M/s. Child Development Project Officer, Shivamogga V. Income-Tax Officer, TDS Ward, Davangere

ITA 882/BANG/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9234 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-01-2024
• Assessment Year: misc
• Appeal Filed On: 09-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Reasonable cause; Bonafide mistake; TDS; Set aside
• Section: 250; 234E; 200A; 192; 73; 13; 272A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.882 to 890/Bang/2023 Assessment Years : 2014-15 to 2016-17 The Child Development Project Officer, Department of Women and Child Kuvempu Road, Basavanagudi, Shivamogga. TAN : BLRC 03390 C Vs. The Asst. Commissioner of Income-tax, Central Processing Cell, TDS. APPELLANT RESPONDENT Assessee by : Shri Hemant Pai, C.A Revenue by : Shri Nischal B, Addl. CIT (DR) Date of hearing : 04.01.2024 Date of Pronouncement : 09.01.2024 O R D E R PER BENCH All these appeals are filed by the assessee against the separate orders passed by the CIT(A), which is as under:- ITA Nos.882-890/Bang/2023 Page 2 of 17 S.No. ITA Nos. Asst. Year 1 882/Bang/2023 2014-15 2 883/Bang/2023 2014-15 3 884/Bang/2023 2014-15 4 885/Bang/2023 2015-16 5 886/Bang/2023 2015-16 6 887/Bang/2023 2015-16 7 888/Bang/2023 2015-16 8 889/Bang/2023 2015-16 9 890/Bang/2023 2016-17 2. The issue involved in all these appeals is common except for the figures, hence these appeals are clubbed together, heard together and disposed of by this common order for the sake of convenience. 3. At the outset, it is observed that there was delay of 645 days in filing the appeal before this Tribunal. The Ld.AR submitted that during the relevant period Hon'ble Supreme Court in Suo Moto Writ Petition (C) No.3/2020 extended the period of limitation with effect from 15.03.2022 to 28.02.2022 and, therefore, the Ld.AR submitted that the present appeals has been filed before this Tribunal on 10.11.2023 thereby causing a net effective delay of 530 days. ITA Nos.882-890/Bang/2023 Page 3 of 17 4. He thus humbly prayed that this Tribunal may take a lenient and compassionate approach and condone the delay of 530 days in filing the present appeal against the orders of the Ld.CIT(A) passed under section 250 of the Act and hear the same on merits for the advancement of substantial cause of justice. 5. He also relied on the decision of Hon'ble Apex Court in the case of COLLECTOR, LAND ACQUISITION Vs MST. KATIJI AND OTHERS reported in (1987) 167 ITR 471, in the case of CONCORD OF INDIA INSURANCE CO LTD Vs SMT. NIRMALA DEVI AND OTHERS reported in 118 ITR 507 and decision of Hon'ble Supreme Court in the case of M/S. MELA RAM & SONS Vs CIT (PUNJAB) reported in 29 ITR 607. He also relied on the decision of recent judgment of Hon'ble Supreme Court in case of CIT Vs.WEST BENGAL INFRASTRUCTURE DEVELOPMENTFINANCE CORP, where Hon'ble Supreme Court held that delay should be condoned and matters to be heard on merits, when the stakes involved are high. 6. The Ld.DR though objected to the condonation of delay vehemently could not bring out anything on record to ITA Nos.882-890/Bang/2023 Page 4 of 17 establish any malafide on behalf of the assessee in causing such delay to file the present appeals before this Tribunal. 7. On merits of the case, the Ld.DR submitted that the issue has not been considered by the Ld.CIT(A) who dismissed the appeals in limine by not condoning the delay caused in filing the appeals. However, he admitted to the fact that the merits of the case is covered by the decision of Hon'ble Karnataka High Court in case of v. UOI reported in [2016] 73 taxmann.com 252. However he submitted that the revenue preferred SLP before the Hon'ble Supreme Court against the decision of Hon'ble Karnataka High Court and that he relied on the orders passed by the authorities below. 8. We have perused the submissions advanced by both sides in the light of records placed before us. On merit, the issue is in favour of assessee as per the ratio of Hon`ble Karnataka High Court in case of Fatehraj Singhvi v. UOI (supra). But there is a technical defect as in all the appeals before us are not filed within the period of limitation. The assessee has filed an affidavit establishing the cause for the inability to file the present appeals. Revenue has not denied the averments made by the assessee in the affidavit. ITA Nos.882-890/Bang/2023 Page 5 of 17 9. The Ld. DR submitted that there was inordinate delay of 530 days and the reason given by the assessee for filing the appeal belatedly cannot be considered as bona fide. It was submitted that the assessee was very negligent in its action and it could have been vigilant to avoid delay in filing the appeal before the Tribunal. Therefore, he submitted that the delay cannot be condoned in this case. According to the Ld. DR in this case, the assessee was sleeping over the matter and not keen to take remedial measures against the order of the CIT(A). Hence, the appeal is to be dismissed in limine. 