2025 (11) TMI 1745 - AT - Income Tax

Delay condoned under Section 5; TDS mismatch under Section 200A(1) remanded for data reconciliation and correction

ITAT Rajkot condoned an effective delay of 834 days in filing the assessee's appeals, holding that, considering the SC's suo motu orders excluding the ... Demand u/s 200A(1) - data entry errors while filing TDS returns through NSDL - TDS mis-match - HELD THAT:- Since the assessee has made data entry errors while filing return of TDS, hence assessee should be given an opportunity to make the corrections. We further find that claim of the assessee seems to be genuine, therefore, we remit all these five appeals back to the file of Assessing Officer with a direction to allow the access to the assessee to CONSOLE file in the TDS module and examine the reconciliation of mismatch (TDS-mismatch) and rectify the same as per the provisions of law. Condonation of delay in matters of limitation - delay in filing the appeals 834 days after excluding the period of COVID-19 pandemic disease - We note that Hon’able Supreme Court in a suo-motu writ petition/ Miscellaneous application no. 21 of 2022 dated 10.01.2022 held that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. The exercise of discretion in condonation of delay in matters of limitation, such as in the present case, has to be carried out within the meaning of 'Sufficient Cause' as envisaged in Section 5 of Limitation Act. Hence, the general rule of law of limitation is that an extension shall not be granted under Section 5 if there is no sufficient cause or cogent ground for the condonation of delay, the onus of proving which lies on the appellant, as clearly laid down in the judicial pronouncements by the Highest Courts of Law. Therefore, we are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others [1987 (2) TMI 61 - SUPREME COURT] A perusal of the reasons and sufficient cause explained by assessee, gives us an impression of existence of mitigating circumstances to enable us to exercise our discretion in favour of the assessee. Considering the above facts and circumstances of the cases, as narrated above, we are of the considered opinion that in the interest of justice, the delay deserves to be condoned. Accordingly, we condone the effective delay of 834 days and admit all the appeals of the assessee to adjudicate on merit. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the inordinate delay of 1672 days (effective 834 days after excluding the COVID-19 period) in filing the appeals against orders under section 200A(1) constituted 'sufficient cause' for condonation. 1.2 Whether, in the facts of technical/data-entry errors in TDS statements leading to demand under section 200A(1), the matter should be remanded to the Assessing Officer for reconciliation and rectification of TDS mismatch, including granting access to the CONSOLE file in the TDS module and correcting PAN/challan-related errors. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Condonation of delay in filing appeals Legal framework (as discussed) 2.1 The Tribunal considered the expression 'sufficient cause' under section 5 of the Limitation Act, 1963, as applicable to condonation of delay in filing appeals. It referred to the principle that extension of limitation cannot be granted in absence of sufficient cause, and the burden lies on the appellant. 2.2 The Tribunal relied on the suo motu order of the Supreme Court in Miscellaneous Application No. 21 of 2022 dated 10.01.2022, whereby the period from 15.03.2020 to 28.02.2022 was directed to be excluded for computation of limitation for all judicial and quasi-judicial proceedings, with a minimum limitation of 90 days from 01.03.2022 where limitation expired during that excluded period. 2.3 The Tribunal also referred to the Supreme Court decision in Collector, Land Acquisition v. Mst. Katiji, emphasizing that when substantial justice and technical considerations are in conflict, the cause of substantial justice deserves preference. Interpretation and reasoning 2.4 The appeals were originally delayed by 1672 days. The assessee explained that: (a) The only dispute related to TDS demands arising from technical errors in TDS returns. (b) The first appellate authority had allowed the appeals and directed the Assessing Officer to provide the CONSOLE file and give appeal effect for rectification of TDS mismatch. (c) The assessee repeatedly approached the TDS authorities through written communications and personal visits seeking implementation of the directions and access to CONSOLE files, but the directions were not fully complied with and appeal effects were not issued. (d) The assessee filed appeals to the Tribunal only when it became clear that the Assessing Officer was not fully implementing the first appellate directions; this was stated to be the sole cause of delay. 2.5 The Tribunal noted that the delay in all five appeals arose from the same and identical reasons; the condonation petition and affidavit contents were common. 