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2005 (1) TMI 610 - AT - Income TaxDeduction of tax at source - Time Limitation for recovery of tax dues u/s 201(1) and 201(1A) - Reasonableness of delay in passing orders - Nature of interest - HELD THAT - We are of the view that for the following reasons the plea of the assessee that the orders in his case under sections 201(1) and 201(1A) should be declared as void on account of having become barred by limitation should not be accepted ( i )There is no doubt that the Hon ble High Court have in the case of CIT v. Blackwood Hodge (India) (P.) Ltd. 1969 (2) TMI 59 - CALCUTTA HIGH COURT and in the case of British Airways v. CIT 1989 (9) TMI 6 - CALCUTTA HIGH COURT clearly held that the argument of the assessee that the amount of tax deducted at source had become irrecoverable being barred by limitation cannot be sustained. In the various decisions relied upon by the learned counsel of the assessee this proposition is not in dispute. However on the facts of the cases before them the Tribunal have held that the orders under sections 201(1) and 201(1A) having been made by the Assessing Officer after the expiry of 4 years from the end of the financial year should be treated as having been made beyond a reasonable period and therefore for that reason should also be treated as barred by limitation. In this view of the matter it can by no means be held that there is an infallible time-limit of four years from the end of the financial year in operation in respect of every order under sections 201(1) and 201(1A) made or to be made by the Assessing Officer. ( ii )Factual background in the appeals before us is vastly different and distinguishable from the facts of the cases relied upon by the assessee. We see considerable force in the contention of the learned DR that there was no unreasonable delay on the part of the Assessing Officer. The assessee made certain payments to its employees on different counts but did not deduct tax at source. This fact was not highlighted by the assessee in certificate of tax deduction at source issued in Form No. 16. The Assessing Officer was thus left unaware of the facts relating to non-deduction of tax at source by the assessee. After the Assessing Officer became aware of the facts of the case he acted promptly. The Assessing Officer cannot be defaulted for not having acted upon the facts that were not placed before him and which he could not have enquired into or obtained in the ordinary course. Any failure or lapse on the part of the Assessing Officer has not even been alleged left alone established. In these circumstances it is difficult to hold the impugned orders as barred by limitation. Reference in this respect is also invited to the order of the Tribunal in Lakshmi Gnaneswara Enterprises Financiers v. ITO 1999 (2) TMI 105 - ITAT HYDERABAD-B ). ( iii )There is no time-limit laid down under the provisions of Income-tax Act for orders under sections 201(1) and 201(1A). The Tribunal does not enjoy the same powers as Hon ble Supreme Court under Article 142 of the Constitution of India to pass such orders as deemed fit for doing complete justice in the matter before them. That being so the extreme view as to the illegality of an order passed by the authority in the absence of statutory support should be taken only in rare cases where the authority acted in complete disregard of reasonability. We do not find any such circumstance existing in these appeals so as to warrant the action of annulment of the orders under sections 201(1) and 201(1A) made by the Assessing Officer. Thus we reject the assessee s plea as to the orders being illegal on account of having been made beyond the time-limit in the eyes of law. During the course of hearing before us both the parties agreed that the issues involved and their respective arguments thereupon are the same as presented before us during the course of elaborate hearing in relation to assessee s appeals in TDS Appeal Nos. 50 and 51 (Del)/95 for financial year 1992-93. Accordingly our findings on various aspects of the matter and issues are the same. Following that order we hold that all the orders u/s 201(1) made by the Assessing Officer should be cancelled. At the same time levy of interest u/s 201(1A) is upheld for each assessment year subject to re-computation in accordance with our directions contained in the order in the case of the assessee in TDS Appeal Nos. 50 and 51 (Del)/95. The Tribunal concluded that the orders u/s 201(1) should be cancelled while the levy of interest u/s 201(1A) was upheld subject to re-computation. The assessee s appeals regarding orders u/s 201(1) were allowed and the revenue s appeals were dismissed.
Issues Involved:
1. Plea of Limitation 2. Merits of Orders u/s 201(1) and 201(1A) Summary: Plea of Limitation: The assessee contended that the orders u/s 201(1) and 201(1A) for financial years 1986-87 to 1991-92, passed on 5-6-1996, were barred by limitation as they were issued more than four years after the end of the financial year. The assessee cited several Tribunal decisions to argue that a reasonable time limit of four years should be read into these provisions. The revenue countered that no statutory time-limit is prescribed for passing such orders, and thus, they could be passed at any time, relying on judgments from the Hon'ble Calcutta High Court and other authorities. The Tribunal considered the conflicting views and observed that while some Tribunal decisions supported the assessee's contention, the factual background in the present case was different. The Tribunal noted that the Assessing Officer acted promptly upon discovering the facts and that no unreasonable delay occurred. Consequently, the Tribunal rejected the plea of limitation, stating that the orders could not be annulled merely because they were made beyond four years from the end of the financial year. Merits of Orders u/s 201(1) and 201(1A): On the merits, the Tribunal addressed the orders u/s 201(1) and 201(1A) for the financial years in question. Both parties agreed that the issues and arguments were the same as those presented in the assessee's appeals for the financial year 1992-93. Following the findings in those appeals, the Tribunal held that the orders u/s 201(1) made by the Assessing Officer should be cancelled. However, the levy of interest u/s 201(1A) was upheld for each assessment year, subject to re-computation in accordance with the directions given in the earlier order. Conclusion: - The assessee's appeals regarding orders u/s 201(1) were allowed. - The revenue's appeals regarding orders u/s 201(1) were dismissed. - The appeals of both the assessee and the revenue regarding orders u/s 201(1A) were partly allowed for statistical purposes.
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