M/.S. VERTEX TECHNOSOLUTIONS PRIVATE LIMITED,BANGALORE vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALISED PROCESSING CELL- TDS, GHAZIABAD

The assessee filed statement of tax deducted at source (TDS) for various quarters in Form No.24Q/26Q for FYs 2012-13 & 2013-14 (AYs 2013-14 to 2014-15). The statement was processed by CPC TDS, Bengaluru. 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 Act, in appeals pertaining to filing of Form No.24Q in Q-2, Q-3 & Q-4 and filing of Form No.26Q in Q-4 of AY 2013-14 and filing of Form No.24Q for Q-1 relating to AY 2014-14. In respect of filing of Form No.26Q, Q-1 for AY 2014-15 and Q-2 & Q-3 for AY 2013-14, the levy of late fee u/s.234E was passed u/s.200A read with Sec.154 of the Act The details of the late fee so levied was as follows:-

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 the appeals filed by the Assessee were belated and the following was the delay in filing appeal before him:-

The Assessee filed application for condonation of delay in filing appeals before CIT(A). The reasons assigned by the Assessee for delay in filing appeal was that there were many opposing judgments on whether late filing fee can be levied u/s.234E or not viz., that of the Amritsar Bench of ITAT in the case of Sibia Healthcare Private Ltd. Vs. DCIT in order dated 9.6.2015 holding that without enabling provision like u/s.200A(1)(c ) of the Act, there cannot be levy of late fee u/s.234E of the Act and Chennai ITAT in the case of M/S.Neelagiris Textiles Vs. DCIT ITA No.795 to 797/Mds/2015 order dated 10.7.2015 taking a contrary view. It was only later i.e., on 26.8.2016, the Hon’ble Karnataka High Court in the case of Fateraj Singhvi (supra) took the view that without enabling provision like u/s.200A(1)(c ) of the Act, which enabling provisions came into effect only from 1.6.2015, there cannot be levy of late fee u/s.234E of the Act. The Assessee Assessee’s business was small and all affairs had to be looked after by the Assessee as proprietor. Further the TDS compliance are web based and system driven and the Assessee was unable to long into the traces and reply to the notices/orders within stipulated time. It was also stated that the TDS assessment orders which were subject matter of appeal before CIT(A) were not served on the Assessee. The Assessee has also stated that after the decision of the Hon’ble Karnataka High Court in the case of Fatheraj Singhvi (supra), he was under the impression that no late fee will be levied u/s.234-E of the Act in respect of the period prior to 1.6.2015 as the enabling provisions u/s.200A of the Act, were introduced only from 1.6.2015. The Assessee however on 4.2.2019 received a demand notice for late fee u/s.234-E of the Act dated 30.1.2019. Thereafter the Assessee approached his auditor and they informed that the remedy was to file appeal against the orders u/s.200A of the Act. The Assessee submitted that he was not guilty of negligence and the delay was due to bonafide reasons set out above. The Assessee also placed reliance on decision of Hon’ble Supreme Court in the case of State of Haryana Vs. Chandramani (TS 5109-SC-1996-O) wherein it was held that the expression “sufficient cause” should be considered with pragmatism and in a justice oriented approach rather than technically and CMJ Foundation Vs. Principal CIT (TS 6571-ITAT-2019(Gauhati)-O) wherein it was held that bonafide belief that appeal should not be filed is sufficient cause for condonation of delay. The Assessee also relied on the decision in the case of Collector of land acquisition Vs. Mst. Katiji & Others AIR 1987 1353 (SC) wherein principles regarding condonation of delay have been explained by the Hon’ble Supreme Court.

The CIT(A) however was of the view that there was a difference between marginal delay and inordinate delay and made reference to a decision of ITAT Hyderabad Bench in the case of T. Krishna Vs. ACIT(IT(SS)A.No.23 & 25/Hyd/2011) and held that the Assessee should explain the delay as one that occurred due to circumstances beyond his control. He also referred to decision of Hon’ble Supreme Court in the case of Ramalal Vs. Rewa Coalfields Ltd. AIR 1962 SC 361 wherein it was held that delay caused which by due care and attention could have been avoided cannot be said to be reasonable cause. He also referred to decisions where delay was not condoned for the reason that the conduct and negligence of the Assessee existed for the delay in filing appeal. He held that the reasons assigned by the Assessee were routine explanation which cannot be accepted as reasonable or sufficient cause. The CIT(A) accordingly dismissed the appeals as unadmitted.

Aggrieved by the aforesaid orders of the CIT(A), the Assessee has filed the present appeals before the Tribunal. The learned counsel for the Assessee reiterated stand of the Assessee as put forth before CIT(A) and the grounds raised before the Tribunal in which it has been stated that when the levy of fee is unconstitutional to that extent the levy itself is illegal and in such circumstances delay in filing appeal which is only technical should be condoned.

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. An intimation u/s.200A of the Act became an appealable order u/s.246A of the Act, only consequent to amendment by the Finance Act, 2015 w.e.f. 1.6.2015. Prior to the said date an intimation u/s.200A was not appealable. At the outset, we observe that the Hon’ble Supreme Court, in the case of Mst. Katiji (supra), has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon’ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained 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).

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