2014 (6) TMI 315 - AT - Income Tax

Time limit for passing an Order u/s 201(1) or 201(1A) of the Act - TDS default - Assessee contended that order passed by the AO is barred by limitation as the order has not been passed within a period of 4 years from the end of the relevant - Held that - Following ITO v. Delhi Development Authority 2001 (11) TMI 6 - SUPREME Court - order u/s 201(1) is to be treated as an order of assessment as per section 2(8) assessment includes reassessment , then it becomes manifest that the time-limit for initiating and completing the proceedings u/s 201(1) has to be at par with the time-limit available for initiating and completing the reassessment, more so when the scope of section 147 also ropes in the cases of assessment apart from reassessment - order passed u/s 201(1) or 201(1A) cannot be held as barred by limitation if it is passed within 4 years from the end of the relevant AYs or 6 years as the case may be - the order passed u/s 201(1) and 201(1A) is not barred by limitation and the same is valid, therefore, to that extent the CIT(A) is not correct in annulling the order passed u/s 201(1) and 201(1A) of the Act - even though the orders are passed beyond four years from FY 2003-04 and 2004-05, but within six years from the relevant financial year Decided in favour of Revenue.

Summary

Issues Involved:
1. Time limit for passing orders under Section 201(1) and 201(1A) of the Income Tax Act.
2. Applicability of decisions from other cases.
3. Nature of TDS defaults and their classification under relevant sections.
4. Validity of CIT(A)'s decision based on the Tribunal's previous rulings.
5. Interpretation of the statute regarding the limitation period.

Detailed Analysis:

1. Time Limit for Passing Orders Under Section 201(1) and 201(1A):
The primary issue revolves around whether there is a reasonable time limit for passing orders under Section 201(1) and 201(1A) of the Income Tax Act when no such explicit provision exists in the statute. The CIT(A) held that a time limit of four years is reasonable, following the Tribunal's decision in the case of A.P. State Civil Supplies Corporation. However, the Revenue contended that no such time limit is prescribed under the IT Act, especially after the omission of Section 231 w.e.f. 01.04.1989.

2. Applicability of Decisions from Other Cases:
The CIT(A) relied on previous Tribunal decisions, including the case of A.P. State Civil Supplies Corporation and SBI vs. ACIT, to quash the orders passed by the Assessing Officer. The Revenue argued that these decisions were not binding and had been appealed before higher courts. The Special Bench of the Tribunal, Mumbai, in the case of Mahindra and Mahindra Ltd, was cited, which examined the issue of whether an order under Section 195 r/w 201 of the IT Act is barred by limitation within four years from the end of the financial year.

3. Nature of TDS Defaults and Their Classification:
The Assessing Officer found TDS defaults in payments to news service agencies, bandwidth charges, transponder rent, internet charges, software expenses, and data circuit rentals, classifying them under Sections 194J and 194C of the IT Act. The CIT(A) quashed these orders based on the time limit issue, but the Revenue argued that the orders were valid as they were passed within the six-year time limit prescribed for reassessment proceedings under Section 147 r/w 149.

4. Validity of CIT(A)'s Decision Based on Tribunal's Previous Rulings:
The CIT(A)'s decision was based on the Tribunal's previous rulings, which the Revenue contested. The Special Bench in the case of Mahindra and Mahindra Ltd held that the maximum time limit for passing orders under Sections 201(1) and 201(1A) should align with the time limits under Section 149, i.e., four or six years depending on the amount involved. The Tribunal in the present case agreed with this view, holding that the orders for AY 2002-03 and 2003-04 were within the time limit, while the order for AY 2001-02 was barred by limitation.

5. Interpretation of the Statute Regarding the Limitation Period:
The Revenue argued that in the absence of a specified time limit under Section 201, actions could be taken at any time. However, the Tribunal, following the Special Bench's decision, held that the absence of a specified time limit does not imply indefinite time for action. The Tribunal also cited the Supreme Court's decision in the case of Delhi Development Authority, which treated orders under Section 201(1) as orders of assessment, thereby subjecting them to the same time limits as reassessment orders.

Conclusion:
The Tribunal upheld the CIT(A)'s decision for AY 2001-02, dismissing the appeal as the order was barred by limitation. However, for AYs 2002-03 and 2003-04, the Tribunal set aside the CIT(A)'s decision, restoring the Assessing Officer's orders as they were within the six-year time limit. The Tribunal emphasized that the statutory interpretation should align with the Supreme Court's rulings, thereby dismissing the assessee's contention regarding the limitation period.

Order:
- Appeal No. ITA NO. 1516/Hyd/2008 is dismissed.
- Appeals No. 314 & 315/Hyd/12 are allowed.

Order pronounced in the open court on 8th August, 2013.