10. Admittedly there is a delay of 530 days in filing the present appeals before this Tribunal. Hon'ble Supreme Court in case of N.Balakrishnan vs. M. Krishnamurthy reported in AIR 1998 SC 3222 in a similar circumstances, held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. 11. The decision of Hon'ble Mumbai Benches in the case of Y.P. Trivedi vs. JCIT in ITA No. 5994/Mum/2010 dated ITA Nos.882-890/Bang/2023 Page 6 of 17 11/07/2012 held that delay in filing the appeal due to CA's fault is bona fide and must be condoned and the delay of 438 days was condoned by observing as follows: "5 After considering the rival submissions and carefully gone through the affidavit filed by the assessee as well as the affidavit of Shri Sunil Hirawat, CA of the assessee, we note that the facts of the case do not suggest that the assessee has acted in a malafide manner or the reasons explained is only a device to cover an ulterior purpose. It is settled proposition of law that the Court should take a lenient view on the matter of condonation of delay. However, the explanation and the reason for delay must be bonafide and not merely a device to cover an ulterior purpose or an attempt to save limitation in an underhand way. The Court should be liberal in construing the sufficient cause and should lean in favour of such party. Whenever substantial Justice and technical considerations are opposed to each other, cause of substantial Justice has to be preferred. In the case in hand, when the reasons explained by the assessee are not found as malafide or a device to cover up ulterior purpose, then a liberal approach has to be taken for considering the sufficiency of course. We are satisfied with the reasons explained by the assessee that due to bonafide mistake and inadvertence, the appeal could not be filed within the period of limitation. Accordingly, in the interest of Justice we condone the delay of 496 days in filing the present appeal. " 12. Hon'ble Madras High Court in case of Sreenivas Charitable Trust vs. DCIT reported in 280 ITR 357 observed that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. ITA Nos.882-890/Bang/2023 Page 7 of 17 13. Further Hon'ble Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder: "(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 14. Thus from the above decisions, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. ITA Nos.882-890/Bang/2023 Page 8 of 17 15. In the case on hand, the issue on merit is regarding issue involved in all these appeals are with regard to dismissing the appeal of the assesee by the CIT(A) for challenging the fee imposed u/s 234(E) for delay in filing the TDS return, which is covered in favour of assessee by the decision of Hon'ble Karnataka High Court. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Hon'ble Apex Court, referred to hereinabove if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground, when the Tribunal is capable of removing injustice and to do justice. Therefore, in our opinion, in the present facts by preferring the substantial justice, the delay of 645 days deserves to be condoned. 16. The next question may arise whether 530 days was excessive or inordinate. In our opinion, there is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. Hon'ble Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. reported in ITA Nos.882-890/Bang/2023 Page 9 of 17 153 ITR 596 considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Hon'ble Madras High Court condoned nearly 21 years of delay in filing the appeal. 17. Further Hon'ble Madras High Court in the case of Sreenivas Charitable Trust (supra) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that 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. 18. In the present facts of the case, the sufficient cause has been made out by the assessee in the affidavits substantiating the delay in filing the present appeals before this Tribunal. In view of the above, we condone the delay of 530 days in filing the present appeals and admit the same for adjudication on merits. Accordingly condone the delay in filing the appeal after relying on the above judgment. ITA Nos.882-890/Bang/2023 Page 10 of 17 19. Coming to the merit of the case, the sole issue involved in all these appeals are with regard to dismissing the appeal of the assessee by the CIT(A) for challenging the fee imposed u/s 234(E) for delay in filing the TDS return. 