Ld. AR submitted that the Ld. CIT(A)/NFAC without considering the same rejected the condonation application of the assessee. He dismissed the appeals filed by the assessee without considering the merits of the case which is totally unjustified. He submitted that the delay in filing of the appeals before the Ld. CIT(A)/NFAC was attributable to the following reasons : “1.2 Appellant Company was under IBC Process: The appellant was non-operational since the year 2006 and subsequently admitted to Corporate Insolvency Resolution Process (CIRP) under Insolvency & Bankruptcy Code, 2016 on 31-05-2019 by Hon'ble National Company Law Tribunal (the NCLT), Mumbai Bench. The Resolution Plan was finally approved on 21-06-2021 [Refer PB Page No. 39 to 48] and thereafter management of the company was handed over to the Resolution Applicant on 07-12-2021. [Refer PB Page No. 73 to 75]. Hence, from the period 31-05-2019 to 07-12-2021, the company was under IBC proceedings and the handover of the management of the company was pending with Resolution Professional (RP). 1.3 Non availability of login credentials of e-filling account: Post- handover of management by the RP, the new management was unable to login to the e-fling portal as the password of the said portal was not in the knowledge of the present personnel & RP and there was no communication with the prior management. In order to activate the e-filing account, the new management sent a mail to efilingwebmanager@incometax.gov.in [Income tax department helpline contact details) on 06-08-2022 [Refer PB Page No. 62]. Several diligent attempts were further made to resolve the aforementioned problem, via numerous grievances, emails and telephone conversations [Refer PB Page No. 120-121]. Subsequently, an email communication was received from Income tax department on 27-02-2023 [Refer PB Page No. 63] whereby the password of the income tax portal was reset and the appellant was allowed to access the e-fling portal. Hence, from the period 07-12-2021 to 27-02-2023, the appellant could not file the appeal due to non-availability of login credentials of its e-filling account. Immediately thereafter, the appellant, acting diligently and in good faith, duly filed Form 35 online at its e-filling account against Intimation u/s 200A for the various quarters pertaining to FY 2019-20 to FY 2021-22 as stated in the table above. 1.4 Therefore, the delay in filing of appeal in form 35 by the appellant was clearly due to bona fide reasons not on account of any fault of the appellant. There was no delay caused due to apathy or ignorance, but rather due to a lack of operational control (non-access to login credentials) and procedural discontinuity during the CIRP. 1.5 The appellant in addition to above would also like to submit that in respect to appeals mentioned at Sr No. 4, 5 & 6 of the table above ile appeals w.r.t Q4 of FY 20-21 and Q 2 & 3 of FY 21-22, Form 35 was duly filed with the Income Tax Department via email dated 27-07- 2022 at efilingwebmanager@incometax.gov.in as a measure of compliance to due date prescribed under the Act ie 27-07-2022. [Refer PB Page No. 9 to 21 for Q4 of FY 20-21, Page No. 24-36 for Q2 of FY 21-22 & Page No. 49 to 61 of Q3 of FY 21-22].”
As regards the levy of late fee u/s 234E and interest u/s 201(1A) of the Act, the Ld. AR made the following submissions : “2.0 Brief Back ground 2.1 Reason for delay in filing TDS Returns: (i) For Q4 of FY 2019-20 and Q3 of FY 2020-21 [Sr No. 1 &3 of table above]- TDS has been deducted by RP and hence the responsibility to file TDS return was of the RP and infact TDS Return were filed by the RP during CIRP before the handover of the company to the new management. The New management had no access or control during this period, hence cannot be held responsible for the delay in filing the TDS Return. (ii) For Q1 of FY 2020-21 [Sr No. 2 of table above]- TDS has been deducted by RP and hence the responsibility to file TDS return was of the RP, however the TDS Return was duly filed by the New Management on 10-12-2021 ie within 3 days after handover of the company on 07-12-2021. The RP had informed the new management about the pending TDS returns to be filed by the company. (iii) For Q4 of FY 2020-21, Q2 & 3 of FY 2021-22 [Sr No. 4 to 6 of table above]- TDS has been deducted by RP and hence the responsibility to file TDS return was of the RP, however the TDS Return was duly filed by the appellant on 24-06-2022 post hand over of management on 07-12-2021 by the RP. Though, TDS with respect to these quarters has been deducted by RP, however the same has not been informed to the new management during the handover which were ultimately traced by the new management on scrutiny of the accounts and the compliances was made thereafter. Further there has been delay in deposit of TDS amount of Rs 81,200/- deducted by RP in Q 4 of FY 2020-21, resulting in levy of interest u/s 201(1A) amounting to Rs. 7,270/-. Further, TDS deducted by RP in Q3 of FY 2021-22 has not been deposited by RP but has been deposited by the New Management in June 2022, again resulting in levy of interest u/s 201(1A) amounting to Rs. 4,040/-. The New management cannot be held responsible for such delay in deposit of TDS. 2.2 It is respectfully submitted that the aforesaid delays in TDS return filing & delay in deposit of TDS were beyond the control of the New Management of the Company and hence could not be held liable for such defaults due to reasons stated herein below. (i) Delay due to ongoing Corporate Insolvency Resolution Process (CIRP) For the period 31-05-2019 to 21-06-2021, the company was under IBC proceedings, therefore the New Management as on that date had no information or records with respect to such non compliances and hence cannot be held responsible. (ii) New Management cannot be held responsible for any non- compliance by the Interim Resolution Professional or Resolution Professional Reference in this regard is placed on FAQ on Corporate Insolvency Resolution Process ("CIRP") issued by Insolvency Bankruptcy Board of India (IBBI) [Refer PB Page No. 76-77] wherein it has been stated