2022 (5) TMI 1100 - AT - Income Tax

Late fees under 234E - appeal remedy for late fee u/s 234E - assessee had filed belatedly TDS statements in Form No.24Q and 26Q for various quarters - HELD THAT - AO cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E of the Act. The Parliament for the first time enabled the AO to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. In the case of Olari Little Flower Kuries (P.) Ltd. v. Union of India 2022 (2) TMI 1061 - KERALAHIGH COURT has held that since provision of section 200A was amended to enable computation of fee payable u/s 234E 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. In the instant case, the assessee submits that he was advised that there is no appeal remedy for late fee u/s 234E of the I.T.Act. It is further stated that the decision in the case of Sri Fateharaj Singhvi v. Union of India Ors. 2016 (9) TMI 964 - KARNATAKA HIGH COURT declaring that late fee u/s 234E was bad in law came to the notice of the assessee only in September 2018. The pleae of the assessee that downloading of the intimation and filing an appeal for which he has received legal advise that it is not appealable order cannot be totally brushed aside. The assessee came to know of the judgment of the Hon ble Karnataka High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. (supra) only in September 2018, and thereafter, he filed appeal before the first appellate authority immediately. Since on merits, the issue is covered in favour of the assessee

Summary

Issues:
Appeals against orders of CIT(A) for late filing of TDS statements, levying fees u/s 234E - Delay condonation - Merits of late fee levy - Interpretation of "sufficient cause" for delay condonation.

Analysis:
1. Late Fees Under Section 234E:
The appeals were against orders of CIT(A) upholding late fees levied under section 234E for late filing of TDS statements. The Assessing Officer had levied fees under section 234E of the Income Tax Act for belated TDS statements for assessment years 2013-2014 and 2014-2015. The CIT(A) upheld the late fee primarily relying on a judgment of the Gujarat High Court. However, the Tribunal referred to a judgment of the Kerala High Court which held that prior to 01.06.2015, the Assessing Officer could not levy fees under section 234E at the time of processing returns. The Tribunal, following the Kerala High Court's judgment, concluded that the late fee for the relevant quarters could not be sustained in orders passed before 01.06.2015.

2. Delay Condonation:
The appeals before the first appellate authority were barred by limitation, and the assessee sought condonation of delay. The Tribunal considered the reasons for the delay, including lack of awareness about appeal remedy for late fees u/s 234E and knowledge of a Karnataka High Court judgment declaring the late fee as invalid. The Tribunal applied the principle of "sufficient cause" for delay condonation, emphasizing the need to advance substantial justice. Citing Supreme Court precedents, the Tribunal noted that rules of limitation should not hinder substantial justice and that delay should be condoned unless malafides are evident. Considering the legal advice received by the assessee and the subsequent filing of appeals upon learning of relevant judgments, the Tribunal allowed the appeals and condoned the delay.

3. Judicial Precedents and Interpretation:
The Tribunal extensively referred to judgments of the Kerala High Court and Supreme Court on the interpretation of "sufficient cause" for delay condonation. Emphasizing the need for substantial justice over technicalities, the Tribunal highlighted that delay should be condoned unless there are clear malafides. The Tribunal's decision to allow the appeals was based on the application of legal principles and the assessee's actions upon becoming aware of relevant legal judgments.

In conclusion, the Tribunal allowed the appeals, setting aside the late fees levied under section 234E and condoning the delay in filing the appeals before the first appellate authority based on the principle of "sufficient cause" for delay condonation and the need to advance substantial justice.