2024 (11) TMI 866 - AT - Income Tax

Demand u/s 201(1)/201(14) as barred by limitation - assessee company has failed to deduct tax at source as reflected by Tax Auditor in his report - assessee submitted that the order passed by the AO was time barred by limitation - Scope of amendment - HELD THAT - Only change which was effected from the earlier provision was the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas, in case of a person /deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub section (3) of section 201 was again amended by Finance Act, 2014 w.e.f 1st October 2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. If the legislature intended to apply the amendment provision of sub-section (3) retrospective it would definitely have provided such retrospective effect expressing in clear terms while making such amendment. In the instant case the time limit for passing order u/s 201(1) of the Act pertaining to financial year 2010-11 where a statement u/s 200 of the Act has been filed was two years from the end of the financial year in which such statement was filed. It is evident from the order of the AO that the tax statement in the relevant form i.e. Form 26Q for F.Y. 2010-11 was filed by the assessee on 13-05-2011. The time limit for passing an order u/s 201(1) of the Act was up to 31-03-2014.The assessment order was completed on 28-03-2018 by the AO beyond the prescribed time limit. The sub-section (3) of the Section 201 of the Act does not applicable in this case. We find that the assessment was made by the AO was time barred has no leg to stand and the Ld. CIT(A) has rightly allowed the appeal. The appeal of the revenue is liable to be dismissed.

Summary

Issues Involved:

1. Whether the order under Section 201(1)/201(1A) of the Income Tax Act was passed within the prescribed time limit.
2. Applicability of limitation period under Section 201(3) of the Income Tax Act.
3. Validity of the CIT(A)'s decision to allow the appeal based on the time-barred nature of the assessment order.

Detailed Analysis:

1. Timeliness of the Order under Section 201(1)/201(1A):

The primary issue raised by the revenue was whether the order under Section 201(1)/201(1A) was passed within the prescribed time limit. The revenue argued that the order was within the time limit as per the provisions of the Act. However, the respondent contended that the order was time-barred, relying on Section 201(3) of the Act, which prescribes a time limit for passing such orders. The CIT(A) agreed with the respondent, holding that the order was indeed time-barred, as the TDS statement was filed within the stipulated time, and thus the limitation period was two years from the end of the financial year in which the statement was filed.

2. Applicability of Limitation Period under Section 201(3):

Section 201(3) of the Income Tax Act provides the time limit within which an order under Section 201(1) can be made. Initially, the period was two years if the TDS statement was filed and four years if it was not. This was amended by the Finance Act, 2012, extending the period to six years where no TDS statement was filed. The Finance Act, 2014 further amended this to a uniform period of seven years from the end of the financial year, irrespective of whether the TDS statement was filed. The tribunal noted that the amendment by the Finance Act, 2014, was not intended to have retrospective effect, as there was no clear legislative intent for such retrospective application. Therefore, the limitation period applicable in this case was two years, as the TDS statement was filed within time.

3. Validity of the CIT(A)'s Decision:

The CIT(A) allowed the appeal on the grounds that the assessment order was time-barred. The tribunal upheld this decision, noting that the assessment order was completed on 28-03-2018, well beyond the prescribed time limit of 31-03-2014. The tribunal emphasized that the legislative amendments did not retrospectively extend the limitation period for orders where the TDS statement had been filed. Consequently, the assessment order was deemed null and void due to being time-barred.

Conclusion:

The tribunal dismissed the appeal by the revenue, affirming the CIT(A)'s decision that the order under Section 201(1) was time-barred. The tribunal refrained from addressing the merits of the applicability of Section 194C, leaving it open for consideration in any other assessment year. The appeal was dismissed, and the order was pronounced in the open court.