2025 (10) TMI 91 - AT - Income Tax

Appeal delay of 2,455 days condoned; AO (TDS) to verify cases and delete u/s 234E fees before 01.06.2015

ITAT PUNE-AT condoned a 2,455-day delay in filing appeals to CIT(A), finding reasonable cause and no intentional default, relying on SC precedents. The ... Levy of fees u/s. 234E - delay in filing of the TDS quarterly returns - CIT(A) dismissed the appeal in lime holding that the appellant has failed to give the sufficient reason with material evidence for the delay in filing of appeal. - delay of about 2455 days - HELD THAT:- After hearing both the sides and perusing the reasons so stated, we are satisfied that ‘reasonable cause’ prevented the assessee to file the appeals within the stipulated time. We note that the delay was not intentional and assessee would not have gained from filing the appeals with a delay. We therefore in light of judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [1987 (2) TMI 61 - SUPREME COURT] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment [2025 (3) TMI 1479 - SUPREME COURT] condone the delay in filing the appeals before ld.CIT(A) for the respective quarters under consideration. From the discussion made herein above in light of decision of M/s. Office of The District Prosecution [2020 (3) TMI 1493 - ITAT INDORE] determining the period for which fees can be levied, only saving could be that for the period of delay falling prior to 1.06.2015 and the jurisdiction to levy fees u/s. 234E for the period starting 1.06.2015 to the date of actual filing of the TDS return which is 15.05.2016 in the instant case. In view thereof, we restore the issue raised in the instant appeals to the file of ld. Jurisdictional Assessing Officer (TDS) for the limited purpose of making verification in each of the case and in case if any fee u/s. 234E is levied for the delay in filing return for the period prior to 01.06.2015, the same is directed to be deleted and the remaining fee levied for the default committed from 01.06.2015 onwards needs to be sustained. ISSUES PRESENTED AND CONSIDERED 1. Whether the delay of approximately 2,455 days in filing appeals before the first appellate authority constitutes 'reasonable cause' warranting condonation. 2. Whether fees under section 234E of the Income-tax Act can be levied for periods of delay in filing TDS returns that fall prior to the effective date of an amendment (01.06.2015) which empowered processing authorities under section 200A to impose such fees. 3. If section 234E fees were levied by the Centralized Processing Cell (CPC)/Assessing Officer when processing under section 200A occurred after 01.06.2015, what is the correct temporal extent of liability for such fees (i.e., whether fees may be sustained only from 01.06.2015 to actual filing date and must be deleted for delay before 01.06.2015). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of Delay in Filing Appeals Legal framework: The statutory regime permits condonation of delay in filing appeals where 'reasonable cause' is shown; courts apply established principles to assess sufficiency of reasons. Precedent treatment: The Court relied on controlling principles from higher courts recognizing that institutional constraints and absence of mala fide or deliberate delay can constitute reasonable cause (referred judgments: Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji; and Inder Singh v. State of Madhya Pradesh). Interpretation and reasoning: The Tribunal examined the factual matrix - the appellant is a military unit lacking dedicated tax compliance staff, operating within a hierarchical structure dependent on centralized salary administration, and therefore faced systemic limitations causing delayed appeals. The delay was found non-intentional and not to have conferred any gain on the appellant. Given those factual constraints and absence of mala fide, the Tribunal concluded that reasonable cause existed. Ratio vs. Obiter: Ratio - institutional limitations and lack of dedicated tax personnel can constitute reasonable cause for condonation where delay is not deliberate and no prejudice or gain is shown. Obiter - none significant beyond application to facts. Conclusions: The Tribunal condoned the delay and restored the appeals to permit adjudication on merits. Issue 2 - Power to Levy Section 234E Fees: Effect of Amendment Effective 01.06.2015 Legal framework: Section 234E prescribes late fee for delay in filing TDS returns; amendment to section 200A by Finance Act, 2015 (effective 01.06.2015) expanded processing/levy powers of authorities. Temporal operation of statutory amendments (prospective vs retrospective) governs whether fees can be levied for pre-amendment periods. Precedent treatment: The Tribunal noted consistent judicial authority holding that the assumption of jurisdiction to levy section 234E fees arising from the amended section 200A is prospective; courts have held that fees cannot be levied for periods of delay wholly prior to the amendment's effective date. Coordinate Bench decisions (including Indore and Jaipur Benches) have been applied to similar fact patterns. Interpretation and reasoning: Although the TDS returns and CPC processing occurred after 01.06.2015, the Tribunal distinguished between (a) delay period antecedent to 01.06.2015 and (b) delay continuing after that date. It reasoned that the Jurisdiction to levy under the amended provision exists from 01.06.2015 onwards; consequently fees attributable to delay prior to 01.06.2015 cannot be sustained even if processing occurs after that date. Where delay continues beyond 01.06.2015, the authorities may levy fees for the post-amendment portion of the delay up to actual filing date. Ratio vs. Obiter: Ratio - levy of section 234E fees pursuant to the amendment to section 200A is sustainable only for the period commencing from the amendment's effective date (01.06.2015) to the date of actual filing; fees attributable to delay solely prior to 01.06.2015 must be deleted. Obiter - affirmation that processing after 01.06.2015 does not retrospectively validate levying fees for pre-amendment delay. Conclusions: The Tribunal held that fees under section 234E could not be levied for the period before 01.06.2015 and are sustainable only for the period from 01.06.2015 to the date when the TDS return was actually filed. Issue 3 - Practical Relief and Directions on Remand for Verification Legal framework: Where a legal principle limits imposition of tax or penalty to a specified period, adjudicatory authorities must verify accountings and recalculate liabilities consistent with law. Precedent treatment: The Tribunal followed Coordinate Bench decisions which directed reassessment of fees levied to erase pre-amendment portions and to confirm fees for post-amendment delay where applicable. Interpretation and reasoning: Given the factual chart (filing date 15.05.2016; CPC intimation 31.05.2016) and that processing occurred after the amendment effective date, the Tribunal determined that departmental records must be examined to identify amounts of section 234E charged for periods prior to 01.06.2015. The Tribunal observed that some intimations showed sizable fees and that mechanical confirmation by CPC may have included fees apportioned to pre-amendment delay. Ratio vs. Obiter: Ratio - where fees were levied by CPC without temporal segregation, the matter should be remitted to the Assessing Officer (TDS) for verification and deletion of any portion of section 234E charged for delay prior to 01.06.2015; fees for delay from 01.06.2015 to actual filing date should be sustained. Obiter - none beyond procedural direction. Conclusions: The Tribunal partly allowed the appeals and remitted the matters to the jurisdictional Assessing Officer (TDS) to verify each case, delete any fee levied for delay prior to 01.06.2015, and sustain fees only for the post-01.06.2015 delay up to actual filing. Inter-issue Cross-reference The condonation of delay (Issue 1) was a preliminary prerequisite enabling consideration of the substantive question of temporal extent of section 234E liability (Issues 2-3); once delay was condoned, the Tribunal proceeded to apply the prospective-amendment principle and directed remand for quantification consistent with that principle.