2023 (8) TMI 1021 - AT - Income Tax

Tribunal overturns interest for late TDS payment due to valid reasons

Central Bank of India Versus DCIT TDS-CPC, Ghaziabad

The Tribunal allowed the appeal, setting aside the CIT(A)'s order and deleting the interest of Rs. 1,69,962 levied for late TDS payment. The delay was ... Interest levied for late deposit of TDS amount - there was an interim order operating in favour of the assessee, the assessee deposited the aforesaid TDS amount with the Income Tax Department on 10/04/2013 and the Department has levied interest for late deposit of TDS amount - HELD THAT:- As there an Interim Order dated 29/03/2011 in operation as on the date of remittance TDS, thus, in our opinion, there was sufficient cause for the assessee not to remit TDS amount and the authorities ought not to have charged the interest on the Assessee, accordingly we allow the Grounds of Appeal of the assessee, set aside the order of the CIT(A) by deleting the interest levied on the Assessee by the Revenue for late payment of TDS amount. Appeal of assessee allowed. Issues involved:The judgment involves issues related to late deposit of TDS amount, applicability of interim court orders, justification of interest levied, and the reasoning behind the orders passed by the authorities.Late deposit of TDS amount:The appellant had deducted TDS amount in March 2011 but deposited it with the Income Tax Department only on 10/04/2013. The Assessing Officer charged interest of Rs. 1,69,962/- for this delay. The appellant contended that the delay was due to an interim stay by the Madras High Court and subsequent reorganization within the bank. The appellant sought deletion of the interest levied.Applicability of interim court orders:During the relevant period, there was an interim order from the Madras High Court restraining the deduction of Tax at source. Despite this order, the appellant deposited the TDS amount in 2013. The Tribunal noted that the interim order was in effect during the deposit of TDS, providing a sufficient cause for the delay. Consequently, the interest charged was deemed unjustified.Justification of interest levied:The authorities had levied interest of Rs. 1,69,962/- on the appellant for late deposit of TDS amount. The appellant argued that the interim court order and organizational restructuring were valid reasons for the delay. The Tribunal agreed with the appellant's stance, stating that there was a legitimate cause for the delay in remittance. Therefore, the interest levied was considered arbitrary and was deleted.Reasoning behind the orders:The Counsel for the appellant highlighted the impact of the interim court order on the deposit of TDS and emphasized that the delay was unintentional. The Departmental Representative supported the Revenue Authorities' decision to uphold the interest charged. After considering both arguments, the Tribunal found in favor of the appellant, acknowledging the valid reasons for the delay and overturning the order of the CIT(A).Conclusion:The Tribunal allowed the appeal of the appellant, setting aside the order of the CIT(A) and deleting the interest of Rs. 1,69,962/- levied for the late payment of TDS amount. The judgment was pronounced in open court on 21st August 2023.