2021 (3) TMI 425 - AT - Income Tax

Condonation of delay - Late fee u/s. 234E - Fee for default in furnishing statements - delay in filing the TDS statement and therefore the AO by intimation u/s. 200A - HELD THAT - As held in the case of MSV IT Solutions Ltd. 2018 (10) TMI 1774 - ITAT HYDERABAD wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A). The Assessee is not guilty of negligence and the delay was due to bonafide reasons set out above. The Assessee and as per the ratio laid down by the Hon ble Supreme Court in the case of Collector of Land Acquisition Vs. Mst. Katiji others 1987 (2) TMI 61 - SUPREME COURT delay should be condoned where there is no negligence. The Hon ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day s delay must be explained does not mean that a pedantic approach should be taken. Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. Accordingly the delay is condoned. Since the CIT(A) has not decided the issue on merits, the order of the CIT(A) is set aside and remanded to the CIT(A) with a direction to decide the appeals of the Assessee on merits - Appeals by the assessee are treated as allowed for statistical purpose.

Summary

Issues:
- Late fee under section 234E of the Income-Tax Act, 1961 for delayed filing of TDS statements.
- Condonation of delay in filing appeals before the CIT(A).
- Validity of charging late fee under section 234E of the Act for TDS returns filed prior to 1.6.2015.

Late Fee under Section 234E:
The Appellant filed appeals against the CIT(A)'s order regarding late fee levied under section 234E for delayed filing of TDS statements. The Appellant argued that the provisions of section 234E came into effect from 1.7.2012, and the authority could only levy the fee under section 234E while processing returns of TDS filed under section 200(3) of the Act, based on provisions of section 200A(1)(c), (d), and (f) which were effective from 1.6.2015. The Appellant relied on a High Court decision stating that the amendment allowing fee computation under section 234E during return processing had prospective effect from 1.6.2015. Consequently, the Appellant challenged the validity of charging late fee under section 234E for TDS returns filed before 1.6.2015.

Condonation of Delay in Filing Appeals:
The Appellant filed appeals before the CIT(A) challenging the late fee, citing a lack of clarity on the issue until a High Court decision. The Appellant claimed they were under the impression that the late fee was not appealable and were advised against filing appeals. They sought condonation of delay, emphasizing a wrong understanding of the law and referred to a case where delay was condoned due to subsequent enlightening by a Special Bench. However, the CIT(A) observed significant delays in filing the appeals and noted the Appellant's failure to pay the late fee despite intimation. The CIT(A) differentiated between marginal and inordinate delays, referring to a previous case, and refused to condone the delay, ultimately dismissing the appeals.

Validity of Charging Late Fee:
The CIT(A) upheld the late fee imposition and rejected the condonation of delay. The Appellant appealed to the Tribunal, where the absence of the Appellant was noted. The Tribunal considered the arguments and grounds of appeal, acknowledging the illegality of charging interest under section 234E for TDS returns before 1.6.2015 based on a High Court decision. The Tribunal cited a case where delay was condoned due to the absence of a legal remedy before 1.6.2015 against intimation under section 200A. Emphasizing the absence of negligence and the need for substantial justice, the Tribunal held that the delay should be condoned, setting aside the CIT(A)'s order and remanding the case for a merit-based decision.

In conclusion, the Tribunal allowed the appeals for statistical purposes, condoning the delay in filing appeals and emphasizing the importance of substantive justice over technicalities.