2017 (2) TMI 282 - HC - Income Tax

Chargeability of interest under Section 201(1A)- non deduction of tds - Held that - As proceedings were already barred by limitation and this finding of CIT(A) was not challenged and has attained finality. Therefore, no occasion has arisen to raise any further question in regard to Section 201(1) of Act, 1961 before this Court for the first time when against this finding, no appeal has been filed before Tribunal.

Summary

Issues:
1. Justification of ITAT in holding the assessee not liable for tax deduction.
2. Restoration of the issue of Section 201(1) applicability for verification.
3. Confirmation of the Ld. CIT(A)'s order on the time limit for Section 201(1) of the IT Act.

Analysis:

Issue 1:
The first issue revolves around the justification of the ITAT in holding the assessee not liable for tax deduction. The appellant raised substantial questions of law regarding the applicability of tax deduction on the basis of a judgment by the Hon'ble Supreme Court. The crux of the matter was the difference in the rate of deduction, not the act of deduction itself. The Tribunal's decision was based on the interpretation of Section 194C of the IT Act, emphasizing that the liability for tax deduction is on the payment made by the deductor to the deductee, irrespective of positive or negative income conditions.

Issue 2:
The second issue pertains to the restoration of the applicability of Section 201(1) of the IT Act for verification. The Tribunal was questioned on whether it was justified in restoring the issue to the AO for verifying if the deductee had returned losses for the relevant years, rather than focusing on the payment of due taxes on the assessed income. This issue highlights the importance of thorough verification and compliance with tax provisions concerning deductions and payments.

Issue 3:
The final issue questions the confirmation of the Ld. CIT(A)'s order on the time limit for Section 201(1) of the IT Act. The Tribunal confirmed the Ld. CIT(A)'s decision that the AO's order under Section 201(1) for specific fiscal years was time-barred. The Tribunal relied on the judgment of the Hon'ble Delhi High Court, stating that the time limit of four years was not prescribed by the statute and that the decision was not binding in the territory of Uttar Pradesh. This issue underscores the significance of adhering to prescribed time limits and relevant judicial interpretations in tax matters.

In conclusion, the judgment dismissed both appeals as the proceedings were already barred by limitation, and the findings of the CIT(A) had attained finality without any appeal filed before the Tribunal. The decision emphasizes the importance of timely compliance with tax provisions and the significance of challenging findings at the appropriate stages of appeal to avoid issues of finality and non-entertainment of new grounds before higher courts.