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2023 (5) TMI 694 - AT - Income TaxOrder passed u/s 201(1)/201(1A) - Failure to deduct TDS in certain cases - whether assessment barred by limitation? - reasonable period of four years - Period prior to the amendment in section 201(3) by the Finance Act 2012 w.r.e.f. 01.04.2010 - HELD THAT - Prior to the amendment in section 201(3) by the Finance Act 2012 w.r.e.f. 01.04.2010 there was no stipulation provided in the Act for passing an order u/s 201(1)/201(1A) holding a person to be an assessee in default. In fact this fact is also explained by the CBDT Circular No.05/2010 dated 03.06.2010 which explains the amended provisions w.r.e.f. 01.04.2010 prescribing time limit for framing an order u/s 201 of the Act. In fact the said Circular says that this amendment would be effective from 01st April 2010 only and would apply to such orders passed on or after 1st April 2010. We find that the ld. DR took shelter based on this CBDT Circular before us stating that since the order in the instant case was passed on 29.03.2011 which is after 01.04.2010 the said order is passed within the time limit prescribed in section 201(3) of the Act r.w. proviso thereto. We find that the very same issue was subject matter of consideration before the Hon ble jurisdictional High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India reported in 2016 (8) TMI 509 - DELHI HIGH COURT referred to supra. The Circular has to be interpreted in such a manner that the time limit stipulated in section 201(3) of the Act would apply only for those orders passed on or after 1.4.2007 and not earlier. we hold that the order passed by the ld. TDS officer u/s 201 / 201 (1A) of the Act is barred by limitation. Hence the demand raised thereon is directed to be quashed. Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Imposition of interest and recovery of TDS. 3. Limitation period for passing orders under section 201(1)/201(1A) of the Income-tax Act, 1961. Summary: Issue 1: Delay in Filing the Appeal The Tribunal initially dismissed the appeal due to an 8½ month delay in filing by the assessee. However, the Hon'ble Delhi High Court condoned the delay and restored the appeal to the Tribunal for adjudication on merits. Issue 2: Imposition of Interest and Recovery of TDS The primary issue was whether the CIT(A) was justified in imposing interest and recovering TDS from the assessee. The Tribunal noted that the TDS proceedings were initiated following a survey operation on 17.03.2002, which revealed defaults under sections 194C and 194H of the Act. The TDS Officer had treated the assessee as an 'assessee in default' and levied interest for delayed remittance. Issue 3: Limitation Period for Passing Orders The interconnected issue was whether the orders passed under section 201(1)/201(1A) were barred by limitation. The Tribunal examined the provisions of section 201(3) as amended by the Finance Act, 2012, which stipulated that orders for financial years commencing on or before 01.04.2007 could be passed up to 31.03.2011. For the assessment year 2002-03, the order passed on 29.03.2011 was within this period. The Tribunal referred to the decision of the Hon'ble Delhi High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, which held that proceedings must be initiated within a reasonable period, typically four years, unless specified otherwise. The Court had established that the amendment to section 201(3) did not retrospectively extend the limitation period for earlier years. Given this interpretation, the Tribunal concluded that the orders passed by the TDS Officer were barred by limitation. Consequently, the demands raised were quashed. Conclusion: The Tribunal allowed all the appeals, holding that the orders passed by the TDS Officer under section 201(1)/201(1A) were barred by limitation. Therefore, the demands raised were quashed, and other grounds on merits were not adjudicated as they became academic in nature. Order Pronounced: The order was pronounced in the open court on 10.05.2023.
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