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2018 (10) TMI 1404 - AT - Income TaxValidity of order passed under section 201(1)/201(1A) - order passed after 4 years from the end of the financial year under consideration - period of limitation - non deduction of tds - Held that - There are series of decisions of Hon ble High Courts on this issue wherein it was held that when no limitation provided for initiating the action by the AO and passing the order under the particular provisions of the Act, then a reasonable time limit for such action is 4 years from the end of the relevant financial year. Further, after the decisions of the Hon ble High Courts on this issue, the legislatures have amended the provisions of section 201 of the Act and thereby provided the limitation of 2 years and 4 years respectively in specific cases for passing the order under section 201(1)/201(1A) of the Act. Having regard to the binding precedents as well as amended provisions of the Act, the impugned order passed by the AO is barred by limitation as it was after 4 years from the end of the financial year under consideration. Accordingly, we hold that the impugned order passed under section 201(1)/201(1A) of the Act is invalid being barred by limitation. Hence the same is quashed.
Issues Involved:
1. Validity of the order passed under section 201(1)/201(1A) of the IT Act. 2. Limitation period for passing the order under section 201(1)/201(1A) of the IT Act. 3. Demand for alleged non-deduction of TDS under section 201(1) of the IT Act. 4. Initiation and reference of penalty proceedings under section 271C of the IT Act. Issue-wise Detailed Analysis: 1. Validity of the Order Passed under Section 201(1)/201(1A) of the IT Act: The assessee contended that the order passed under section 201(1)/201(1A) of the IT Act is bad in law and on facts for want of jurisdiction and various other reasons, and thus should be deleted. This issue was not pressed by the assessee during the hearing, and accordingly, the ground was dismissed as not pressed. 2. Limitation Period for Passing the Order under Section 201(1)/201(1A) of the IT Act: The assessee argued that the order dated 27.03.2014 was barred by limitation as it was passed beyond the permissible period of 4 years from the end of the financial year 2008-09. The Tribunal admitted this additional ground, considering it a pure question of law that did not require fresh investigation of facts. The Tribunal referred to various judicial precedents, including the Hon’ble Supreme Court's decision in NTPC vs. CIT, which allowed raising such legal issues at any stage. On merits, it was held that the limitation for passing an order under section 201(1)/201(1A) is 4 years if the assessee has not filed TDS statements. The Tribunal referenced several High Court decisions, including CIT vs. NHK Japan Broadcasting and CIT vs. U.B. Electronics Instruments Ltd., which consistently held that a reasonable period for passing such orders is 4 years. The Tribunal concluded that the order passed on 27.03.2014 was beyond the 4-year period and thus invalid, quashing the order on the grounds of being barred by limitation. 3. Demand for Alleged Non-Deduction of TDS under Section 201(1) of the IT Act: The assessee contested the demands of ?59,603 and ?41,914 raised for alleged non-deduction of TDS under section 201(1) of the IT Act. However, since the Tribunal quashed the impugned order on the ground of limitation, it did not delve into the merits of these demands. 4. Initiation and Reference of Penalty Proceedings under Section 271C of the IT Act: The assessee challenged the initiation and reference of penalty proceedings under section 271C of the IT Act, arguing that it was not liable to deduct TDS and thus the proceedings were void ab initio and lacked jurisdiction. However, as the Tribunal quashed the main order under section 201(1)/201(1A) due to being barred by limitation, it did not address this ground separately. Conclusion: The Tribunal allowed the appeal partly by quashing the order passed under section 201(1)/201(1A) of the IT Act as it was barred by limitation. The Tribunal did not address the other grounds raised by the assessee due to the quashing of the main order. The decision was pronounced in the open court on 24/10/2018.
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