that the duty to comply with the requirements under any law on behalf of the Corporate Debtor lies with the Interim Professional and Resolution Professional as the case maybe. Further, Circular No. No. IP/002/2018 dated 03-01-2018 [Refer PB Page No. 78] issued by Insolvency Bankruptcy Board of India states that insolvency professional will be responsible for the non-compliance of the provisions of the applicable laws if it is on account of his conduct. (iii) Demand which pertains to time frame before Corporate Insolvency Resolution Process is invalid Hon'ble NCLT vide order dated 21-06-2021 [Refer PB Page No. 39 to 48] has held that the order will be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government or any local authority to whom any dues arising under any law for the time being in force is due. Further no creditors of the erstwhile Corporate Debtor can claim anything other than the liabilities referred in the resolution order from the acquirer. Therefore, the interest levied u/s 234E by the AO vide Intimation u/s 200A for Q4 of FY 2019-20 dated 19-10-2020 and for Quarter 3 of FY 2020-21 dated 12-03-2021, which is neither appearing in the approved Resolution Plan nor in the NCLT order, shall stand extinguished. (iv) Bona fide delay beyond control of the New Management does not warrant applicability of 234E Subsequent to handover of the management of the company by RP on 07-12-2021, the appellant undertook thorough review of the books of account and other legal and regulatory matters of the company which took a reasonable amount of time. Since, details of TDS deduction by RP has not been informed to the new management during handover, on being aware of such pending TDS compliance requirements, the New management promptly filed the TDS returns. Hence, reasons for delay in filing TDS return were genuine and hence necessary directions may please be given to A.O. to kindly delete the late filing fee u/s 234E in the interest of justice.”
The Ld. DR, on the other hand, supported the order(s) of the Ld. CIT(A)/NFAC and submitted that the Ld. CIT(A)/NFAC was completely justified in not condoning the unreasonable delay in filing the appeals before him.
We have heard the Ld. Representatives of the parties and perused the material available on record as well as paper book filed by the Ld. AR on behalf of the assessee. Admittedly, the assessee filed TDS returns on quarterly basis for the relevant AYs under consideration belatedly. The TDS returns were processed vide intimation u/s 200A of the Act wherein the CPC-TDS/AO has levied fees u/s 234E of the Act for delay in filing the TDS returns. We find that the Ld. CIT(A)/NFAC has dismissed the appeals of the assessee as not maintainable on technical grounds without deciding the issue(s) on merits. The Ld. CIT(A)/NFAC has dismissed the appeals of the assessee observing that there is an extraordinary delay in filing of the appeal(s) and the assessee has not shown any sufficient cause as required by the proviso to section 249 of the Act. Before us, the Ld. AR has submitted that the assessee is a public limited company and was non- operational since 2006. It underwent IBC proceedings from 31.05.2019 to 07.12.2021. Consequently, the management of the company was handed over to the new management by the Resolution professional. This process took some time which led to the delay in filing appeal(s) before the Ld. CIT(A)/NFAC. He contended that the assessee had a reasonable/sufficient cause for the delay in filing the appeals before the Ld. CIT(A)/NFAC as well as the delay in filing the TDS returns. The delay was caused due to the bonafide reasons cited above which were beyond the control of the assessee. The said delay in filing the appeal(s) and TDS returns was not intentional or out of ignorance but occurred on account of non- availability/non-access of login credentials of e-filing account of the Department.
We find some force in the arguments advanced by the Ld. AR. The Ld. Counsel for the assessee has submitted that from the period from 31.05.2019 to 07.12.2021 the assessee company was under IBC proceedings and the handover of the management of the company was pending with the Resolution Professional. Post-handing over of the management to the new management, the assessee faced several operational difficulties which led to the delay in filing of the appeals and TDS returns within the stipulated time period. We find that the Ld. CIT(A)/NFAC has not condoned the delay in filing the appeals before him holding that the assessee has failed to substantiate that there was sufficient cause for not filing the appeals within the prescribed time frame and the assessee has as such failed to explain the unreasonable delay satisfactorily. In our view, there was sufficient cause for the delay in filing the appeals before the Ld. CIT(A)/NFAC. The Ld. CIT(A)/NFAC is silent on the merits of the case and not decided the issue(s) raised by the assessee before him.
We find, the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) has held that when substantial justice and technical considerations are pitted against each other, 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. Refusing to condone delay can result in a meritorious matter being thrown out 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.
We find recently the Hon’ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
In the light of the above factual matrix of the case and decisions of Hon’ble Supreme Court cited (supra), we deem it proper, in the interest of justice, to set aside the impugned order(s) and restore the appeal(s) back to the file of the Ld.CIT(A)/NFAC with a direction to condone the delay in filing of all the six appeals before him and decide the appeals on merits, as per facts and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to make its submissions, as may be required/called upon on the appointed date without seeking any adjournment, unless required for a sufficient cause, failing which the Ld.CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeals of assessee in to 1121/PUN/2025 are allowed for statistical purposes.