Covid limitation exclusion and corrective TDS filing defeated time bar and late fee under section 234E.

Limitation for the assessee's first appellate filing had to be computed after giving effect to the Supreme Court's Covid-19 exclusion orders, including the extended excluded period up to 28.02.2022; on that basis, the appeal was not time barred. Late fee under section 234E was also held unsustainable where the assessee had already filed the original TDS statement and later filed a corrected form only to fix a technical error in the return, with no prejudice to the Revenue. Applying a non-mechanical approach to the machinery provision, the Tribunal deleted the late fee and decided the matter in favour of the assessee.

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Issues: (i) Whether the assessee's appeal before the first appellate authority was within time in view of the exclusion of the Covid-19 period for limitation purposes; (ii) whether late fee under section 234E could be sustained where the assessee had already filed the original TDS statement and the later filing was only to correct a technical error in the return form.

Issue (i): Whether the assessee's appeal before the first appellate authority was within time in view of the exclusion of the Covid-19 period for limitation purposes.

Analysis: The filing date of the appeal fell within the period excluded by the Supreme Court's limitation orders. The appellate authority had considered only the initial limitation extension and ignored the later enlargement of the excluded period up to 28.02.2022. On that basis, the appeal could not be treated as time barred.

Conclusion: The objection of limitation was not sustainable and the assessee's appeal could not be rejected as barred by time.

Issue (ii): Whether late fee under section 234E could be sustained where the assessee had already filed the original TDS statement and the later filing was only to correct a technical error in the return form.

Analysis: The assessee had originally complied with TDS filing requirements and later filed another form only because the nature of the deduction had been wrongly reflected in the first filing. The Tribunal treated the subsequent filing as a corrective step arising from a technical mistake, noted that no loss was caused to the Revenue, and followed the principle that machinery provisions should not be applied to produce an unduly harsh result in such circumstances.

Conclusion: The levy of late fee was deleted.

Final Conclusion: The appeals succeeded and the impugned late fee demand was set aside, with the matter decided in favour of the assessee on both limitation and merits.

Ratio Decidendi: Where a TDS filing is subsequently corrected only to rectify a technical error and the Revenue suffers no prejudice, late fee cannot be mechanically sustained; limitation must also be computed by giving effect to the binding exclusion orders for the Covid period.

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