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2023 (6) TMI 177 - AT - Income TaxDefault u/s 201(1A) and interest u/s 201(1A) - delayed remittance of TDS by one day on two occasions -delay of 1 day in remittance of TDS - HELD THAT - For delay of 1 day in remittance of TDS for the month of October 2016, the assessee had submitted that Corporation Bank Website was not working on 07.11.2016 , which is a designated bank for collection of TDS. Also submitted that the assessee had never defaulted in remittance of TDS except for the months of October and November 2016, wherein there was delay by 1 day in each of the months. TDS was remitted to the account of the Central Government on 08.11.2016. In our considered opinion, this delay in remittance of TDS by one day is due to the technical glitches / reasons beyond the control of the assessee and hence we hold that the assessee cannot be penalized by way of interest u/s 201(1A) of the Act for the same. Chargeability of interest u/s 201(1A) is automatically calculated by the CPC based on the dates mentioned by the assessee in its quarterly results and the same is mandatory in nature - We are unable to comprehend ourselves to accept to this argument of the ld.DR, in as much as, the delay had occurred not due to willful default on the part of the assessee, which is evident from the reason stated. Reason stated by the assessee had not been found to be false. Even though the chargeability of interest u/s 201(1A) as rightly pointed out by the DR is automatic in nature, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. There is no default committed by the assessee while remitting the TDS for the month of October 2016 on 08.11.2016. Delay in remittance of TDS for the month of November 2016 - AR before us submitted that though the transaction is made online by the assessee, still when the transactions are routed through National Electronic Fund Transfer (NEFT) mode, still the bank takes few hours to process the said payment and accordingly the bank after processing mentions the date of execution as the immediately succeeding day. This fact is also evident from the fact that the time of execution of the said TDS remittance is mentioned in the tax paid challan as 04 45 20 hours, which is 4.45. AM and 20 seconds. This clinching evidence goes to prove that the assessee had made the remittance on the previous day itself i.e on 08.12.2016 and bank had taken its usual time for processing the said payment. The reason stated by the assessee had not been found to be false. Even though the chargeability of interest u/s 201(1A) of the Act, as rightly pointed out by the ld. DR is automatic in nature, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. There is no default committed by the assessee while remitting the TDS for the month of November 2016 on 08.12.2016. Accordingly, we direct the ld. AO to delete the interest charged u/s 201(1A) of the Act for the alleged default for the month of November 2016. Appeal of assessee allowed.
Issues Involved:
The judgment involves the following Issues: - Appeal against order of Commissioner of Income Tax (Appeals) regarding interest charged under section 201(1A) of the Income-tax Act, 1961 for delayed remittance of TDS. - Whether the levy of interest under section 201(1A) was justified. - Liability of the assessee for interest under section 220(2) for non-payment of the demand. Details of Judgment: Issue 1: Interest Charged under Section 201(1A) for Delayed TDS Remittance The appeals in ITAs No.6899 to 6901/Del/2019 were filed against the order of the Commissioner of Income Tax (Appeals) regarding interest charged under section 201(1A) of the Act for delayed remittance of TDS by one day on two occasions. The appeals were related to quarterly returns filed in Form 24Q, Form 26Q, and Form 27Q for the 3rd quarter of the assessment year 2017-18. Issue 2: Justification of Interest Levy under Section 201(1A) The main issue in all appeals was whether the Commissioner of Income Tax (Appeals) was justified in confirming the levy of interest under section 201(1A) for the delayed remittance of TDS by one day on two occasions. The Tribunal found that the delay was due to technical glitches beyond the control of the assessee and held that the assessee could not be penalized for the delay. The Tribunal directed the Assessing Officer to delete the interest charged for the alleged default. Issue 3: Liability for Interest under Section 220(2) The Tribunal considered the argument that interest under section 220(2) would be liable on the assessee for not paying the demand raised. However, the Tribunal held that since the delay was not due to willful default by the assessee and was beyond their control, the interest liability under section 201(1A) could not be levied. Consequently, the Tribunal directed the Assessing Officer to delete the interest charged for the delay in TDS remittance for both instances. Conclusion: The Tribunal allowed the grounds raised by the assessee in all three appeals, concluding that there was no default committed by the assessee in remitting the TDS for the specified months. Therefore, all the appeals of the assessee were allowed, and the interest charged under section 201(1A) was directed to be deleted.
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