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 being beyond their control, supported by legal precedents and CBDT circulars, led to the Tribunal's decision. The Tribunal found no default by the assessee and held interest u/s 201(1A) not leviable in this instance.

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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 circumstances

The 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 liability

The 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 matter

During 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.

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