2016 (3) TMI 285 - HC - Income Tax

Non deduction of tds - challenge to the notices / summonses issued u/s 201 - period of limitation for passing an order u/s 201 - Limitation under section 201(3)(i) - whether notices initiating assessment proceedings were without jurisdiction as being barred by limitation? - Held that - Present case relates to financial year 2008-2009. The petitioner had filed statements as required under section 200 of the Act. The limitation for initiating proceedings under section 201(1) of the Act would, therefore, be governed by section 201(3)(i) of the Act as it stood at the relevant time which provided for a period of limitation of two years from the end of the financial year in which statement was filed in a case where the statement referred to in section 200 has been filed. The limitation for initiating action under section 201(1) of the Act, therefore, elapsed on 31st March, 2012 whereas the amendment in section 201 of the Act as amended by Finance Act No.2 of 2014 came into force with effect from 28th May, 2012. The impugned notice, therefore, is clearly barred by limitation and, therefore, cannot be sustained. See Tata Teleservices v. Union of India (2016 (2) TMI 414 - GUJARAT HIGH COURT ) - Decided in favour of assessee

Summary

Issues:
Challenge to notice issued under section 201(1)/201(1A) of the Income Tax Act, 1961 for financial year 2008-2009 as being barred by limitation and without jurisdiction.

Analysis:
The petitioner, a pharmaceutical company, challenged a notice issued by the respondent deeming the petitioner an "assessee in default" for non-deduction of tax at source in payments made to certain domestic parties for assessment year 2009-2010. The petitioner argued that the notice was beyond the two-year limitation period under section 201(3)(i) of the Act. The petitioner relied on a Division Bench decision that held proceedings would be time-barred if the limitation had expired before the amendment in the Act. The respondent did not dispute this position.

The court referred to the Division Bench decision and noted that the petitioner had filed TDS statements under section 200 of the Act, making the limitation under section 201(3)(i) expire on 31st March, 2012, before the amendment in 2014. The court held that the impugned notice was clearly barred by limitation and, therefore, unsustainable. The court relied on the principles established in the previous decision and allowed the petition based on the expiration of the limitation period before the amendment came into force.

In conclusion, the court allowed the petition, quashed the notice issued by the respondent, and set aside all subsequent proceedings. The court held that the impugned notice was time-barred and without jurisdiction, in line with the legal principles established in a previous decision. The petition succeeded on the grounds of the limitation period expiring before the relevant amendment in the Act, leading to the notice being deemed invalid.