2016 (6) TMI 335 - HC - Income Tax

Limitation for initiating proceedings under section 201(1) - TDS liability - period of limitation - Held that - The 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, expired 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 notices, therefore, are clearly barred by limitation and, therefore, cannot be sustained - Decided in favour of assessee

Summary

Issues:
Challenge against notices dated 10th January, 2013 and 18th March, 2015 under Articles 226 and 227 of the Constitution of India, alleging they are barred by limitation and without jurisdiction.

Analysis:

1. The petitioner, engaged in infrastructure development, contested notices under section 201 of the Income Tax Act, 1961 for alleged failure to deduct tax at source. The petitioner argued that the limitation period prescribed in section 201(3) had expired, making the proceedings void.

2. The petitioner cited a Division Bench decision in Tata Teleservices v. Union of India, where it was held that if the limitation under section 201(3)(i) had lapsed before subsequent amendments, the proceedings would be time-barred. The petitioner contended that the present case, relating to the financial year 2008-2009, fell under this scenario.

3. The court, referring to the Tata Teleservices case, noted that the limitation for initiating action under section 201(1) had expired on 31st March, 2012, whereas the relevant amendment came into effect later. Therefore, the impugned notices were deemed barred by limitation and unsustainable.

4. Considering the legal principles established in Tata Teleservices, the court ruled in favor of the petitioner, allowing the petition and quashing the notices dated 10th January, 2013 and 18th March, 2015, along with all proceedings based on them. The court made the rule absolute with no order as to costs, concluding the judgment.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the legal arguments presented, and the court's decision based on the applicable legal principles and precedents cited during the proceedings.