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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K, JM & Shri Laxmi Prasad Sahu, AM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George George K, JM & Shri Laxmi Prasad Sahu, AM ITA No.275/Coch/2021 : Asst.Year 2013-2014 Q3 ITA No.276/Coch/2021 : Asst.Year 2013-2014 Q2 ITA No.277/Coch/2021 : Asst.Year 2015-2016 Q1 ITA No.278/Coch/2021 : Asst.Year 2013-2014 Q4 Government Mental Health Centre The Assistant Commissioner Kuthiravattom of Income-tax, CPC – TDS v. Kozhikode. Kozhkodet – 673 016. TAN : CHNG03373G (Appellant) (Respondent) Appellant by : Sri.Richard Mathew, CA Respondent by : Smt.J.M.Jamunna Devi, Sr.DR Date of Pronouncement : 30.06.2022 Date of Hearing : 29.06.2022 O R D E R Per George George K, JM : These appeals at the instance of the assessee are directed against four orders of the CIT(A), all dated 23.09.2021. The relevant assessment years are 2013-2014 and 2015-2016.
The Registry has noted delay of 28 days in filing these appeals before the Tribunal. The impugned orders of the CIT(A) are received by the assessee on 26.09.2021 and the appeals ought to have been filed within 60 days from the date of receipt of the first appellate order. However, the same has been filed on 09.12.2021. Therefore, there was delay of 28 days in filing these appeals before the Tribunal. However, on account of extension of time limit from time to time due to Covid-19 Pandemic by the Hon’ble Apex Court in the case of Cognizance
2 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. For Extension of Limitation reported in (2021) 438 ITR 296 (SC), the learned AR submitted that there is no delay in filing these appeals. The learned Departmental Representative was duly heard.
In view of the judgment of the Hon’ble Apex Court in the case of Cognizance For Extension of Limitation (supra), which has extended the time limit for filing an appeal from time to time, we hold that there is no delay in filing this appeal and proceed to dispose of the same on merits.
The issues raised are (i) whether the first appellate authority was justified in dismissing the appeals without condoning the delay; (ii) whether the CIT(A) was justified in confirming the late fees levied u/s 234E of the I.T.Act.
The brief facts of the case are as follows: The assessee is a Mental Health Institution run by the Government of Kerala. There was a delay in filing statement of TDS for various quarters for the financial years 2012-2013 and 2014-2015. The orders were passed u/s 200A of the I.T.Act by imposing late fee u/s 234E of the I.T.Act for the various quarters for the financial years 2012-2013 and 2014-2015. The details of the same are as follows:-
Appeal No. Financial Quarter Late fee u/s Year 234E of the I.T.Act 275/Coch/2021 2012-2013 3rd 38,200 276/Coch/2021 2012-2013 2nd 63,590 277/Coch/2021 2014-2015 1st 18,360 278/Coch/2021 2012-2013 4th 3,32,490
3 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. 6. Aggrieved, the assessee preferred appeals before the first appellate authority. There was delay in filing appeals before the CIT(A). The CIT(A) dismissed the appeals on delay as well as on merits. The CIT(A), while dismissing the case on merits, relied on the judgment of the Hon’ble Gujarat High Court in the case of Shri Rajesh Kourani v. Union of India reported in (2017) 83 taxmann.com 137 (Gujarat) and the judgment of the Hon’ble Kerala High Court in the case of Sree Narayana Guru Smaraka Sangam Upper Primary School v. Union of India and Others reported in (2017) 392 ITR 457 (Ker.).
Aggrieved by the orders of the CIT(A), the assessee has filed the present appeals before the Tribunal. Identical grounds are raised in these appeals. The grounds raised read as follows:-
“There was no guidance received by the assessee regarding action to be taken following imposition of late fee under Section 234E. Order under Section 200A also does not guide the assessee to seek appellate remedy against the demand. Assessee became aware of appellate remedy after consultation with a Chartered Accountant Filing of appeal was further delayed due to pandemic- situation in the country beginning from March2020. As soon as the situation became normal the assessee filed the appeal with application seeking condonation for delay. There are many court decisions in favour of the assessee where late fee levied for ' defaults prior to 01.06.2015 was ordered to be deleted. There are decisions against the assessee also. ITAT Delhi in Raj Veer Singh v ACIT held that where there are conflicting decisions the view taken in favour of the assessee should be followed as per Honourable Supreme Court decision in CIT v. M/s Vegetable products Limited 88 ITR 192 (SC).
