JSD Steel Private Limited (Formerly CBS Steel Private Limited) vs Income Tax Officer Ward 75(1)

PER MANISH AGARWAL, A.M.:

The present appeal is filed by assessee against the order dated 15.07.2024 passed by Ld. Commissioner of Income Tax (A)/ADDL/JCIT(A)-2, Mumbai [“Ld. CIT(A)”] in Appeal No. NFAC/2012-13/10017409 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of order dated 24.03.201 passed u/s 201(1)/201(1A) of the Act pertaining to Assessment Year 2013-14.

The appeal filed by the assessee is barred by 449 days. For the condonation of delay, an application alongwith affidavit of the Director is filed. In the said application, it is stated that due to financial distress, the company has closed its operation and does not have any employee since 2014. The order was passed by Ld.CIT(A) on 15.07.2024 however, due to the fact that the Directors are not aware of the proceedings and have not visited the Income Tax Portal where the appellate order was served. They came to know about the passing of the order only when they have received the appeal effect order on 28.01.2025. Since the Director was very old aged and fully dependent upon the consultancy and Director, Shri Yashpal Singla was suffered from severe cardiac problems and necessitating emergency bypass surgery and advised strict bed rest, therefore, the appeal was got delayed and requested for the condonation of the same. Reliance was placed on the judgement of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji & Ors reported in 167 ITR 471 (SC).

On the other hand, Ld. Sr. DR for the Revenue vehemently opposed the request of the assessee.

Heard both the parties. It is submitted from the perusal of the order that Director was not medically fit and his medical report etc. was filed and order passed by Ld.CIT(A) has not been intimated to the assessee which was directly served on the Income Tax portal and therefore, the delay had occurred. We find that there is a reasonable and sufficient cause with the assessee in filing the appeal delayed by 449 days which was occurred due to medically unfit and strict bed rest advised to the Director of the company. It must be remembered that in every case of delay, there can be some lapses on the part of the litigant concerned however, that alone is not enough to turn down the plea of assessee and to shut the doors against it. When the explanation does not smack of mala fide or it is not put-forth as a part of dilatory strategy, the Courts must give utmost consideration to such litigant and its right of hearing of appeal on merit ought not to be rejected. Considering the overall facts and circumstances of the case and in the larger interest of justice, delay in filling the appeal is hereby, condoned and appeal of the assessee is admitted for adjudication on merits.

Brief facts of the case are that the assessee is a Private Limited Company and assessment for the year under appeal was completed u/s 143(3) vide assessment order dated 29.03.2016 wherein disallowance was made u/s 40(1)(ia) of the Act on account of non-deduction of tax at source to the extent of expenses claimed at INR 95,01,186/-. Thereafter, the AO made a reference that TDS were deducted for necessary verification. Income Tax Officer, Ward-75(1), Delhi in terms of the order dated 24.03.2021 held that the assessee is in default of not deducting the tax and correct the demand u/s 201(1) of the Act of INR 8,10,664/-and further interest u/s 201(1a) of INR 8,39,310/-. Besides this, late fee penalty u/s 234E was levied at INR 8,10,664/-. Accordingly, total income of the assessee company was corrected.

Against the said order, the assessee is in appeal before Ld.CIT(A) who in terms of impugned order dated 15.07.2024 has dismissed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.

Before us, Ld.AR for the assessee submits that in the instant case, the order was passed on 24.03.2021 wherein limitation is barred u/s 201(3) of the Act as existed for the relevant AY expired on 31.03.2019 and therefore, the impugned order u/s 201(1) r.w.s. 201(1A) of the Act is barred by limitation. Ld.AR drew our attention to the observations of Ld.CIT(A) in para 6.6 wherein Ld.CIT(A) has dismissed this contention by placing reliance on the amendment made in terms of Finance Act No.2 /2014 w.e.f. 01.02.2014 according to which as against the period of 06 (six) years. It was provided that the order can be passed within the period of expiry of 07 (seven) years from the end of Financial Year in which payment is made and credit is given. Ld.AR submits that Ld.CIT(A) by placing reliance on the amendment made after the expiry of the Financial Year under appeal, has dismissed the appeal of the assessee. Ld.AR submits that provision of section 201(1) should have been considered for the purpose of limitation according to which the period of 06 years from the end of the Financial Year in which payment is made or credit is to be given and credit of the computation of limitation for passing of the order passed by AO is barred by limitation and deserves to be quashed.

On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits once the amendment has been made and the AO has passed the order u/s 201(1) after such amendment therefore, the limits so extended are applicable to the facts of the case. He prayed accordingly.

Heard the contentions of both the parties at length and perused the material on record. In the instant case, the proceedings in the case of the assessee were initiated u/s 201(1) of the Act were initiated on the basis of the information supplied by the AO that assessee has failed to deduct the TDS on various payments made totaling to INR 95,01,186/-. Thereafter, in terms of the order passed u/s 201 r.w.s 201(1A) of the Act, AO has created the demand of INR 8,10,664/- on account of TDS not paid and interest u/s 201(1A) of the Act of INR 8,39,310/- and further levied late fee penalty of INR 8,10,664/- u/s 234E of the Act in terms of the order dated 24.03.2021. The assessee claimed that the said order is barred by limitation passed on the provisions as existed as only last day of Financial Year before us however, the assessment is passed in the year 2021 where the law has been amended and in terms of Finance Act No.2/2014 w.e.f. 01.10.2014 sub-section (3) of section 201 reads as under:-

As per the provision of section 201(1) of the Act, it could be passed within the period of 07 (seven) years from the end of the Financial Year in which payment made or credit is given. In the instant case, the Financial Year involved is 2012-13 and limitation period of 07 (seven) years expired on 31.03.2020 however, due to Covid-19 Pandemic as per TOLA, the limitation was extended and therefore, the order passed on 24.03.2021 is not barred by limitation. We thus, fund no error in the order of Ld.CIT(A) and accordingly, this Ground of appeal of the assessee is dismissed.

The remaining Ground of appeal with respect to the creation of provision of section 201 & 201(1A) of the Act and further levy of late fee penalty u/s 234E of the Act.

Heard the contentions of both the parties at length and perused the material on record. admittedly, the assessee has failed to deduct the tax at source and before us, no evidence whatsoever filed in support of the claim that TDS was not deducted due to low deduction certificate. This being so, we find no error in the order of AO in holding the assessee in default for non-deduction of tax at source and thus, the demand created u/s 201(1) r.w.s. 201(1A) of the Act are hereby, upheld. With respect to the late fee penalty u/s 234E of the Act of INR 8,10,664/-, it is observed that the provisions of section 234E have been inserted w.e.f. 01.06.2015 and therefore prior to that, late fee penalty cannot be imposed and accordingly, late fee charge of IRN 8,10,664/- u/s 234E is hereby deleted. Accordingly, Ground of appeal Nos. 3 to 9 raised by the assessee are partly allowed.

In the result, appeal of the assessee is partly allowed.