2014 (7) TMI 265 - BOMBAY HIGH COURT

Period of limitation for declaring Assessee in default - time limit for proceedings u/s 201(1) and (1A) of the Act - Reassessment u/s 147 of the Act – tribunal held that the order passed under Section 195 r/w 201(1) or 201(1A) of the Income Tax Act, 1961 cannot be held as barred by limitation if it is not passed within four years from the end of the relevant financial year – Held that:- Tribunal was rightly of the view that Section 195(1) casts duty on the person responsible for paying or crediting to the account of a nonresident any sum chargeable to tax under this Act for deducting tax at source - on failure to deduct or pay to the Government after deducting, the person responsible is treated as Assessee in default u/s 201(1) - “Any such person” referred to in section 201(1) extends not only the person deducting and failing to deposit the tax but also the person failing to deduct the tax at source - Where no time limit is prescribed for taking an action under the statute, the action can be taken only within a reasonable time by harmoniously considering the scheme of the Act - Tax recovery proceedings are initiated only after the passing of order u/s 201(1) and that too if the person responsible fails to comply with notice of demand u/s 156.

The decision in COMMISSIONER OF INCOME-TAX Versus NHK JAPAN BROADCASTING CORPORATION [2008 (4) TMI 182 - DELHI HIGH COURT] - though Section 201 does not prescribe any limitation period for the Assessee being declared as an Assessee in Default yet the Revenue will have to exercise the powers in that regard within a reasonable time - the Tribunal's order does not suffer from any error of law apparent on the face of record or perversity warranting our interference in appellate jurisdiction – thus, no substantial question of law arises for consideration – Decided against Revenue.