No Prejudice to Revenue as TDS Paid with Interest and Quarterly Returns Filed before 4th Quarter: ITAT finds Medical Grounds genuine, Waives Late Fee [Read Order]
The Assessing Officer and CIT(A) erred in mechanically levying and sustaining the late fee without considering these mitigating circumstances.
TDS - ITAT - Taxscan
TDS - ITAT - Taxscan
The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has waived late fees levied under Section 234E of the Income Tax Act, 1961, for delayed filing of quarterly TDS ( Tax Deducted at Source) returns.
The Tribunal held that when the assessee has deposited TDS with applicable interest, filed all pending quarterly returns before the due date of the fourth quarter, and showed genuine medical reasons for the delay, no prejudice is caused to the Revenue or deductees.
The assessee-appellant, Supujita Advisory and Consultancy (OPC) Pvt. Ltd., a corporate advisory firm, which deducted TDS on various payments during Financial Year 2022-23. The company filed quarterly TDS statements in Form 26Q for the first, second, and third quarters on 29 April 2023.
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While these were beyond their statutory due dates under Section 200(3), they were submitted before the deadline for the fourth quarter statement, i.e., 31 May 2023. The CPC (TDS) nevertheless levied late filing fees under Section 234E, which was upheld by the Commissioner of Income Tax (Appeals).
Before the Tribunal, the assessee argued that the delay was attributable to the ill-health of its sole director, who had undergone spinal surgery, supported by medical records. It was stated that the company had paid the TDS amounts along with interest and ensured that all returns were filed before the final quarterly deadline, avoiding any loss to the Revenue or inconvenience to deductees.
The Revenue, however, contended that Section 234E imposes a mandatory late filing fee for delays in quarterly TDS returns, and that the statute does not provide for condonation on grounds of reasonable cause.
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The Tribunal observed that while Section 234E prescribes a fee for delayed filing, the peculiar facts of the case merited relief. It noted that the assessee had substantiated the medical reasons behind the delay and had fully discharged its liability by paying TDS along with interest. Since the returns were filed before the fourth quarter’s due date, the Department suffered no inconvenience, nor were deductees deprived of credit.
The Bench held that the Assessing Officer and CIT(A) erred in mechanically levying and sustaining the late fee without considering these mitigating circumstances.
"No prejudice is caused to the Department or deductees when compliance is ultimately achieved in time for the last quarter,” said the bench of Vijay Pal Rao (Judicial member) and Manjunatha G (Accountant member) while setting aside the lower authorities’ orders and directed deletion of the late fee imposed for all three quarters.
Accordingly, the appeal was allowed.
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