2020 (3) TMI 1224 - AT - Income Tax

TDS default - Order passed u/s 201(1) and (1A) - Period of limitation - Effective date of amendments by Finance Act (No. 2) of 2009 - The impugned year under examination is Assessment-year 2010-11. Finance Act (No. 2) of 2009 inserted subsections (3) and (4) with effect from 1-4-2010. It provided that an order under section 201(l) for failure to deduct the whole or any part of the tax as required under the Act, if the deductee is a resident payer, shall be passed within two years from the end of the financial year in which statement of tax deducted at source is filed by the deductor. The assessee submits that the said amendment is applicable to the year under appeal. HELD THAT - Having heard rival contentions, we are of the view that the order passed by Ld CIT(A) quashing the impugned order as barred by limitation does not call for any interference, as the Ld CIT(A) has followed the decision rendered by Hon ble jurisdictional Karnataka High Court in M/S BHARAT HOTELS LTD. 2015 (12) TMI 1469 - KARNATAKA HIGH COURT wherein held period of limitation would be four years from the end of the financial year in question. Accordingly, we uphold the order passed by Ld CIT(A). - Decided against revenue.

Summary

Issues:
1. Appeal by Revenue against CIT(A) order quashing AO order u/s 201(1) and 201(1A) of the Act.
2. Cross-objection by Assessee challenging legal issues and default amount quantification.

Analysis:
1. The Revenue appealed against the CIT(A) decision to quash the AO order u/s 201(1) and 201(1A) of the Act, which was delayed by 9 days. The Revenue sought condonation of delay, which was granted, allowing the appeal.
2. The Assessee raised legal issues and disputed the default amount quantification. The TDS Officer initiated proceedings u/s 201(1) in 2016 for failure to deduct tax at source in 2010-11, leading to a demand of ?28.73 lakhs and interest of ?26.14 lakhs.
3. The Assessee contended that the proceedings were time-barred, citing precedents like CIT vs. NHK Japan Broadcasting Corporation and CIT vs. Bharat Hotels Ltd, arguing that the initiation in 2016 was beyond the four-year limit from the relevant financial year.
4. The CIT(A) rejected the Assessee's reliance on the Finance Act, 2009 amendment, stating it applied from AY 2011-12 onwards, not for 2010-11. The CIT(A) upheld the limitation argument, leading to the quashing of the impugned order u/s 201(1).
5. The CIT(A) referenced various judicial decisions supporting the four-year limitation period for initiating proceedings under section 201, ultimately ruling in favor of the Assessee based on the Karnataka High Court's decision in CIT vs. Bharat Hotels Ltd.
6. The Tribunal upheld the CIT(A) decision, stating that the order was not time-barred, as per the jurisdictional High Court's interpretation of the limitation period. The cross-objection by the Assessee was dismissed as it hinged on the quashed order u/s 201(1).
7. The Tribunal dismissed the Revenue's appeal and the Assessee's cross-objection, affirming the CIT(A)'s decision on the time-barred nature of the impugned order u/s 201(1). The judgment was pronounced on 6th March 2020.