2017 (8) TMI 564 - AT - Income Tax

Tribunal Waives Interest for TDS Delay Due to Bank Strike

The Tribunal allowed the appeal, waiving the interest u/s 201(1A) due to a bank strike causing delay in TDS deposit. The appellant's argument of delay ... Late payment of TDS u/s 201(1A) - Provisions for condone the delay in payment - delay for cause of bank Strike - reasonable cause of delay - Held that:- It is not in dispute that the taxes deducted have been deposited with a delay of one day. It is also not in dispute that on the due date of deposit i.e, 7.8.2009, there was bank strike and an effective bank holiday and no taxes could have been deposited on the said date. In the instant case, the bank was closed on 7.8.2009 on account of bank strike and the taxes have been deposited on 8.8.2009. In our view, circular no. 676 dated 14.1.1994 draws support from section 10 of the General Clauses Act and is equally applicable to deposit of TDS where on the due date of deposit, the bank is closed and the taxes are deposited on the next working day. We are cognisance of the fact that the period under consideration relates to period where internet banking and e-deposit of taxes were not in vogue. In light of above, there is no default on the part of the assessee and interest u/s 201(1)(a) is not leviable in the instant case - Decided in favour of assessee. Issues:1. Dismissal of appeal by CIT(A) for maintaining interest u/s 201(1A) without considering circumstances.2. Delay in TDS deposit due to bank strike leading to interest liability.3. CIT(A) directing AO to verify interest rate instead of deciding the matter.Issue 1: Dismissal of appeal by CIT(A) for maintaining interest u/s 201(1A) without considering circumstancesThe appeal was filed against the order of the Ld. CIT(A) for A.Y. 2010-11. The CIT(A) dismissed the appeal, confirming the interest demand u/s 201(1A) of the IT Act. The appellant argued that the delay in TDS deposit was due to a bank strike, requesting condonation. However, the CIT(A) held that the Act mandates interest u/s 201(1A) without provision for condonation. The appellant's claim of a one-month delay and interest rate discrepancy was unsubstantiated. The AO was directed to verify the delay period and interest rate.Issue 2: Delay in TDS deposit due to bank strike leading to interest liabilityThe appellant deposited TDS on 08.08.2009 instead of the due date of 07.08.2009 due to a bank strike. The interest liability was determined on the late payment of TDS u/s 201(1A) @ 1.5%. The appellant contended that the delay was due to a bank strike, requesting the interest to be waived. The lower authorities upheld the interest demand citing the mandatory nature of interest u/s 201(1A) and absence of provisions for condonation due to reasonable causes like a bank strike.Issue 3: CIT(A) directing AO to verify interest rate instead of deciding the matterDuring the hearing, the appellant argued that the delay was due to a bank strike, and reliance was placed on legal precedents and CBDT circulars supporting the waiver of interest in such cases. The appellant highlighted the applicability of General Clauses Act and CBDT circulars to justify the timely deposit of TDS despite the delay caused by the bank strike. The AO was directed to verify the delay period and interest rate. The Tribunal, considering the circumstances and legal provisions, allowed the appeal, stating no default on the part of the assessee and that interest u/s 201(1A) was not leviable in this case.In conclusion, the Tribunal allowed the appeal, considering the bank strike as a valid reason for the delay in TDS deposit, citing the applicability of CBDT circulars and General Clauses Act. The Tribunal found no default on the part of the assessee and waived the interest u/s 201(1A) in this case.