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2021 (2) TMI 282 - AT - Income TaxOrder u/s 201(1A) - TDS u/s 195 - Proceedings barred by limitation - assessee has not deducted the tax at source for the payment made to the NRI - assessee treated as assessee in default for non deduction of tax - HELD THAT - In the instant case, the transaction took place on 24.04.2010 i.e. in the financial year 2010-11 and the AO passed the order on 22.03.2018 by issue of notice u/s 195 on 18.09.2017. Thus, the action taken by the AO was more than six years from the end of the financial year in which the transaction took place. Thus, the assessee s case is squarely covered by the decision of Bheemarasetty Sunitha 2017 (8) TMI 476 - ITAT VISAKHAPATNAM . Hence, we hold that the proceedings initiated by the AO are barred by limitation. Accordingly we set aside the orders of the lower authorities and allow the appeal of the assessee.
Issues:
1. Assessment of interest under section 201(1A) of the Income Tax Act, 1961 for non-deduction of tax at source. 2. Limitation period for passing orders under section 201(1A) of the Income Tax Act, 1961. Issue 1: Assessment of interest under section 201(1A) of the Income Tax Act, 1961 for non-deduction of tax at source. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding charging interest under section 201(1A) of the Income Tax Act. The case involved the purchase of immovable property by the assessee from a non-resident. The assessing officer found that the assessee did not deduct tax at source as required under section 195 of the Act. The assessee argued that they did not directly deal with the non-resident and made payments in India through an Indian resident representative. However, the AO treated the assessee as an assessee in default for non-deduction of tax at source. The CIT(A) upheld the AO's order, leading to the appeal before the Tribunal. The Tribunal considered the arguments and legal provisions, including the applicability of section 195 and the tax liability on the sale proceeds of land. The Tribunal also examined the nature of the transaction and the obligations under the Income Tax Act. Issue 2: Limitation period for passing orders under section 201(1A) of the Income Tax Act, 1961. The assessee raised a ground of limitation for passing the order under section 201(1A), contending that the order was beyond the prescribed time limit. The CIT(A) dismissed this ground, stating that there was no specific time limit under the law for passing such orders. However, during the appeal before the Tribunal, the assessee argued that the order was passed beyond four years, which they claimed was barred by limitation. The Tribunal considered previous decisions and held that four years was a reasonable time for passing orders under section 201(1A) in cases involving non-residents. Referring to relevant case laws and the provisions of the Act, the Tribunal concluded that the proceedings initiated beyond the four-year limit were indeed barred by limitation. The Tribunal analyzed the timeline of the transaction and the order passed by the AO, determining that the action taken was beyond the permissible period. Consequently, the Tribunal set aside the orders of the lower authorities and allowed the appeal of the assessee based on the limitation issue. In conclusion, the Tribunal's judgment addressed the issues of interest assessment under section 201(1A) and the limitation period for passing orders under the Income Tax Act. The decision provided a detailed analysis of the legal provisions, case laws, and the specific circumstances of the case to arrive at a reasoned conclusion in favor of the assessee.
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