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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI B.R. BASKARAN
These are a batch of 11 appeals filed by Assessee against common order dated 27.6.2019 of CIT(Appeals)-7, Bangalore relating to assessment years 2013-14 to 2015-16.
The assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.24Q/26Q/ for FY 2012-13 to 2014-15 (AY 2013- 14 to 2015-16). The statement was processed by the respondent. There was a delay in filing the above TDS statement and therefore the AO by intimation u/s. 200A of the Income-Tax Act, 1961 [“the Act”] levied late fee
Page 2 of 8 u/s. 234E of the Income-Tax Act, 1961 [“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 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
Page 3 of 8 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— (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.”
Page 4 of 8 4. 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 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 10.4.2017 and were filed belated and there was 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 under the bonafide impression that levy of fee u/s.234E of the Act is not appellable and were advised not to file any appeal against the levy of fee u/s.234E of the Act. The Assessee submitted that the intimation u/s.200A of the Act was uploaded in the system and he does not know how to log into the system. He came to know about the passing of the intimation u/s.200A of the Act only on receipt of notice of demand including the levy of late fee u/s.234E of the Act. The Assessee submitted that he was running a Page 5 of 8 small business and has to look after all the affairs himself. He was not aware of the that the appeal has to be filed within a time frame from the date of the intimation u/s.200A of the Act which was not served on him but was only uploaded in the system. The Assessee therefore submitted that a liberal view has to be taken in the matter of condonation of delay.
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) as follows:
Financial Quarter Date of order Date of filing Delay in filing year & Form of appeal appeal 2012-13 26Q 08-09-2013 24-01-2019 1934 days 2012-13 26Q:Q2 30-08-2016 07-01-2019 847 days 2012-13 26Q:Q4 30-08-2016 07-01-2019 847 days 2013-14 26Q:Q1 14-06-2014 07-01-2019 1638 days 2013-14 26Q:Q2 14-06-2014 07-01-2019 1638 days 2013-14 26Q:Q3 14-06-2014 07-01-2019 1638 days 2013-14 26Q:Q4 14-06-2014 07-01-2019 1638 days 2014-15 26Q:Q1 08-03-2015 08-01-2019 1372 days 2014-15 26Q:Q2 12-11-2014 08-01-2019 1488 days 2014-15 26Q:Q3 04-02-2015 08-01-2019 1404 days 2014-15 26Q:Q4 08-06-2015 08-01-2019 1280 days
The CIT(A) referred to decisions of Supreme Court in the case of Ramlal Vs. Rewa Coalfields Ltd. AIR 1962 361 (SC) and the decision in the case of Chief Postmaster General and Others Vs. Licving Media India Ltd. 348 ITR 76 (SC) ;and Pundlik Jalam Patil (deceased) by LRs Vs. Executive Engineer, Jalgaon Medium Project (2008) 17 SCC 448 (SC) and observed that as per the law laid down in the aforesaid decisions, cause for the delay in filing the appeal which by due care and attention could have been avoided cannot be a sufficient cause and that if there is negligence, want of bonafide and inaction on the part of the Assessee then the delay cannot be said to be owing to reasonable cause.
The CIT(A) thereafter refused to condone the delay in filing appeals and dismissed all the appeals. The CIT(A) was of the view that filing of TDS returns is online since many years and details of intimation and demand become immediately available online to the Assessee. The Assessee was using the website of the Department to file its quarterly TDS returns. So Page 6 of 8 details of pending demands was not dependent on the knowledge of any specific person but the Assessee has neglected to follow it up either by payment or by filing the appeal. He therefore held that the Assessee cannot deny that the information related to TDS demand arising out of processing of TDS return and as reflected in Form 26AS was not available to him.
Aggrieved by the order of the CIT(A), the Assessee has preferred appeals before the Tribunal. None appeared for the Assessee. The learned DR reiterated 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) & 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). The CIT(A) has proceeded to hold that the Assessee is guilty of negligence on a presumption that the Assessee must be conversant with operating TDS return on the website of the Department and that the intimation u/s.200A could not have escaped his attention. In our view in a case like this the benefit of doubt should go to the Assessee. Therefore, the Assessee is not guilty of negligence and the delay was due to bonafide reasons set out above. As per the ratio laid down by the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) delay should be condoned where there is no negligence. The Hon’ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained
Page 7 of 8 that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day’s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. The ITAT Hyderabad Bench in the case of MSV IT Solutions Ltd. Vs. ITO, Ward 16(4) & 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 reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. Accordingly the delay is condoned. Since the CIT(A) has not decided the issue on merits, the order of the CIT(A) is set aside and remanded to the CIT(A) with a direction to decide the appeals of the Assessee on merits in accordance with law with due opportunity to the Assessee of being heard.
In the result, all the appeals by the assessee are treated as allowed for statistical purpose.
Pronounced in the open court on this 11th day of March, 2021.