2021 (6) TMI 837 - AT - Income Tax

Levy of fee/interest u/s 234E of the Act by the CPC, Bangalore - CIT(A) was of the opinion that the delay was not to be condoned - Rectification application u/s 154 - HELD THAT - The enabling provision for levy of fee/interest was not in the statute books at that time and hence, the assessee filed a rectification application u/s 154 - section154 application was rejected. Thereupon assessee filed appeal before the learned CIT(A) did not condone the delay. CIT(A) has erred in not condoning the delay pertaining to assessee s appeal. The assessee was waiting for the outcome of application under Section 154 - This is a reasonable cause and the delay attributable to it deserves to be condoned. CIT(A) by not condoning the same has erred. This is also when the adjustment was done by the CPC which was not permissible by the law in operation at that time. Hence, the delay ought to have been condoned. Hence, we set aside the order of learned CIT(A) and hold that delay ought to have been condoned. CIT(A) has further erred as after noting that he is not condoning the delay in filing the appeal, he has gone on a different tangent saying that actually this appeal is against the order under Section 154 of the Act, hence the issue on merits cannot be adjudicated - CIT(A) has further erred in going on to adjudicate the merits academically and rejecting the assessee s appeal without dealing with the case laws submitted. In the interest of justice, we remit the issue to file of learned CIT(A). Learned CIT(A) is directed to decide the appeal on merits by passing a speaking order as per law. Appeals by the assessee stand allowed for statistical purposes.

Summary

Issues:
Levy of late filing fees under Section 234E of the Income Tax Act, 1961; Delay in filing appeals against the original order; Condonation of delay in filing appeals; Adjudication of merits of the case; Applicability of enabling provision for levy of fee/interest under Section 234E.

Analysis:

1. Levy of Late Filing Fees under Section 234E:
The appeals by the assessee were directed against the order of the Commissioner of Income Tax (Appeals) confirming the levy of late filing fees under Section 234E of the Income Tax Act. The appellant, engaged in the production of advertisement films, was required to file TDS returns but faced delays, leading to the imposition of late filing fees by the CPC Bangalore. The appellant argued that the enabling provisions of Section 234E were prospective and not retrospective, citing various judicial authorities. The case involved multiple instances of late filing fees being levied, and the appellant sought the expunging of these fees.

2. Delay in Filing Appeals:
The delay in filing appeals against the original order was a crucial issue in this case. The appellant contended that the delay was due to waiting for the outcome of the rectification application filed under Section 154 of the Act. The learned CIT(A) noted significant delays in filing the appeals and held that the delay was not to be condoned. However, the delay was attributed to the appellant's reliance on the rectification application process, which was a reasonable cause for the delay. The delay in filing the appeals was a key point of contention, leading to further analysis by the appellate tribunal.

3. Condonation of Delay:
The appellate tribunal found that the delay in filing the appeals should have been condoned by the learned CIT(A) due to the reasonable cause presented by the appellant. The tribunal highlighted that the delay was linked to the rejection of the rectification application under Section 154, and the appellant was justified in waiting for the outcome before filing the appeals. The failure to condone the delay was deemed an error, and the tribunal set aside the order of the learned CIT(A) on this ground.

4. Adjudication of Merits:
The learned CIT(A) raised concerns about the nature of the appeal, stating that it was against the order under Section 154 and not the original order processed by the CPC. Despite this observation, the learned CIT(A) proceeded to adjudicate the merits of the case and rejected the appeal without a detailed analysis of the case laws submitted by the appellant. The tribunal intervened, remitting the issue back to the learned CIT(A) for a proper adjudication on the merits, emphasizing the need for a speaking order as per the law.

5. Applicability of Enabling Provision for Levy of Fee/Interest:
The crux of the matter in this case was the levy of fee/interest under Section 234E by the CPC Bangalore. The appellant's argument centered around the absence of the enabling provision for such levy at the time of the original order, leading to the filing of a rectification application under Section 154. The tribunal agreed with the appellant's position and emphasized that the delay in filing the appeals should have been condoned, given the circumstances surrounding the rectification application and the adjustment made by the CPC.

In conclusion, the appellate tribunal allowed the appeals by the assessee for statistical purposes, highlighting the errors in the learned CIT(A)'s decision regarding the condonation of delay and the adjudication of merits. The case was remitted back to the learned CIT(A) for a proper decision on the merits, ensuring the appellant's right to be heard.