2022 (6) TMI 1494 - AT - Income Tax

Appeals allowed after NFAC wrongly calculated limitation period under Section 200A instead of Section 154

ITAT Chandigarh allowed assessee appeals against rejection of applications under Section 154. NFAC had erroneously dismissed appeals as time-barred by ... Rejection of appeals against intimation u/s 154 - Late filing fee u/s 234E levied - assessee had filed an appeal against order rejecting the application u/s 154 which was not maintainable - NFAC dismissing the assessees’ appeals on the ground that the assessees had filed appeals against 154 intimations and not against the original orders u/s 200A of the Act and, hence, were not maintainable - HELD THAT:- This issue is squarely covered by the order of Medical Superintendent Rural Hospital [2017 (12) TMI 1623 - ITAT PUNE] wherein it has been held that the appeals filed by the assessees were to be considered within time since the period has to be reckoned from the date of order u/s 154 of the Act and not from the issue of intimation u/s 200A. NFAC had erred in dismissing the appeals of the assessees as being time-Barred by taking the date of intimation u/s 200A of the Act as the basis for computing the limitation period for filing the appeal. The NFAC should have taken the date of intimation u/s 154 of the Act for the purpose of computing the limitation period. Admittedly, and, undisputedly, the appeals before the NFAC were within time if we take the date of intimation u/s 154 of the Act. NFAC was patently incorrect in out-rightly rejecting the assessees appeals by treating them as time barred by calculating the limitation period from the date of intimation u/s 200A of the Act, rather than by taking the date of intimation u/s 154 of the Act for the purpose of adjudication. Contention of the Department that there was no mistake apparent on the face of record which could be rectified u/s 154 of the Act by the AO - In our considered view, since the levy of late fee u/s 234E in the intimation u/s 200A was contrary to the settled law in numerous cases, the same was binding on the lower authorities as has been held in the case of Bank of Baroda Vs. H.C. Shrivastava [2001 (7) TMI 21 - BOMBAY HIGH COURT] wherein it was held that not following the binding decision is a mistake apparent from the record which should have been rectified by way of an order u/s 254 of the Act. Accordingly, we reject this contention of the Department and proceed to adjudicate the issues before us on merits. Levy of late fees under Section 234E for periods prior to 01.06.2015 - Levy of late fee u/s 234E of the Act prior to 01.06.2015 is not sustainable. See case of Bathline India (Pvt.) Ltd, Delhi [2020 (9) TMI 147 - ITAT DELHI] as held since the amendment to section 200A of the Act was prospective in nature, the Assessing Officer while processing TDS returns / statements for the period prior to 01.06.2015 was not empowered to charge late filing fees under section 234E of the Act, even in cases where such TDS returns were filed belatedly after June, 2015 and even in cases where the Assessing Officer processed the said TDS returns after June, 2015. Accordingly, we hold that intimation issued by Assessing Officer under section 200A of the Act in all the appeals does not stand. Demand raised by charging late filing fees under section 234E of the Act is not valid and the same is deleted. Assessee appeal allowed. Issues Involved:1. Condonation of delay in filing appeals.2. Legitimacy of NFAC's dismissal of appeals as time-barred.3. Merits of the levy of late fees under Section 234E for periods prior to 01.06.2015.4. Rectification applications under Section 154 of the Income Tax Act, 1961.Detailed Analysis:1. Condonation of Delay in Filing AppealsThe Assessee argued that the delay in filing the appeals was due to logistical challenges, including the remote locations of the branches and the lack of advanced communication infrastructure. The Tribunal acknowledged these difficulties and emphasized that 'no assessee would be benefitted by intentionally delaying the filing of appeals.' Citing the Supreme Court's liberal approach in condoning delays, the Tribunal condoned the delay, stating that 'the assessee should be given an opportunity to be heard on merits.'2. Legitimacy of NFAC's Dismissal of Appeals as Time-BarredThe NFAC dismissed the appeals on the grounds that they were time-barred, calculating the limitation period from the date of the original order under Section 200A. The Tribunal found this approach incorrect, referencing the ITAT Pune Bench's decision in the case of Medical Superintendent Rural Hospital, which held that the limitation period should be reckoned from the date of the order under Section 154. Thus, the Tribunal concluded that the NFAC 'had erred in dismissing the appeals of the assessees as being time-barred.'3. Merits of the Levy of Late Fees Under Section 234E for Periods Prior to 01.06.2015The Tribunal noted that the levy of late fees under Section 234E for periods prior to 01.06.2015 is not sustainable. This conclusion was supported by numerous judicial precedents, including the Hon'ble Karnataka High Court's decision in the case of Fatehraj Singhvi & Ors. Vs. Union of India, which held that the amendment to Section 200A(1)(c) was prospective and not applicable to periods before 01.06.2015. The Tribunal observed, 'the levy of late fee u/s 234E of the Act prior to 01.06.2015 is not sustainable.'4. Rectification Applications Under Section 154 of the Income Tax Act, 1961The Department argued that there was no mistake apparent from the record to justify rectification under Section 154. However, the Tribunal found that the levy of late fees was contrary to settled law and should have been rectified. Citing the Hon'ble Bombay High Court's decision in the case of Bank of Baroda Vs. H.C. Shrivastava, the Tribunal held that 'not following the binding decision is a mistake apparent from the record which should have been rectified by way of an order u/s 254 of the Act.'ConclusionThe Tribunal allowed all the appeals, setting aside the orders of the NFAC and directing the AO to delete the levy of late fees under Section 234E. The Tribunal emphasized the importance of adhering to judicial precedents and the necessity of a liberal approach in condoning delays to ensure substantial justice. The decision underscores the principle that in cases of conflicting judicial opinions, the view favoring the assessee should be followed.