2015 (2) TMI 910 - HC - Income Tax

Proceeding under Section 201 - whether barred by time? - Held that - Section 201 itself was amended, by introduction of Section 201(1) (A), significantly that amendment was given irrespective effect from 01.04.1966. The Parliament consciously did not amend Section 201 by inserting sub-section (3) with irrespective effect. ITAT correctly affirmed an order of the CIT (Appeals) to the effect that the treatment of the assessee s company as one in default for the purpose of proceeding under Section 201 of the Income Tax Act, is barred by time. No substantial question of law arises - Decided against revenue.

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal affirming the treatment of the assessee's company as one in default under Section 201 of the Income Tax Act.
2. Whether the action under Section 201 is barred by time.
3. Impact of subsequent amendments on the limitation period under Section 201(3) of the Income Tax Act.

Analysis:
1. The appeal before the Delhi High Court challenged the order of the Income Tax Appellate Tribunal (ITAT) affirming the treatment of the assessee's company as one in default under Section 201 of the Income Tax Act. The ITAT upheld the CIT (Appeals) order, which concluded that the action against the assessee was barred by time. The CIT (A) relied on previous court rulings, including Commissioner of Income Tax vs. NHK Japan Broadcasting Corporation, to support the assessee's contention that the action under Section 201 was belated.

2. The Revenue argued that subsequent amendments to Section 201(3) of the Income Tax Act, extending the limitation period to seven years, should impact the interpretation of the law. However, the High Court considered the arguments and noted that previous judgments, such as Commissioner of Income Tax (TDS)-I vs. C.J. International Hotels Pvt. Ltd., supported the view that the legislative intent was to maintain the existing law prior to the amendments. The Court highlighted that the Parliament did not introduce a retrospective amendment to Section 201, indicating acceptance of the previous court rulings as valid law.

3. Ultimately, the High Court concluded that no substantial question of law arose in the case. The Court held that the decision in NHK Japan Broadcasting Corporation remained valid law for the period before 01.04.2010, based on the statutory developments and legislative intent. Therefore, the appeal was dismissed, affirming the decision that the action under Section 201 was not barred by time based on the existing legal framework and precedents.