4 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. Adjudication on merits will result in deletion of late fee imposed under Section 234E. It is only on account of delay in appeal filing not being condoned that the assessee is losing out on relief which it would have obtained had the appeal been filed within the time limit prescribed.”
The learned AR submitted that the assessee became aware of the orders passed u/s 200A of the I.T.Act levying late fee u/s 234E of the I.T.Act only in March 2020. It was stated that orders u/s 200A of the I.T.Act are posted online and the Secretary and the Treasurer of the assessee-institution, who were familiar with the computer system, had retired and notice of demand came to the knowledge only when assessee made inquiries with regard to the demands pending. It was stated that the Superintendent of the Government Mental Health Centre had issued a letter to the Secretary directing him to explain the lapses and the Secretary had vide letter date 28.07.2020 had explained the reasons for the delay since he was not having the knowledge of the orders passed u/s 200A of the I.T.Act
As regards the issue on merits, the learned AR submitted that the issue raised is squarely covered in favour of the assessee by the following judicial pronouncements:-
(i) The judgment of the Hon’ble Kerala High Court in the case of Olari Little Flower Kuries (P.) Ltd. v. UOI reported in (2022) 440 ITR 26 (Ker.) (ii) The Hon’ble Kerala High Court judgment in the case of M/s.Sarala Memorial Hospital v. Union of India & The Income Tax Officer (TDS) [WP(C) No.37775 of 2018 of 18th December, 2018]
5 ITA Nos.275-278/Coch/2021. Government Mental Health Centre.
(iii) The judgment of the Hon’ble Kerala High Court in the case of Sanjeev Mathew & Co. v. ITO (TDS) (judgment dated 30.11.2021) (iv) The judgment of the Hon’ble Kerala High Court in the case of Headmaster, Government Upper Primary School v. ITO (TDS) (judgment dated 18.05.2022) (v) The order of the Cochin Bench of the Tribunal in the case of Travels Trails India Pvt. Ltd. V. ACIT TDS, Trivandrum, [ITA No168/Coch/2020 dated 10th June, 2020] (vi) The order of the Cochin Bench of the Tribunal in the case of Sri.Sabir Ali v. ACIT in ITA No.200/Coch/2021 & Ors (order dated 20.05.2022)
The learned Departmental Representative relied on the orders of the CIT(A).
We have heard rival submissions and perused the material on record. The assessee submitted that it had no knowledge about the orders passed u/s 200A of the I.T.Act till March 2020. The hospital Superintendent had directed the Secretary and Treasurer to explain the reasons why no appeal was preferred before the first appellate authority within the prescribed time limit. The reply of the Secretary, reads as follows:-
