2022 (5) TMI 221 - AT - Income Tax

Levy of fee u/s 234E as intimation issued u/s 200A(1) for the period prior to 01.06.2015 - whether clause (c) of section 200A(1), as substituted by Finance Act, 2015, w.e.f. 01.06.2015, whereby the A.O. was enabled to compute the fee under section 234E of the Act while processing of statement of tax deducted at source, is prospective in nature? - HELD THAT - As in Fatheraj Singhvi v/s Union of India 2016 (9) TMI 964 - KARNATAKA HIGH COURT whereby the Hon ble High Court held that such an amendment is prospective in nature and thus intimation issued under section 200A of the Act for computation and intimation of payment of fee under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. We also find that the Co ordinate Bench of the Tribunal in Permanent Magnets Ltd. v/s DCIT 2019 (8) TMI 1049 - ITAT MUMBAI following the aforesaid decision of the Hon ble Karnataka High Court in Fatheraj Sanghvi (supra) directed deletion of fee under section 234E of the Act levied vide intimation under section 200A of the Act for the period prior to 01.06.2015. It is well established that rules of procedure are handmaid of justice. Further, when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred. Thus, in view of the above, as the learned CIT(A) has dismissed the appeals filed by the assessee, on delay and on defects in filing the appeal, without dealing with merits of the case, we in the substantial interest of justice deem it appropriate to restore the appeals before the learned CIT(A) for adjudication on merits after condoning the delay in filing the appeals. The assessee is also directed to obtain the copy of intimation issued under section 200A(1) for financial years under consideration from the AO(TDS) and provide the same to the learned CIT(A) for adjudication of its appeals. Appeals by the assessee are allowed for statistical purpose.

Summary

Issues:
Challenging impugned orders under section 250 of the Income Tax Act for assessment years 2014-15, 2015-16, and 2016-17; levy of fee under section 234E of the Act; dismissal of appeals by CIT(A) on the ground of delay.

Analysis:
The appeals were filed by the assessee against orders passed by the Commissioner of Income Tax (Appeals) for the mentioned assessment years. As the appeals pertained to the same assessee and involved identical issues, they were consolidated for adjudication. Despite the absence of the assessee during the hearing, the appeals were disposed of ex-parte after considering the departmental representative's submissions and available records.

The primary grievances of the assessee were the levy of fee under section 234E of the Act and the dismissal of appeals by the CIT(A) due to delay. The assessee failed to provide the order/intimation under section 200A of the Act, which led to the fee imposition. The CIT(A) noted that the appeals were defective as the default summary statements were not equivalent to the order under section 200A. The CIT(A) dismissed the appeals, stating that the assessee did not present a reasonable cause for the delay in filing within the prescribed time limit.

During the hearing, the departmental representative supported the CIT(A)'s decisions, emphasizing the belated filing of appeals by the assessee. The CIT(A's dismissal was based on technicalities, as the fee under section 234E had been levied, and the delay was not adequately justified by the assessee. The CIT(A) did not address the merits of the case and rejected the assessee's plea regarding lack of intimation on outstanding dues.

Regarding the issue of the retrospective or prospective nature of the amendment to section 200A(1) by the Finance Act, 2015, different High Courts had conflicting decisions. The Kerala High Court, aligning with the Karnataka High Court, held that the amendment was prospective from 01.06.2015, making intimation issued before this date invalid for fee computation under section 234E. A Tribunal decision also supported this interpretation.

To uphold the principles of substantial justice, the ITAT decided to restore the appeals before the CIT(A) for a thorough examination on merits after condoning the delay in filing. The assessee was directed to provide the intimation under section 200A(1) for the relevant years to facilitate a fair adjudication process, ensuring a proper hearing and consideration of all aspects.

In conclusion, the appeals by the assessee were allowed for statistical purposes, emphasizing the importance of procedural fairness and substantial justice in the adjudication process.