Vivimed Labs Limited vs DCIT: COVID-19, Limitation Extensions & Late Fee under Section 234E

This decision of the ITAT Hyderabad in the case of Vivimed Labs Limited vs DCIT addresses a recurring controversy: whether COVID-19–related relaxations, including the Supreme Court’s limitation orders, protect an assessee from late fee under Section 234E, interest under Section 201(1A) and Section 220(2) for belated TDS returns.

Two appeals were filed by Vivimed Labs Limited against orders of the Commissioner of Income Tax (Appeals)-11, Hyderabad dated 31/05/2025, arising from processing of TDS statements by the Income Tax Officer (TDS), CPC, Ghaziabad under Section 200A/206CB read with Section 154 for various quarters of AY 2021-22 and **AY 2022-23`. Given that the facts and issues overlapped, the Tribunal disposed them by a consolidated order, treating AY 2021-22 as the lead case.

Factual Background

Processing of TDS/TCS Statements

  • The assessee, a company, filed quarterly TDS/TCS statements for FY 2020-21 on different dates.
  • The CPC (TDS) processed these statements under Section 200A/206CB read with Section 154 and raised:
    • Late filing fee under Section 234E
    • Interest under Section 201(1A)
    • Interest under Section 220(2)
  • Additionally, by an order dated 19/04/2022 under Section 154, a further demand of Rs. 13,660 was raised towards short payment/short deduction in respect of Form 26Q for Q3.

These demands were challenged in appeal before the CIT(A), and thereafter before the ITAT.

Grounds Taken by the Assessee

In substance, the assessee argued:

  1. The orders under Section 200A/206CB and Section 154 were erroneous as they mechanically levied Section 234E fee, computed short deduction/short payment under Section 201(1) and charged interest under Section 201(1A) and Section 220(2) without appreciating the factual hardships during COVID-19.
  2. The accountant in charge of TDS compliance had fallen seriously ill and could not attend office during the lockdown phase, which, coupled with overall disruption of business operations, caused unavoidable delays in compiling data and filing TDS returns.
  3. As the delay was neither intentional nor deliberate but caused by circumstances beyond control, penal levy under Section 234E and interest under Section 201(1A) and Section 220(2) should not be sustained.
  4. Relying on the orders of the Hon’ble Supreme Court in MA 665 of 2021 and connected matters, it was contended that the limitation period stood extended for the COVID period, and therefore no penal consequences should arise for delayed furnishing of quarterly TDS statements.
  5. It was further claimed that the assessee was not an “assessee in default” under Section 201, and therefore interest under Section 201(1A) and consequential interest under Section 220(2) were not leviable.

Findings of the CIT(A)

1. Late Fee under Section 234E

The CIT(A) rejected the assessee’s explanation and recorded the following key observations:

  • The Government had already addressed COVID-19 disruptions through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31/03/2020, later replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No.38 of 2020) dated 29/09/2020.
  • These relaxations, together with CBDT Notification dated 24/06/2020, extended due dates and compliance timelines in several areas.
  • However, as far as TDS statements are concerned, the statutory extension was only for the quarter ending 31/03/2020, and not for later quarters of FY 2020-21.
  • The assessee could not produce any CBDT notification or circular showing that due dates for filing quarterly TDS returns for AY 2021-22 had been extended beyond what the law or notifications already prescribed.

On the reliance placed on the Supreme Court’s limitation extension orders (including MA 665 of 2021), CIT(A) held:

  • Those orders pertained to judicial and quasi-judicial proceedings, and to limitation periods for filing petitions, appeals, suits and similar proceedings under general or special laws.
  • The Supreme Court’s directions did not extend statutory time limits for routine compliance requirements such as filing quarterly TDS statements under Section 200(3) or Section 206C(3).

Given the clear mandate of Section 234E that a fee of Rs. 200 per day is payable for every day of delay in furnishing TDS/TCS statements beyond the prescribed due date, and noting the admitted delay, the CIT(A) upheld the mandatory nature of the levy and confirmed the demand of late fee.