2022 (12) TMI 1259 - AT - Income Tax

Levy of interest for delay of 1 day in deposit of TDS - Levy of Fee u/s 234E - due to technical glitch the bank could not remit the amount immediately to the account of the department - HELD THAT - Income Tax Department has authorized certain banks to collect TDS on their behalf. The Bank of Baroda being one of the authorized banks, thus, has acted as an agent of the Income Tax Department. In our view, the moment, the assessee deposited the TDS with the bank, the bank being an agent of the Income Tax Department, the amount is deemed to have been received by the principal i.e. Income Tax Department. The bank has issued letter in this respect that the amount was duly deposited by the assessee before the due date and that there was no default on the part of the assessee. Though the Income Tax Department and other Government Organisations have shifted to the online system, however, the said system is in the developing stage and often there are technical glitches faced due to which certain acts of uploading of forms etc and as in the present case, the remittance of the amount by the bank to the account of the department are being faced, which are beyond the control of the concerned assessee or the person who is supposed to upload such information, form or to remit the amount, as the case may be. This type of technical glitches is beyond the control of concerned assessee/person for which the concerned assessee cannot be penalised. The facts in this case are apparent that the assessee had deposited the amount with the authorized bank within the due date, however, due to technical glitch the bank could not remit the amount immediately to the account of the department and there occurred a delay of one day because of which the assessee cannot be burdened with levy of interest u/s 201(1A) - assessee cannot be burdened because of not doing an act which was beyond his control. Even otherwise, as observed above, the Bank has accepted the payment being agent of the Income Tax Department, and the assessee has deposited the payment with the bank before the due date.The impugned levy of interest by the lower authorities is set aside. Appeal of the assessee stands allowed.

Issues Involved:
1. Dismissal of appeal against intimation issued under Section 200A for the Financial Year 2018-19.
2. Incorrect statement in the appellate order regarding the nature of the appeal.
3. Non-consideration of written submissions by the Commissioner of Income-tax (Appeals).
4. Levy of interest under Section 201(1A) due to delayed TDS payment caused by the bank's technical issues.

Issue-wise Detailed Analysis:

1. Dismissal of Appeal Against Intimation Issued Under Section 200A:
The assessee challenged the dismissal of their appeal against the intimation dated 02/06/2019 issued under Section 200A for the Financial Year 2018-19, relevant to the Assessment Year 2019-20. The intimation raised a demand of Rs.1,10,43,080 based on the levying of interest under Section 201(1A) for the alleged late payment of TDS by the appellant. The appellant had deducted taxes at source under Section 195 and deposited the TDS amounts at the authorized bank, which subsequently faced technical issues, causing a delay in remittance to the Central Government's account.

2. Incorrect Statement in the Appellate Order:
The Commissioner of Income-tax (Appeals), NFAC, incorrectly stated that the appeal related to the levy of fee under Section 234E, whereas the actual issue was the levying of interest under Section 201(1A). The CIT(A) erroneously concluded that the levy of fee under Section 234E was justified, which was not the issue raised by the appellant. The relevant part of the CIT(A)'s order was reproduced to highlight this misstatement and the incorrect footing on which the CIT(A) proceeded.

3. Non-consideration of Written Submissions:
The appellant argued that the CIT(A) did not take into account the written submissions furnished in response to the notices issued under Section 250 by the NFAC. The appellant had submitted that there was no fault on their part in the one-day delay in depositing the TDS, which was due to a technical problem faced by the authorized bank. Despite this, the CIT(A) dismissed the appeal without considering these submissions.

4. Levy of Interest Under Section 201(1A) Due to Bank's Technical Issues:
The appellant deposited the TDS amounts within the due date, but the authorized bank, due to technical issues, remitted the amounts to the Income Tax Department with a delay of one day. The bank issued certificates certifying the technical issues and the delay. The appellant contended that the interest demand should be waived as the delay was beyond their control. The Tribunal noted that the authorized bank acts as an agent of the Income Tax Department. Therefore, the moment the assessee deposited the TDS with the bank, it was deemed to have been received by the Income Tax Department. The technical glitch faced by the bank was beyond the control of the assessee, and thus, the assessee should not be penalized for the delay. The Tribunal set aside the impugned levy of interest by the lower authorities, concluding that the assessee cannot be burdened with interest for an act beyond their control.

Conclusion:
The appeal of the assessee was allowed, and the impugned levy of interest under Section 201(1A) was set aside. The Tribunal emphasized that the technical issues faced by the authorized bank, which caused the delay, should not result in penalizing the assessee. The decision was delivered on November 16, 2022, in Kolkata.

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