Failure Of Assessee To Reply To Income Tax Notice Due To COVID: ITAT Directs Fresh Adjudication

The two-member bench headed by N.V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) set aside the orders of the CIT (A) and remanded the issue to the CIT (A) for a decision afresh after affording the assessee an opportunity to be heard.

The ITAT directed the assessee to co-operate in the proceedings before the CIT (A) and furnish the required information to enable the CIT (A) to decide the appeals in accordance with law.

The appellant/assessee filed a statement of tax deducted at source (TDS) for various quarters on Form No.26Q for different quarterly years. The statement was processed by CPC TDS, Bengaluru. There was a delay in filing the TDS statement and, therefore, the AO by intimation levied a late fee. If there is a delay in filing a statement of TDS within the prescribed time, then the person responsible for making payment and filing the return of TDS is liable to pay by way of a fee a sum of Rs.200 per day during which the failure continues.

Aggrieved by the orders, the assessee filed appeals before the CIT (A). The assessee contended that the provisions of section 234E were inserted by the Finance Act, 2012 w.e.f. 1.7.2012. Section 200A of the Act is a provision which deals with how a return of TDS filed under section 200(3) of the Income Tax Act has to be processed.

The CIT (A) found that the appeals filed by the assessee were belated. The CIT (A) called upon the assessee to explain the reasons for the delay. The assessee, in its reply, submitted that it had applied to the Commissioner, Income Tax (TDS), Goa, under section 119 of the Income Tax Act to waive the fees levied. No reply was received in response. Hence, there was a delay in filing the appeal against the order levying interest under section 234E of the Income Tax Act.

The CIT (A) noted that the notice under section 250 of the Act was issued on 04.12.2020 and called upon the assessee to file submissions on or before 17.12.2020. Further, notices were issued on 02.03.2021 and 08.04.2021. The appeal before the CIT (A) was instituted by the assessee on 03.06.2019.

The assessee submitted that it was unable to respond to the notices due to the COVID pandemic and no staff were attending to the office work. There was a reasonable cause for non-attendance before the CIT (A) and, therefore, the action of the CIT (A) in proceeding to decide the appeal ex parte cannot be sustained.

The Registry has noted a delay of 255 days in filing the appeals. The orders were dated April 30, 2021. The appeals against these orders were filed on 11.03.2022, whereas they ought to have been filed within 60 days from the date of service of the order, which is 30.04.2022. In a Suo motu Writ Petition, In Re: Cognizance for Extension of Limitation, the Hon'ble Supreme Court on March 27, 2021, decided to extend the period of limitation for filing cases in various legal forums with effect from 14.03.2021 until further orders in view of the hardships faced by litigants due to the alarming COVID-19 situation. It was directed that the period of limitation in filing petitions/applications/suits/appeals/all other proceedings, irrespective of the period of limitation prescribed under the general or special laws, shall be extended with effect from 15th March, 2020 till further orders.

"There is no delay in filing these appeals. So far as the grievance of the assessee regarding the action of the CIT (A) in proceeding to decide the appeals ex-parte, we are of the view that the same is not sustained. It is therefore clear that even the Hon'ble Supreme Court has taken cognisance of the pandemic situation and extended the period of limitation," the ITAT said.

Case Title: M/s. Madanthyar Primary Agricultural Credit Co-operative Society Versus DCIT

Citation: ITA Nos.163 to 170/Bang/2022

Dated: 17.05.2022

Counsel For Appellant: Advocate Prathibha R

Counsel For Respondent: CIT(DR)(ITAT) Susan D. George

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