M/S IMAGE LABELS PRIVATE LIMITED ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CPC TDS , BANGALORE

These are a batch of 12 appeals filed by Assessee against different orders, all dated 30.10.2019 of CIT(Appeals)-3, Bangalore relating to assessment years 2013-14 & 2014-15.

The assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.24Q/26Q/27Q for FY 2012-13 to 2013-14 (AY 2013-14 to 2014-15). 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 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:-

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:-

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 some of the appeals were filed by the Assessee belated and the reasons for condonation of delay in filing the appeals were no sufficient. 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). 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) for each of the appeals set out in the cause title of this order.

The CIT(A) refused to condone the delay in filing appeals and dismissed all the appeals where there was delay in filing appeal before CIT(A) observing that the Assessee has not brought sufficient cause for delay. As far as appeals before CIT(A) that were filed within time like appeals for AY 2013-14 Q2 Form 24Q and Q4 Form 26Q and other similar appeals are concerned, the CIT(A) held that the appeals had been filed without the relevant order under Sec.200A of the Act and hence the appeals were defective.

None appeared for the Assessee. We have considered the plea raised by the Assessee in the grounds of appeal and the orders of the revenue authorities. 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. The reasons for the delay in filing appeal before CIT(A) has been explained as owing to shifting of registered office and factory of the Assessee company from 270/2, Bommanahally, Bangalore-560068, which was the place of business at the time of incorporation of the Assessee in 1996 to 214, Changamaraju Sapota Gardens, JP Nagar 7th Phase, Bangalore-560078 w.e.f. from 1/10/1997. The annual return of TDS since 1998 continued to be filed with the old address and the communication from the Department were all sent to the old address. It is only after e-mails were received that the Assessee knew about the impugned orders of demand u/s.200A of the Act. It is not in dispute that if the ratio laid down by the Hon’ble Karnataka High Court in the case of Fatehraj 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 Fatehraj 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 Assessee will be to hardship if delay in filing the appeal is not condoned. Reliance was placed on the decision of the Hon'ble Apex Court

In the result, all the appeals by the assessee are treated as allowed for statistical purpose.