20. The brief facts of the case are that the assessee is required to file statement of tax deducted at source u/s 200 of the Act in Form No. 24Q/26Q. The assessee deduced tax and filed TDS return in the prescribed form belatedly. Therefore, while processing TDS return, the CPC-TDS imposed fee, which are as under:- 21. The ld.AR of the assessee submitted that the CPC- TDS while processing the return wrongly charged fee u/s 234E for belatedly filing the TDS return. The Act has been amended from 01/06/2015 and prior to this period, levy of fee was in the statute book, therefore, the assessee is not ITA Nos.882-890/Bang/2023 Page 11 of 17 liable for the period till 01/06/2015 and the issue is squarely covered in favour of the assessee by the decision of jurisdictional High Court in the case of Fatheraj Singhvi [2016] 73 taqxmann.com 252 [kar]Patheran Vs. UOI and he also relied on other judgments:- 1) Manoj Kumar Jaiswal [2019] 104 taxmann.com (Bang - Trib) 2) Karnataka Grameena Bank [2022] 145 taxmann.com 192 [Bang – Trib) 3) Mindlogicx Infratec Ltd., ITA No.462 to 483/Bang/2022 dt. 19.07.2022 22. The ld.DR relied on the order of the lower authorities. 23. Considering the rival submissions we note that the assessee has deducted TDS and filed TDS return belatedly as prescribed in the Act, therefore, the CPC-TDS imposed levy for delay in filing the consequential TDS return. This issue has been settled by the various decision of jurisdictional High Court in the cases cite supra. For the sake of convenience, we reproduce the same as under:- ‘As per section 200(3) read with rule 31A of the Income Tax Rules, 1962 a tax deductor is required to file quarterly statement of such taxes deducted at source by him as TDS and for the period in question, the relevant dates for filing of such statement is as follows:(i) 30th June - 15th July of the financial' year; (ii) 30th September - 15th October of the financial' year; (iii) 31st December - 15th January of the ITA Nos.882-890/Bang/2023 Page 12 of 17 financial year; and (iv) 31st March - 15th May of the following financial year.[Para 8] It may be recorded that section 200(3) requiring to file formal TDS statement within the aforesaid each quarter was inserted on 1-4-2005 and at the relevant point of time, section 272A(2)(k) provided for the penalty of Rs.100 per day for each day of default in filing TDS statement and such provision also came to be inserted with effect from 1-4-2005. On 1-42010, section 200A was inserted providing for the processing of the TDS statement and the consequent issuance of the intimation to the deductor, the same determined as payable by it or refundable by it. But, the relevant aspect is that, in initial provisions of section 200A, there was no reference for fee payable under section 234E.[Para 9] On 1-7-2012, section 234E providing for levying of fee of Rs.200 per day for each day of default in filing TDS statement was inserted.[Para 10] Similarly, section 271H was inserted with effect from 1-7-2012 providing for imposition of penalty for default in filing TDS statement and also for furnishing of incorrect information in such TDS statement. The proviso was inserted in section 272A providing for no penalty under the said section will be imposed after 1-7-2012 for failure to file TDS statement on time possibly because a separate section 271 H was inserted in the Act.[Para 11] On 1-6-2015, clauses (c) to (f) came to be substituted under section 200A providing that the fee under section 234E can be computed at the time of processing of the return and the intimation could be issued specifying the same payable by the deductor as fee under section 234E.[Para 12]. When the returns for TDS filed by the respective appellant-petitioners were processed in purported exercise of the power under section 200A, the amount of fee under section 234E is computed and determined. The demand is made and the intimation given under section 200A includes the computation and the determination of the fee payable by the appellantpetitioners.[Para 13] Section 234E has come into force on 1-7-2012. Therefore, one may at the first blush say that, since section 234E is a charging section for fee, the liability was generated or had accrued, if there was failure to deliver or cause to be delivered the statement/s of TDS within the prescribed time. But, section 234E cannot be read in isolation and is required to be read with the mechanism and the mode provided for its enforcement. As observed hereinabove, when section 234E was inserted in the Act simultaneously, section 271 H was also inserted in the Act providing for the penalty for failure of furnishing of statements etc. Therefore, if there was failure to submit the statement for TDS as per section 234E, the fee payable is provided but the mechanism ITA Nos.882-890/Bang/2023 Page 13 of 17 provided was that if there was failure to furnish statements within the prescribed date, the penalty under section 271 H (1) and (2) could be imposed. However, under sub-section (3) of section 271H, the exception is provided that no penalty shall be levied for the failure referred to under clause (a) of sub-section (1) if the person proves that after paying TDS with the fee and interest the amount is credited and he had delivered or caused to deliver the statement within one year from the time prescribed for submission of the said statement. To