Regional rural bank fails to get massive 6-9 year delay condoned for challenging TDS fees under section 234E

ITAT Chennai dismissed appeals by a regional rural bank for condonation of delay ranging 2175-3300 days (6-9 years) in challenging levy of fees under section 234E for late filing of quarterly TDS returns. Despite bank's arguments regarding remote operations, staff changes, amalgamation difficulties, and awaiting judicial outcomes on similar cases, the tribunal found no reasonable cause justifying such inordinate delay. The court held that as a bank assisted by qualified professionals, gross negligence in ignoring statutory notices and appeal limitations could not be condoned, confirming CIT(A)'s dismissal.

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Issues Involved:
1. Request for condonation of delay in filing of appeal before CIT(A).
2. Applicability of Section 200A(1)(c) of the IT Act w.e.f. 01.06.2015.
3. Prospective effect of Section 200A(1)(c) read with Section 234E.
4. Judicial precedents supporting the assessee's case.
5. ITAT case laws supporting the assessee's case.

Summary:

Issue 1: Request for Condonation of Delay in Filing of Appeal Before CIT(A)

The appellant's primary grievance was the rejection of their appeal by CIT(A) due to the delay in filing, which was not condoned. The appellant argued that the delay was not deliberate, citing various judicial precedents for condonation of delay. The Ld. AR contended that the delay was due to the unsettled nature of the law at the time and logistical issues within the bank. However, the CIT(A) found no "sufficient cause" for the delay, noting that the appellant, a regional rural bank assisted by qualified professionals, showed gross negligence by ignoring statutory notices and deadlines. The delay ranged from 2175 to 3300 days, translating to 6 to 9 years, which was deemed inordinate and unjustifiable.

Issue 2: Applicability of Section 200A(1)(c) of the IT Act w.e.f. 01.06.2015

The appellant argued that the TDS-CPC was empowered to levy late fees under Section 234E only for statements filed on or after 01.06.2015, and hence, intimations for statements filed before this date should be quashed. The CIT(A), however, upheld the levy of fees, noting that the appellant failed to file appeals within the statutory time frame, and the delay was not attributable to the COVID-19 pandemic as claimed.

Issue 3: Prospective Effect of Section 200A(1)(c) Read with Section 234E

The appellant contended that the amendment to Section 200A effective from 01.06.2015 should apply prospectively, and fees for late filing of TDS returns for periods before this date should be quashed. The CIT(A) dismissed this argument, emphasizing that the appellant did not demonstrate sufficient cause for the inordinate delay in filing the appeal.

Issue 4: Judicial Precedents Supporting the Assessee's Case

The appellant cited favorable judgments from the Karnataka and Kerala High Courts, which held that the amendment to Section 200A was effective only from 01.06.2015, and late filing fees under Section 234E could not be levied for periods prior to this date. They also referenced the Supreme Court's ruling in CIT vs. Vegetable Products Ltd. and CIT vs. Vatika Township P. Ltd., advocating for a decision in favor of the assessee in case of divergent opinions among High Courts. The CIT(A) noted these precedents but found them inapplicable due to the appellant's failure to file timely appeals.

Issue 5: ITAT Case Laws Supporting the Assessee's Case

The appellant relied on various ITAT judgments that deemed the intimation for late filing fees under Section 234E before 01.07.2015 as illegal and invalid. However, the CIT(A) distinguished these cases, noting that they did not address the issue of condonation of inordinate delay in filing appeals. The CIT(A) emphasized that the appellant's conduct showed gross negligence and did not justify condonation of delay.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, noting that the appellant failed to provide a reasonable cause for the inordinate delay in filing the appeals. The appeals were dismissed for want of condonation of delay, with the Tribunal confirming the CIT(A)'s detailed reasoning and rejection of the appellant's arguments. The order was pronounced in open court on 17th October 2023.

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