“From Kandankutty Nandanam Pallikkal Parambu Karanthur Post Kozhikode
6 ITA Nos.275-278/Coch/2021. Government Mental Health Centre.
To The Superintendent Govt.Mental Health Centre, Kozhikode Kuthiravattom Post, Kozhikode – 673 016. Sir, Sub : Levy of interest under section 234E of the Income tax Act, 1961 on form No.24Q for Q2, Q3, Q4 in financial year 2012-13 and Q1 in financial year 2014-15 and your proposal to levy the amount from me – reg. Ref : Your notice No.A2-7208/2019 dated 24/03/2020. I hereby acknowledge the receipt of your notice referred above, I humbly submit before you that my services started at the centre on 10/12/2012 and I have retired on 31/01/2016. I hope, we have filed the E-TDS returns of Q2, Q3, Q4 of financial year 2012-13 and Q1 of financial year 2014-15. As against the E-TDS returns, the TDS centralized processing cell necessarily to be issued order levying interest under section 234E of the Income-tax Act, 1961. During the tenure of my service at the centre I have not had seen such orders relating to the above demand. Then how can you say that the defect is mine. As per the enclosures to your notice, the demand is mainly for delay in filing 24Q TDS returns except for interest u/s 220(2) amounted to Rs.1,360.00. Also humbly submit before you that the levy of interest under section 234E before 31/03/2015 is against the provisions of Income-tax Act, 1961. For this reason, we have the right to challenge the demand with appellate authorities. Even without serving the demand notice to my section how can I proceed against the demand. I therefore kindly pray before you please take measures to challenge the demand with appellate authorities under income tax Act, 1961 and get the demand reduced to NIL. I humbly looking before you for lawful remedial action. Thanking you, Yours faithfully, Sd/- Kandankutty Karanthur 28/07/2020”
7 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. 12. The explanation of the Ex.Secretary and the Treasurer of the assessee cannot be totally brushed aside as false. The intimations were issued on the registered email and some of the mails would be posted in the spam. Hence, the orders passed u/s 200A of the I.T.Act levying tax u/s 234E would not come to the knowledge of the assessee. Therefore, no latches can be attributed to the assessee and there was `sufficient cause’ for the delay. Hence, we condone the delay of filing the appeal before the first appellate authority.
As regards the issue on merits, the Hon’ble jurisdictional High Court in the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India reported in (2022) 440 ITR 26 (Ker.), has held that since provision of section 200A of the I.T.Act was amended to enable computation of fee payable u/s 234E of the I.T.Act at the time of processing of return and said amendment came into effect from 01.06.2015 (in view of CBDT Circular No.19 of 2015 dated 17.11.2015) intimations issued u/s 200A of the I.T.Act dealing with fee for belated filing of TDS returns for the period prior to 01.06.2015 were invalid and were to be set aside. Therefore, going by the dictum laid down by the Hon’ble jurisdictional High Court judgment in the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India (supra), the levy of late fee for the various quarters for financial years 2012-2013 and 2014-2015 cannot be sustained in order passed u/s 200A of the I.T.Act, prior to 01.06.2015.
Before concluding, it is to be mentioned that the CIT(A) had relied on the judgment of the Hon’ble Kerala High
8 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. Court in the case of Sree Narayana Guru Smaraka Sangam Upper Primary School v. Union of India and Others (supra). The judgment of the Hon’ble High Court was primarily concerned with the constitutional validity of section 234E of the I.T.Act. The Hon’ble Kerala Court was not adjudicating the issue whether the amendment to section 200A of the I.T.Act with effect from 01.06.2015 has retrospective effect or not. As mentioned earlier, the amendment to section 200A of the I.T.Act whether it applicable from 01.06.2015 has been decided in favour of the assessee by the judgment of the Hon’ble Kerala High Court in the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India (supra).
As regards the CIT(A) placing reliance on the judgment of the Hon’ble Gujarat High Court in the case of Rajesh Kourani v. Union of India (supra), we notice that the Hon’ble Kerala High Court in the case of M/s.Sarala Memorial Hospital v. Union of India (supra) has distinguished the Hon’ble Gujarat High Court judgment. The Hon’ble Kerala High Court had disposed of the Writ Petition in favour of the assessee, stating that there is cleavage in judicial opinion and the judgment in the case of Shri Rajesh Kourani v. Union of India (supra) has not considered CBDT Circular No.19 of 2015, which has clearly emphasized that the amendment would take effect only from 01.06.2015. Therefore, it was concluded by the Hon’ble Kerala High Court that the amendment relating to section 200A of the I.T.Act is prospective with effect from 01.06.2015. In view of the aforesaid reasoning and the
9 ITA Nos.275-278/Coch/2021. Government Mental Health Centre. judgments of the Hon’ble jurisdictional High Court, cited supra, we allow the claim of the assessee. It is ordered accordingly.
In the result, the appeals filed by the assessees are allowed. Order pronounced on this 30th day of June, 2022.
Sd/- Sd/- (Laxmi Prasad Sahu) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Kochi ; Dated : 30th June, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A) NFAC, Delhi. 4. The CIT. 5. The DR, ITAT, Cochin. 6. Guard File. Asst.Registrar/ITAT, Cochin