ITAT Deletes Late Filing Fee u/s 234E for TDS Return Due to Human Error and Absence of Malafide Intention [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the late filing fee under Section 234E of the Income Tax Act for TDS return due to human error and absence of malafide intention.

The assessee Kanta Govind Singh, was a resident senior citizen aged 85 years. During the year under consideration the assessee purchased a house property which was jointly co-owned by Vipul Taneja and Aparajita Bhalla. Both the co-owners of the house property were non-residents in India during the year under consideration and thus the assessee deducted tax at source on the sale consideration as per provision of Section 195 of the Income Tax Act, 1961.

Both the non-resident sellers of the property obtained lower tax certificate from their respective jurisdiction Assessing Officer as per provisions of Section 197 of the Income Tax Act specifying TDS rate at 2.38% (excluding applicable surcharge and education cess) on the sale consideration amount of the house property as referred earlier.

Accordingly, on the date of payment/credit of sale consideration the assessee deducted TDS of Rs.7,11,218/- being 2.85% (i.e. 2.38% +15% surcharge & 4% education cess) on total sale consideration of Rs.2,49,55,000/- (each co-owner share being Rs.1,24,77,500/- towards sale consideration and Rs.3,55,609/- towards TDS).

Thereafter, the assessee deposited the total TDS amount of Rs.7,11,218 to the account of the Central Government on the same day i.e. 20.06.19 without any delay though the due date for payment of TDS was 07.07.2019, on or before seventh day after the end of the month in which TDS is deducted as per provisions of Rule 30 of the Income Tax Rules, 1962.

Due to very old age, the assessee on account of human error forgot to file the TDS return in Form 27Q by the end of the month following the quarter in which TDS is deducted i.e. on or before 31st July, 2019. Due to weak health and thereafter on account of outbreak of Covid-19, the assessee got to know in the month of Jan 2021 that the TDS return for the quarter ending June 2019 was not filed and accordingly in order to comply with the income tax procedures the assessee arranged to file the said return on 08.01.2021.

The return filed in Form 27Q was processed by the Assessing Officer TRACES and intimation dated 12.01.2021 under Section 200A of the Income Tax Act was issued after levying of late filing fees of Rs.1,05,400/- as per Section 234E of the Income Tax Act.Being aggrieved by the intimation processed under Section 200A of the Income Tax Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Counsel for the assessee Sanjay R. Shah  submitted that the procedural error in filing the TDS return is just on account of human error due to old age and with no malafide intention of being non co-operative to income tax compliances.

The counsel further submitted that the assessee had deposited the tax amount of Rs.7,11,128/- to the account of the Central Government on the date of deducting the tax itself i.e. 20th June, 2019 without keeping the tax amount with the assessee even for a single day and also much in advance from the due date of depositing the tax for the month of June 2019 i.e. 7th July, 2019.

The counsel further submitted that the non-resident sellers of the property duly received credit of the tax amount without any error or omission. The  Assessing Officer ought not to have levied such a heavy late filing fees only on account of procedural error of filing the prescribed form in a situation when there was no loss to revenue either on account of tax or interest.

The counsel for revenue Dileep Kumar submitted that Section 234E of the Income Tax Act provides for mandatory filing TDS statements and, therefore, the CIT(A) was right in confirming the levy of fee under Section 234E of the Income Tax  Act.

The Bench consisting of a Judicial Member Suchitra Kamble, and an Accountant Member Annapurna Gupta observed that the assessee being senior citizen had deposited TDS amount immediately after sale consideration was received and there was no lapse on the part of the assessee while depositing the TDS amount to the Treasury of Government of India.

It was further noted that, "Due to the circumstances, the assessee could not file form 27Q within the time frame, but the assessee’s intention is clear as the assessee filed the same in January 2021. Thus, merely on the ground that the assessee had not filed Form 27Q and thus late filing cannot be the criteria for levying fees under Section 234E of the Income Tax Act."

In result, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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