put it in other words, for failure to submit the statements, the penalty provided under section 271(1)(a) cannot be imposed if the deductor complies with the requirement of sub-section (3) of section 271 H. Hence, it can be said that the fee provided under section 234E would take out from the rigors of penalty under section 271 H but of course subject to the outer limit of one year as prescribed under sub-section (3) of section 271H. It can also be said that when the Parliament intended to insert the provisions of section 234E providing for fee simultaneously the utility of such fee was for conferring the privilege to the defaulter deductor to come out from the rigors of penal provision of section 271H. Be it recorded that, prior to section 271H inserted in the statute book, the enforceability of requirement to file return under section 200(3) and section 206C(3) was by virtue of section 272A(2)(k) which provided for the penalty of Rs.100 per day for each day of default in filing TDS statements. But, when section 234E was inserted with effect from 1-72012 simultaneously, a second proviso was added under section 272A(2) with effect from 1-72012.[Para 17] The aforesaid shows that in the clause (k) if the said failure relates to a statement referred to in sub-section (3) of section 200 or the sub- section (3) of section 206C, no penalty shall be imposed for TDS after 1-7-2012.[Para 18] Hence, it can be said that, the mechanism provided for enforceability of section 200(3) or section 206C (3) for filing of the statement by making it penal under section 272A(2)(k) is done away in view of the insertion of section 271 H providing for penal provision for such failure to submit return. When the Parliament has simultaneously brought about section 234E, section 271 H and the aforesaid proviso to section 272A(2), it can be said that, the fee provided under section 234E is contemplated to give a privilege to the defaulter to come out from the rigors of penalty provision under section 271 H (1) (a) if he pays the fee within one year and comp: with the requirement of sub-section (3) of section 271 H.[Para 19] In view of the aforesaid observations and discussion, two aspects may transpire one, for. section 234E providing for fee and given privilege to the defaulter if he pays the fee and hence, when a privilege is given for a particular purpose which in the present case is to come out from ITA Nos.882-890/Bang/2023 Page 14 of 17 rigors of penal provision of section 271 H(1)(a), it cannot be said that the provisions of fee since creates a counter benefit or reciprocal benefit in favour of the defaulter in the rigors of the penal provision, the provisions of section 234E would meet with the test of quid pro quo. [Para 20] However, if section 234E providing for fee was brought on the state book, keeping in view the aforesaid purpose and the intention then, the other mechanism provided for computation of fee and failure for payment of fee under section 200A which has been brought about with effect from 1-6-2015 cannot be said as only by way of a regulatory mode or a regulatory mechanism but it can rather be termed as conferring substantive power upon the authority. It is true that, a regulatory mechanism by insertion of any provision made in the statute book, may have a retroactive character but, whether such provision provides for a mere regulatory mechanism or confers substantive power upon the authority would also be a aspect which may be required to be considered before such provisions is held to be retroactive in nature. Further, when any provision is inserted for liability to pay any tax or the fee by way of compensatory in nature or fee independently simultaneously mode and the manner of its enforceability is also required to be considered and examined. Not only that, but, if the mode and the manner is not expressly prescribed, the provisions may also be vulnerable. All such aspects will be required to be considered before one considers regulatory mechanism or provision for regulating the mode and the manner of recovery and its enforceability as retroactive. If at the time when the fee was provided under section 234E, the Parliament also provided for its utility for giving privilege under section 271 H(3) that too by expressly putting bar for penalty under section 272A by insertion of proviso to section 272A(2), it can be said that a particular set up for imposition and the payment of fee under section 234E was provided but, it did not provide for making of demand of such fee under section 200A payable under section 234E. Hence, considering the aforesaid peculiar facts and circumstances, the contention of the respondent-revenue that insertion of clauses (c) to (f) under section 200A(1) should be treated as retroactive in character and not prospective is unacceptable.