2.6 By applying the Supreme Court's COVID-19 exclusion order, the Tribunal held that the period from 15.03.2020 to 28.02.2022 stood excluded, and the effective delay to be considered was only 834 days. 2.7 The Tribunal emphasized that while limitation provisions must be adhered to strictly and parties cannot be allowed to act at leisure, it is equally necessary to ensure that justice is not defeated on technicalities, especially where delay is non-deliberate and mitigating circumstances exist. 2.8 The Tribunal found the reasons stated in the affidavit and condonation petition convincing, noting that: (a) The first appellate order had already accepted the bona fide nature of the TDS mismatch and directed rectification. (b) Some mismatches were rectified by the Assessing Officer; some remained unrectified, leading to continued demand. (c) The assessee was consistently pursuing rectification with the Department, evidencing bona fide conduct rather than indifference or negligence. Conclusions 2.9 The Tribunal held that 'sufficient cause' under section 5 of the Limitation Act was made out for the effective delay of 834 days. 2.10 In the interest of substantial justice, the Tribunal exercised discretion in favour of the assessee, condoned the delay in all five appeals, and admitted them for decision on merits. Issue 2: Remand for rectification of TDS mismatch and access to CONSOLE file Legal framework (as discussed) 2.11 The demands under dispute arose from intimations passed under section 200A(1) of the Income-tax Act, 1961, wherein CPC had processed TDS statements and raised demands on account of mismatches and short deduction based on the data uploaded. 2.12 In prior appellate proceedings, the first appellate authority had directed the Assessing Officer to rectify bona fide errors in TDS mismatches. A remand report was obtained from the TDS officer, who stated that the taxpayer must rectify its own errors by filing revised returns, and that once corrections are made, liabilities would be reduced automatically. Interpretation and reasoning 2.13 On merits, the Tribunal recorded the assessee's uncontroverted explanation that: (a) There were data entry errors while filing TDS statements through NSDL, leading to mismatch between the actual TDS deducted/paid and what was reflected in the system. (b) TDS paid in earlier quarters had been wrongly included in subsequent quarters in the TDS statements, causing system-based mismatches and resultant demand under section 200A(1). (c) There was also a data entry error in salary figures: TDS had been correctly deducted on net taxable salary, but gross salary was punched in the TDS return, leading CPC to compute short deduction and raise demand. (d) Some mismatches pertained to wrong or incorrect PAN entries and non-grant of credit of certain TDS challans. 2.14 The Tribunal noted specific instances: (a) A demand arising due to error in quoting PAN of an employee, where the correct PAN was on record and rectification was requested. (b) A substantial demand for a later year where credit for a particular challan amount had not been granted, leading to inflated current demand. 2.15 The Tribunal observed that the first appellate authority had already accepted the existence of bona fide TDS mismatches and directed rectification. The Assessing Officer had implemented the direction only partially-some mismatches were rectified, while others remained unresolved. 2.16 The TDS officer in remand had contended that the assessee must correct errors through revised returns. The assessee, however, asserted that: (a) There is no facility in the TDS module enabling the assessee to make required corrections independently. (b) Effective correction requires the Assessing Officer to grant the assessee access to the CONSOLE file in the TDS module, without which accurate rectification is not feasible. 2.17 The Tribunal noted that the Departmental Representative did not object to the proposal to remit the matter back to the Assessing Officer for examination of reconciliation statements and rectification of mismatches in accordance with law. 2.18 After examining the reconciliation of TDS mismatch and supporting details furnished by the assessee, the Tribunal found the assessee's claim to be prima facie genuine and that the errors were technical/data-entry in nature, rather than substantive defaults in deduction of tax. Conclusions 2.19 The Tribunal held that, in the facts and circumstances, the assessee deserved an effective opportunity to correct the data-entry errors in the TDS statements. 2.20 All five appeals were remitted to the file of the Assessing Officer with directions to: (a) Allow the assessee access to the CONSOLE file in the TDS module so that necessary corrections could be made; (b) Examine the assessee's reconciliation of TDS mismatches, including issues of wrong PAN punching, duplication of earlier quarter payments in later quarters, incorrect salary figures, and non-grant of challan credit; (c) Rectify the mismatches and recompute the demands, if any, strictly in accordance with law. 2.21 On this basis, the appeals were allowed for statistical purposes, subject to the outcome of the fresh exercise to be carried out by the Assessing Officer in compliance with the Tribunal's directions.