2022 (11) TMI 526 - AT - Income Tax

Levy of late fees u/s. 234E - belated submission of Tax Deducted at Source - HELD THAT - As it is with effect from 01-06-2015 that an amendment was made to section 200A of the Act providing that fees u/s. 234E could be computed at the time of processing of return of income and an intimation could be issued specifying the same payable by the deductor as fees u/s. 234E of the Act. Hon'ble Karnataka High Court in the case Fatheraj Singhvi Vs. Union of India, 2016 (9) TMI 964 - KARNATAKA HIGH COURT has held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01-06-2015. Therefore, late fees u/s. 234E of the Act can be levied only prospectively w.e.f. 01-06-2015 and not prior to that Admittedly in all the above eighteen cases, the Revenue has levied such late fee u/s. 234E for F.Y. 2012-13, 2013-14 and 2014-15 which are prior to 01-06-2015 and hence, we set aside the concerned orders of the National Faceless Appeal Centre and direct the A.O. to delete the late fees levied u/s. 234E of the Act from the hands of the assessee. Appeals of the assessee are allowed.

Summary

Issues Involved:
1. Levy of late fees under Section 234E of the Income-tax Act, 1961.
2. Condonation of delay in filing the appeal before the CIT(A).

Issue-Wise Detailed Analysis:

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

The primary grievance in all eighteen appeals was the levy of late fees under Section 234E of the Income-tax Act, 1961. The Tribunal noted that the power to levy late fees under Section 234E was not available to the Department prior to 01-06-2015. The cases in question pertained to Financial Years 2012-13, 2013-14, and 2014-15, and the late fees were levied before 01-06-2015. Consequently, the levy was not mandated by law.

The Tribunal referenced the Pune Bench's decision in the case of Nisar Mehboob Alam Khan and others, which held that the amendment to Section 200A, which provided the mechanism for levying late fees under Section 234E, was effective only from 01-06-2015. This position was supported by the Karnataka High Court in Fatheraj Singhvi vs. Union of India, which stated that the provisions of Section 234E are substantive in nature, and the mechanism for computing the late fee was provided by Parliament only from 01-06-2015. Therefore, the late fee under Section 234E could be levied only prospectively from 01-06-2015.

The Tribunal also cited similar decisions by the Pune Tribunal in the cases of Gajanan Constructions vs. DCIT and Maharashtra Cricket Association, Pune vs. DCIT, which reinforced that late fees under Section 234E could not be levied for periods prior to 01-06-2015. As a result, the Tribunal directed the ACIT, CPC-TDS, Ghaziabad to delete the late fees levied under Section 234E for the periods before 01-06-2015.

2. Condonation of Delay in Filing the Appeal before the CIT(A):

The Tribunal addressed the issue of condonation of delay in filing the appeal before the CIT(A). It referred to the Supreme Court's decision in Collector Land Acquisition vs. Mst. Katiji, which emphasized that a litigant does not benefit from lodging an appeal late and that refusing to condone delay could result in a meritorious matter being dismissed at the threshold, defeating the cause of justice. The Supreme Court advocated for a rational, common-sense approach to condonation of delay, favoring substantial justice over technical considerations.

The Tribunal also referenced the Bombay High Court's decision in Vijay Vishin Meghani vs. DCIT, which held that an overall view in the larger interest of justice should be taken in matters of condonation of delay. The Telangana High Court in Thunuguntla Jagan Mohan Rao vs. DCIT reiterated that rules of limitation are meant to ensure prompt seeking of remedies and not to destroy the rights of parties. The Court must consider the explanation for delay with utmost consideration unless it is shown to be deliberate or part of a dilatory strategy.

Applying these principles, the Tribunal found that the appellant had a strong case on merits and that the CIT(A) should have condoned the delay and adjudicated the appeal on merits. Since the issue involved was purely legal, the Tribunal decided the issue on merits, concluding that the late fees under Section 234E could not be levied for periods prior to 01-06-2015.

Conclusion:

In conclusion, the Tribunal set aside the orders of the National Faceless Appeal Centre and directed the Assessing Officer to delete the late fees levied under Section 234E for the Financial Years 2012-13, 2013-14, and 2014-15. The appeals of the assessee were allowed, and the order was pronounced in the open Court on 11th October 2022.