9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 927 - AT - Income TaxTDS u/s 195 - Limitation for issue of notice u/s 201(1)/201(1A) - proceedings initiated after lapse of 5 years - failure to deduct TDS on transfer of immovable property to the assessee by the non-resident - assessee in default - Held that - In the instant case the fact that the vendor is NRI was recorded in the sale deed itself, as evident from the Ld.CIT(A) s order and he is the resident of 7690A, Green Meadow, USA. Having recorded the residential status in sale deed no extra time is required to prosecute the matter against the payee and the payer. All the vendors are shown as residents of India. The assessing officer was under the impression that the vendor was resident of India, thus taken the time for initiating the proceedings u/s 201(1)(1A) of the act. Where as in the instant case residential status was recorded in the sale deed and the AO determined the nil demand in the assessment in representative capacity. The department could not demonstrate the reasons for delay. It is also observed from the facts that the department has initiated simultaneous proceedings against the assessee as well as the vendor. Therefore, the facts of the case law relied upon by the Ld.CIT(A) are distinguishable and not applicable to the assessee s case. Since, the facts of the assessee s case are identical to the decision of the Tribunal in the case of Bheemarasetty Sunitha 2017 (8) TMI 476 - ITAT VISAKHAPATNAM , respectfully following the view taken by this Tribunal, we hold that the notice issued by the AO in this case is beyond 4 years and the same is barred by limitation. Therefore, we set aside the order of the CIT(A) and quash the orders passed u/s 201(1)/201(1A) by the AO and allow the appeal of the assessee.
Issues Involved:
1. Limitation for issuing notice under Section 201(1)/201(1A) of the Income Tax Act, 1961. 2. Treatment of the assessee as an assessee in default for non-deduction of tax at source under Section 195. 3. Determination of tax liability in the hands of non-resident sellers. 4. Computation of long-term capital gains without reference to comparable cases. 5. Charging interest under Section 201(1A). Issue-wise Detailed Analysis: 1. Limitation for Issuing Notice Under Section 201(1)/201(1A): The primary contention of the assessees was that the notice issued under Section 201(1)/201(1A) dated 02.03.2015 was barred by limitation, as it was issued beyond the reasonable period of four years from the end of the relevant assessment year (2008-09). The Tribunal observed that the assessees purchased property from a non-resident on 09.01.2008 and failed to deduct tax at source as required under Section 195. The Tribunal referred to its earlier decision in the case of Bheemarasetty Sunitha and the Andhra Pradesh High Court's judgment in CIT-II, Hyderabad Vs. U.B. Electronic Instruments Ltd., which held that a reasonable period for initiating action under Section 201(1)/201(1A) is four years. The Tribunal concluded that the notice issued by the AO was beyond this period and thus barred by limitation. 2. Treatment of the Assessee as an Assessee in Default for Non-Deduction of Tax at Source Under Section 195: The assessees argued that they were under the impression that the vendor was a resident and hence did not deduct tax at source. They also contended that the vendor had a valid PAN and would file the return of income. The Tribunal noted that the AO treated the assessees as defaulters for failing to deduct tax at source on payments made to the non-resident vendor. The AO computed the capital gains and raised a demand accordingly. However, since the notice under Section 201(1)/201(1A) was issued beyond the reasonable period, the Tribunal quashed the orders passed by the AO. 3. Determination of Tax Liability in the Hands of Non-Resident Sellers: The assessees contended that the liability to tax should be determined in the hands of the non-resident sellers, who had filed their returns of income. The Tribunal noted that the AO had issued notices under Section 147 to the non-resident vendor, who responded and filed returns. The assessments were completed with 'Nil' demand. The Tribunal observed that the simultaneous action taken by the AO under Sections 147 and 201(1)/201(1A) indicated that there was no inaction on the part of the AO. However, since the notice under Section 201(1)/201(1A) was time-barred, the Tribunal set aside the orders. 4. Computation of Long-Term Capital Gains Without Reference to Comparable Cases: Although the assessees initially raised this issue, they did not press it during the appeal hearing. Therefore, the Tribunal dismissed this ground as not pressed. 5. Charging Interest Under Section 201(1A): The assessees argued that the interest under Section 201(1A) should be charged only up to the date on which the non-resident vendor ought to have filed his return of income under Section 139(1). However, since the Tribunal quashed the orders under Section 201(1)/201(1A) due to the time-barred notice, this issue became moot. Conclusion: The Tribunal held that the notice issued by the AO under Section 201(1)/201(1A) was beyond the reasonable period of four years and thus barred by limitation. Consequently, the orders passed under these sections were quashed, and the appeals of the assessees were allowed.
|
