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2018 (9) TMI 1962 - AT - Income TaxTCS @ 5% on sale of Tendu leafs - order passed under section 206C(6) / 206C(7) - Period of limitation to pass order - HELD THAT - As decided in own case 2018 (9) TMI 1234 - ITAT JAIPUR liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly we quash the impugned order passed U/s 206C(6)/206C(7) of the Act.- Decided in favour of assessee
Issues Involved:
1. Validity of the order passed under section 206C(6)/206C(7) of the IT Act being barred by limitation. 2. Confirmation of demand raised by the ITO for non-collection of Tax at Source (TCS) under section 206C(6) of the Act. 3. Demand of interest related to the alleged non-collection of TCS under section 206C(7) of the Act. Issue-wise Detailed Analysis: 1. Validity of the Order Passed Under Section 206C(6)/206C(7) of the IT Act Being Barred by Limitation: The assessee argued that the order dated 31st March 2015, passed under section 206C(6)/206C(7) of the IT Act, was barred by limitation. The Tribunal noted that there was no specific limitation period provided in Section 206C or any other provisions of the Income Tax Act for passing such orders. However, it was emphasized that the absence of a statutory limitation does not grant the Assessing Officer (AO) unfettered powers to pass orders at any point in time. The Tribunal referred to various judicial precedents, including the Hon'ble Delhi High Court's decision in the case of CIT Vs. NHK Japan Broadcasting, which established that a reasonable period for passing such orders is four years. The Tribunal concluded that the order passed on 31st March 2015 was beyond this reasonable period of four years and hence invalid due to being barred by limitation. 2. Confirmation of Demand Raised by the ITO for Non-Collection of Tax at Source (TCS) Under Section 206C(6) of the Act: Given that the Tribunal quashed the order under section 206C(6)/206C(7) due to being barred by limitation, the confirmation of the demand raised by the ITO became infructuous. The Tribunal did not need to address the merits of the demand for non-collection of TCS, as the primary order itself was invalid. 3. Demand of Interest Related to the Alleged Non-Collection of TCS Under Section 206C(7) of the Act: Similar to the demand for non-collection of TCS, the issue of interest demand under section 206C(7) also became infructuous following the quashing of the primary order. The Tribunal did not need to delve into the specifics of the interest demand since the foundational order was deemed invalid. Conclusion: The Tribunal allowed the appeal of the assessee partly, primarily on the ground that the order passed under section 206C(6)/206C(7) was barred by limitation. Consequently, the other issues concerning the confirmation of the demand and the interest related to non-collection of TCS became moot. The order was pronounced in the open court on 28/09/2018.
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