2023 (1) TMI 730 - SCH - Income Tax

Notice u/s 201 - failure to deduct or pay - period of limitation - HELD THAT - As considering the fact that the liability of the recipient in the subject-matter of Appeal before the High Court and to avoid any further question, which may arise on limitation, we confirm the impugned judgment and order passed by the High Court 2022 (2) TMI 345 - BOMBAY HIGH COURT quashing and setting aside the order u/s 201 we also direct that the matter be remitted to the AO(TDS) at the stage of issuance of show cause notice u/s 201 so that after the decision of the High Court in the pending Appeal, the same can be proceeded further in accordance with law and on merits.

Summary

Issues:
1. Notice under Section 201 of the Income Tax Act issued prior to ITAT decision for AY 2014-2015.
2. Appeal against ITAT decision pending before High Court.
3. Judgment for AY 2010-2011 pending before the Court.
4. Proper course for High Court to avoid dispute on limitation.
5. Confirmation of the High Court's judgment quashing the order under Section 201.

Analysis:

1. The Supreme Court addressed the issue of the notice under Section 201 of the Income Tax Act being issued before the ITAT decision for AY 2014-2015. The Court acknowledged that the appeal against the ITAT decision was pending before the High Court, and there was a subsequent judgment for AY 2010-2011 also pending before the Court. The Court noted the possibility of a dispute on limitation even if the Department succeeded in the appeal for AY 2014-2015. The Court directed the High Court to consider clubbing the writ petition(s) with the pending appeal to prevent any future limitation issues.

2. In light of the arguments presented by the Revenue's counsel and the assessee's senior advocate, the Court confirmed the High Court's judgment quashing the order under Section 201 of the Income Tax Act. The Court emphasized the importance of avoiding any further questions on limitation regarding the liability of the recipient in the appeal before the High Court. Consequently, the Court directed the matter to be remitted to the Assessing Officer (TDS) at the stage of issuing a show cause notice under Section 201. This decision aimed to allow further proceedings in accordance with the law and on merits after the High Court's decision in the pending appeal.

3. The Supreme Court disposed of the Special Leave Petitions and pending applications related to the case following the confirmation of the High Court's judgment. The Court's order provided clarity on the course of action regarding the quashed order under Section 201 of the Income Tax Act. The decision ensured that the matter would be appropriately dealt with by the Assessing Officer (TDS) post the High Court's decision, thereby maintaining legal procedures and addressing potential issues of limitation effectively.