NFAC Bound By The Decision Of Jurisdictional High Court: ITAT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that the National Faceless Appeal Centre (NFAC) was bound by the binding decision of the jurisdictional high court, where the AO was situated.

The two-member bench of N.V. Vasudevan (Vice President) and Laxmi Prasad Sahu (Accountant Member) has observed that an appeal against the decision of the Agra ITAT would be before the Allahabad High Court. Therefore, the decision rendered by the Allahabad High Court is binding not only on the ITAT but also on the NFAC (notwithstanding that it was sitting in Delhi) that was deciding the issue pertaining to the jurisdiction of the Agra ITAT.

The petitioner/assessee filed a statement of tax deducted at source (TDS) for various quarters in Form No. 26Q for Quarter 4 of AY 2013–14 and FY 2012–13. The statement was processed by the respondent or department. There was a delay in filing the TDS statement, and therefore, the AO levied a late fee.

Under Section 234E of the Income Tax Act, if there is a delay in filing a statement of TDS within the prescribed time, then the person responsible for making payment and filing a return of TDS is liable to pay by way of fee a sum of Rs. 200 per day during which the failure continues.

The AO, by order, rejected the application under Section 154. The assessee filed a complaint against the order with the NFAC/CIT(A). The NFAC/CIT (Appeals) agreed with the contention that the issue has been decided by the Karnataka High Court in favor of the assessee. The NFAC/CIT(A) however found that the Gujarat High Court has taken the view that even in the absence of Section 200A with the introduction of Section 234E, it was always open to the revenue to demand and collect a fee for late filing of a statement of TDS. Section 200A merely regulates the manner in which the computation of such a fee would be made and demand raised. The NFAC/CIT(A) therefore upheld the levy of interest under Section 234E on the ground that if a return of TDS is filed after January 1, 2015, then the levy of interest under Section 234-E is valid.

The tribunal held that the relief should not be refused to the taxpayer merely because there was a conflicting decision by a non-jurisdictional high court.

Case Title: Nagesh Consultants Versus The Deputy Commissioner of Income Tax

Citation: ITA No.32/Bang/2023

Date: 07.03.2023

Counsel For Appellant: Balram R. Rao

Counsel For Respondent: Shankar Prasad K

Click Here To Read The Order