The Income Tax Appellate Tribunal (ITAT), Bangalore Bench ruled that the levy of interest under section 234-E of the Income Tax Act was illegal for returns of tax deducted at source (TDS) prior to June 1, 2015.
The assessee filed statement of TDS for various quarters for Financial Year 2012-13 to 2014-15. The statement was processed by the respondent. There was a delay in filing the above TDS statement and therefore the AO by intimation under section 200A of the Income-Tax Act, 1961 levied late fee under section 234E of the Income-Tax Act, 1961. Under Section 234E of the Act, if there is a delay in filing statement of TDS within the prescribed time then the person responsible for making payment and filing return of TDS is liable to pay by way of fee a sum of Rs.200/- per day during which the failure continues.
The assessee filed appeals before the CIT(A). The assessee’s contention before CIT(A) was that the provisions of section 234E of the Act was inserted by the Finance Act, 2012 w.e.f. July 1, 2012.
The CIT(A) was of the view that filing of TDS returns is online since many years and details of intimation and demand become immediately available online to the Assessee. The Assessee was using the website of the Department to file its quarterly TDS returns. So details of pending demands was not dependent on the knowledge of any specific person but the Assessee has neglected to follow it up either by payment or by filing the appeal. He therefore held that the Assessee cannot deny that the information related to TDS demand arising out of processing of TDS return and as reflected in Form 26AS was not available to him.
The coram of B.R.Baskaran and George K.George said that in a case like this the benefit of doubt should go to the Assessee. Therefore, the Assessee is not guilty of negligence and the delay was due to bonafide reasons set out above.
“Considering the reasons given by the Assessee for condonation of delay and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that the delay in filing the appeals deserves to be condoned. Accordingly the delay is condoned. Since the CIT(A) has not decided the issue on merits, the order of the CIT(A) is set aside and remanded to the CIT(A) with a direction to decide the appeals of the Assessee on merits in accordance with law with due opportunity to the Assessee of being heard,” the ITAT ruled.
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