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2016 (10) TMI 1236 - AT - Income TaxTime limit for initiating the proceedings - Default u/s 206C(6) read with section 206C(7) - tax at source as per provisions of section 206C(1) was not collected and Form No. 27C was not filed within the stipulated time - period of limitation - Held that - CIT (A) has not considered the case laws and has merely rejected the ground by observing that the provisions contained in section 206C of the Act do not prescribe any time limit for initiating the proceedings or for passing the order thereunder. The above finding of CIT (A) is contrary to the case laws as relied by the assessee. In the present case the order has been passed beyond 6 years from the date of assessment is under challenge. Therefore, respectfully following the decision of the Coordinate Bench rendered in the case of State Bank of India vs. ITO 2013 (4) TMI 858 - ITAT LUCKNOW wherein considered the conflicting view and applied the judgment in the case of CIT vs. Vegetable Products 1973 (1) TMI 1 - SUPREME COURT we hereby quash the order declaring assessee in default on the ground that action taken by AO suffers from delay and latches and the Revenue has not explained the cause of such delay. - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under sections 206C (6) and 206C(7) of the Income Tax Act, 1961. 2. Whether the impugned order is barred by limitation. 3. Confirmation of demand raised for alleged non-collection of Tax at Source (TCS) under section 206C(6) of the Act. 4. Demand of interest in relation to non-collection of TCS under section 206C(7) of the Act. 5. Request for adding, amending, or altering grounds of appeal. Issue 1: Validity of the Order under Sections 206C (6) and 206C(7) The appeal challenged the order passed under sections 206C (6) and 206C(7) of the Act, contending it was bad in law and lacked jurisdiction. The AO had held the assessee in default for non-collection of tax, leading to a demand including interest. The CIT (A) upheld the order, leading to the appeal. The assessee argued that the action was not initiated within a reasonable time, citing judgments emphasizing the need for timely action by revenue authorities. The Tribunal considered these arguments, noting that the AO's action was beyond six years from the relevant assessment year. Relying on precedent, the Tribunal quashed the order due to delay and lack of explanation for the same. Issue 2: Limitation of the Impugned Order The issue of whether the impugned order was barred by limitation was raised in the appeal. The assessee contended that the action taken was beyond the reasonable time limit, citing relevant case laws. The CIT (A) dismissed the limitation argument, stating that the Act did not prescribe any time limit for such proceedings. However, the Tribunal disagreed, emphasizing the need for timely action by revenue authorities and quashed the order due to the delay in passing it. Issue 3: Confirmation of Demand for Non-Collection of TCS Grounds 3 and 4 related to the confirmation of demand for non-collection of Tax at Source (TCS) and interest. However, since the assessment was annulled on the grounds of limitation, these issues became academic and were not adjudicated by the Tribunal. Issue 4: General Ground of Appeal Ground 5, a general ground of appeal, was not specifically addressed by the Tribunal, stating it was of a general nature and required no adjudication. In conclusion, the Tribunal partly allowed the appeal, primarily due to the order being quashed on the grounds of delay and lack of explanation for the delay in passing the order. The decision was pronounced on 27/10/2016.
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