2015 (2) TMI 948 - HC - Income Tax

Non deduction of TDS - assesse in default - ITAT affirmed an order of the CIT (Appeals) as proceeding under Section 201 is barred by time - Held that - Ruling of this Court as to the period of limitation, i.e., Commissioner of Income Tax v. NHK Japan Broadcasting Corporation, (2008 (4) TMI 182 - DELHI HIGH COURT) and CIT Vs. Hutchison Essar Telecome Ltd. (2010 (4) TMI 45 - DELHI HIGH COURT) concludes the issue wherein ruled that the foundational requisite for initiation of proceedings under Section 201 is a period of four years if no limitation is prescribed. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of Section 201 (1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring Section 201 (3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the Court. - Decided against the Revenue.

Summary

Issues:
1. Treatment of assessee's company as one in default under Section 201 of the Income Tax Act.
2. Applicability of time limitation for initiating proceedings under Section 201.

Analysis:
1. The judgment deals with the appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) affirming the decision of the CIT (Appeals) regarding the treatment of the assessee's company as one in default under Section 201 of the Income Tax Act. The Revenue contended that the action under Section 201 was not barred by time, while the assessee argued that the action was belated as its returns were filed much earlier.

2. The Court considered the relevant legal provisions and precedents, including the Division Bench rulings in Commissioner of Income Tax vs. NHK Japan Broadcasting Corporation and CIT vs. Hutchison Essar Telecome Ltd. The Court in NHK Japan had emphasized the need for income tax authorities to initiate proceedings under Section 201 within a reasonable time, which was determined to be four years. However, subsequent amendments extended the period of limitation to seven years, as per Section 201(3) of the Act.

3. The Revenue argued that the subsequent amendments to Section 201, extending the limitation period to seven years, should be applied retroactively. The Court, after considering the arguments, referred to a previous judgment in Commissioner of Income Tax (TDS)-I vs. C.J.International Hotels Pvt. Ltd., where it was discussed that the amendments to Section 201 were not made retrospective. The Court concluded that the decision in NHK Japan still held for the period prior to 01.04.2010, based on legislative acceptance and subsequent developments.

4. Ultimately, the Court found that no substantial question of law arose from the case, and as a result, the appeal by the Revenue was dismissed. The judgment reaffirmed the applicability of the NHK Japan ruling regarding the time limitation for proceedings under Section 201 of the Income Tax Act.