2019 (4) TMI 43 - AT - Income Tax

Condonation of delay - Pre-requisites for condoning delay - sufficiency/reasonableness of the cause - order passed U/s 201(1) and 201(1A) - as argued by assessee DRM was not aware whether any order can be passed against it and whether such order is appealable and it came to know that such orders are appealable only when the department pressed for the payment of outstanding demand - also chronological dates of communication with the department with regard to short deduction of tax and internal communication of the assessee to the senior employees for submitting PAN details, internal circulation of direction by assessee with respect to deduction of tax at source, with respect to furnishing information in order to avoid penal provisions HELD THAT - Evidences placed on record for the efforts done by the assessee for furnishing requires returns which includes the internal communication of the assessee to the senior employees for submitting PAN details, intimation by the Income tax Department for deputing personnel for verification of TDS and TCS details etc. After going through the detailed reasons given for delay in filing the appeal before the CIT(A), we observe that there was a reasonable and bonafide cause for delay. COLLECTOR, LAND ACQUISITION VERSUS MST. KATIJI AND OTHERS 1987 (2) TMI 61 - SUPREME COURT held that sufficient cause for the purpose of condonation of delay should be interpreted with a view to even-handed justice on merits in preference to approach which scuttles a decision on merits. Further the more power to condone the delay is conferred with a view to enable the courts to do substantial justice to litigants by disposing of the cases on merits. Considering the totality of the facts and circumstances of the case, we condone the delay and matter is restored back to the file of the ld. CIT(A) for deciding on merit after giving due opportunity of hearing to the assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Adjudication of the appeal on merits.
3. Legality of the demand for short deduction of TDS and interest.
4. Application of Section 206AA of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The primary issue was whether the delay in filing the appeal by the assessee should be condoned. The assessee argued that the delay was due to a lack of awareness about the appealability of the order and internal communication issues. The assessee relied on several judicial pronouncements to support their request for condonation, including cases like *Motilal Padampat Sugar Mills Co. Ltd. Vs. State of U.P.* and *Collector, Land Acquisition Vs. Mst. Katiji & ors.* The Revenue opposed the condonation, arguing that the delay should be condoned only if there was no gross negligence or deliberate inaction, and cited cases like *K.G.N.M.M.W. Educational Research & Analysis Society Vs ITO* and *Catholic Syrian Bank Ltd. Vs DCIT*. The Tribunal, after considering the rival contentions and judicial precedents, concluded that there was a reasonable and bona fide cause for the delay. The Tribunal emphasized that "sufficient cause" should be interpreted to do substantial justice and condoned the delay.

2. Adjudication of the Appeal on Merits:
The assessee contended that the CIT(A) erred in not adjudicating the appeal on merits and rejecting it on technical grounds. The Tribunal decided to restore the matter back to the CIT(A) for a decision on merits after giving due opportunity of hearing to the assessee. This ensures that the appeal is decided based on its substantive issues rather than procedural lapses.

3. Legality of the Demand for Short Deduction of TDS and Interest:
The assessee challenged the demand of ?3,69,81,060 raised by the AO, which included ?2,25,04,715 for short deduction of TDS and ?1,44,76,345 towards interest. The AO held the assessee to be in default for not obtaining PAN numbers of employees, thereby applying a higher TDS rate of 20%. The assessee argued that they had complied with the normal TDS obligations and that the demand was unjustified and arbitrary. The Tribunal did not provide a final decision on this issue but restored the matter to the CIT(A) for a fresh adjudication on merits.

4. Application of Section 206AA of the Income Tax Act:
The assessee argued that the AO erred in applying Section 206AA, which mandates a higher TDS rate for non-furnishing of PAN, as it was brought into effect from April 1, 2010. The assessee contended that the application of this provision was illegal and arbitrary. The Tribunal, while condoning the delay, directed the CIT(A) to re-examine this issue on merits.

Conclusion:
The Tribunal condoned the delay in filing the appeal and restored the matter back to the CIT(A) for a decision on merits, ensuring that the substantive issues are addressed appropriately. The appeal was partly allowed for statistical purposes, emphasizing the need for a thorough examination of the merits of the case. The order was pronounced in the open court on February 11, 2019.