2022 (5) TMI 728 - AT - Income Tax

Late fee u/s. 234E r.w.s 200A - delay in filing statement of TDS within the prescribed time - Sufficient cause of delay - HELD THAT -. Considering the principles laid down in Equipment Fabricators 2021 (11) TMI 213 - ITAT BANGALORE in construing the expression sufficient cause the principle of advancing substantial justice is of prime importance and the expression sufficient cause should receive a liberal construction. In our considered view the ill health of the MD of the assessee due to which he could not concentrate on the business matter is a sufficient cause for delay in filing the appeal before us.. We therefore condone the delay of 108 days in filing the appeal and admit the appeal for further adjudication on merits. While arguing on merits the learned AR reiterated the submissions made before the lower authorities and the learned DR supported the stand of the revenue as reflected in the order of the CIT(A). It is not in dispute that if the ratio laid down in the case of Fateeraj Singhvi 2016 (9) TMI 964 - KARNATAKA HIGH COURT is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015. The decision in the case of Fateeraj Singhvi (supra) was rendered on 26.8.2016. It has been 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). Considering the peculiar facts and circumstances of the case and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that interest of justice would be met if the delay in filing appeals by the Assessee before CIT(A) is condoned and the issue with regard to levy of interest u/s.234-E of the Act be remanded to the CIT(A) for fresh consideration in accordance with the observations made in this order. Appeal by the assessee is treated as allowed for statistical purpose.

Summary

Issues Involved:
1. Levy of late fee under Section 234E of the Income-Tax Act, 1961.
2. Condonation of delay in filing appeals before the CIT(A) and the Tribunal.

Detailed Analysis:

1. Levy of Late Fee under Section 234E of the Income-Tax Act, 1961:

The core issue revolves around the levy of late fee under Section 234E, which mandates a fee of Rs. 200 per day for delays in filing TDS statements. The Assessing Officer (AO) levied this fee via a rectification order under Section 154 for delays in filing TDS statements for Q2 to Q4 of FY 2012-13 (AY 2013-14). The assessee contested this, arguing that Section 234E was inserted by the Finance Act, 2012, effective from 1.7.2012, and the AO could levy this fee only by virtue of Section 200A(1)(c), (d), and (f), which came into effect from 1.6.2015. The assessee relied on the Karnataka High Court's decision in Fatehraj Singhvi v. UOI, which held that the amendment to Section 200A allowing the computation of fee under Section 234E during processing of returns was prospective from 1.6.2015. Therefore, the fee could not be levied for delays in TDS statements filed before this date.

2. Condonation of Delay in Filing Appeals:

The CIT(A) refused to condone a 122-day delay in filing the appeal, attributing it to negligence and inaction on the part of the assessee. The assessee argued that clarity on the levy of interest under Section 234E emerged only after the Karnataka High Court's decision in Fatehraj Singhvi and that improper legal advice contributed to the delay. The CIT(A) dismissed the appeal, emphasizing that 'sufficient cause' for delay must be beyond the control of the party.

The Tribunal, however, took a different stance, influenced by the principles laid down in the Equipment Fabricators vs. DCIT case. The Tribunal emphasized that substantial justice should prevail over technicalities and that delays should be condoned if they are not deliberate. The Tribunal noted that the assessee's managing director was undergoing medical treatment, which constituted 'sufficient cause' for the delay. The Tribunal cited several judicial precedents, including the Supreme Court's decision in Collector, Land Acquisition v. Mst. Katiji, which advocated for a liberal interpretation of 'sufficient cause' to advance substantial justice.

Judgment:

The Tribunal condoned the 108-day delay in filing the appeal, noting that the health issues of the assessee's managing director constituted a sufficient cause. On the merits, the Tribunal referred to the Karnataka High Court's decision in Fatehraj Singhvi, which invalidated the levy of fees under Section 234E for periods before 1.6.2015. Consequently, the Tribunal remanded the issue back to the CIT(A) for fresh consideration, directing that the delay in filing appeals before the CIT(A) be condoned to ensure substantive justice.

Conclusion:

The appeal was allowed for statistical purposes, with the Tribunal emphasizing that technicalities should not obstruct the rendering of substantive justice. The order was pronounced on 3rd May 2022.