[Para 21] It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, it is found that substitution made by clauses (c) to (f) of sub-section (1) of section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under section 200A for computation and intimation for the ITA Nos.882-890/Bang/2023 Page 15 of 17 payment of fee under section 234E could not be made in purported exercise of power under section 200A by the respondent for the period of the respective assessment year prior to 1-62015. However, it is made clear that, if any deductor has already paid the fee after intimation received under section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest.[Para 22] In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent- department against all the appellants under section 200A are so far as they are for the period prior to 1-6-2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid.[Para 23] If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under section 200A are in respect of fees under section 234E for the period prior to 1-6-2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of section 234E. In view of the reasons recorded, when the amendment made under section 200A which has come into effect on 1-6-2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under section 234E could be made for the TDS deducted for the respective assessment year prior to 1-6- 2015. Hence, the demand notices under section 200A by the respondent authority for intimation for payment of fee under section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.[Para 24] As such, as recorded earlier, it is on account of the intimation received under section 200A for making computation and demand of fees under section 234E, the same has necessitated the appellant to challenge the constitutional validity of section 234E. When the intimation of the demand notices under section 200A is held to be without authority of law so far as it relates to computation and demand of fee under section 234E, it is found that the question of further scrutiny for testing the constitutional validity of section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under section 234E. At this stage, it may also be recorded that the appellant had also declared that if the impugned notices under section 200A are set aside, so far as it relates to computation and intimation for payment of fee under section 234E, the appellant- petitioners would not press the challenge to the constitutional validity of section 234E. But, they submitted that the question of constitutional ITA Nos.882-890/Bang/2023 Page 16 of 17 validity of section 234E may be kept open to be considered by the Division Bench and the judgment of the Single fudge may not conclude the constitutional validity of section 234E .[Para 25] Under these circumstances, no further discussion would be required for examining the constitutional validity of section 234E. Save and except to observe that the question of constitutional validity of section 234E before the Division Bench of this Court shall remain open and shall not be treated as concluded.[Para 26] In view of the aforesaid observations and discussion, the impugned notices under section 200A for computation and intimation for payment of fee under section 234E as they relate to for the period of the tax deducted prior to 1-6-2015 are set aside. It is clarified that the present judgment would not be interpreted to mean that even if the payment of the fees under section 234E already made as per demand/intimation under section 200A for the TDS for the period prior to 1-4-2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect accordingly. It is further observed that the question of constitutional validity of section 234E shall remain open to be considered by the Divisiorr Bench and shall not get concluded by the order of the Single Judge.[Para 27] The appeals are partly allowed to the aforesaid extent.[Para 28.” 24. Respectfully following the above judgments of jurisdictional High Court in the cases Cite supra, we allow the appeals of assessee in ITA Nos.882 to 889/Bang/2023. ITA No.890/Bang/2023 25. We further note in ITA No.890/Bang/2023 for the asst. year 2016-17 levy of fee of Rs.4,000/- which is not covered by the above decision. It is clear that, Form No. 26Q is for the period 01/04/2015 to 30/06/2015 and the Act has been amended on 01/06/2015 by the Finance Act 2015, therefore, this period is ITA Nos.882-890/Bang/2023 Page 17 of 17 not covered as per the judgments cited Supra, therefore, we dismiss this appeal of the assessee. 26. In the combined result, appeals of the assessee in ITA No.882 to 889/Bang/2023 are allowed and the appeal in ITA No.890/Bang/2023 is dismissed. A common order passed shall be kept in the respective case files. Order pronounced in court on 9 th day of January, 2024 Sd/- Sd/- (GEORGE GEORGE K) (LAXMI PRASAD SAHU) Vice President Accountant Member Bangalore, Dated : 09.01.2024. Vms Copyto: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore