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TMI Blog2012 (3) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of High Court in the case of NHK Japan Broadcasting Corporation and filed SLP against it which is still to be decided by the Apex Court (Ref:- Civil Appeal No- 751 of 201 (arising out of SLP (C) no. 1455 of 2009 ) in the case of CIT vs. M/s. British Airways with Connected Civil Appeal No.754, 758, 759, and 764/2010 of NHK Japan Broadcasting Corporation arising out of SLP (C) 4774/2009, 8146/2009, 8661/2009 and 6389/2009 respectively where apex court has kept open the issue on limitation vide its order dated 20.01.2010). 2 On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in holding that the Proviso to section 201 (3) in which the limitation is given upto 31.03.2011 is not applicable in this case. The Ld. CIT(A) has wrongly interpreted section 201 (3) wherein it is clearly provided that the order for a F.Y. commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March,2011 . 3. On the facts and in the circumstances of the case as well as in law, the Ld. CIT (A) has erroneously reached the conclusion that the since the order of Hon'ble Delhi High Court in the case of CIT vs. Hut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings was barred by limitation in view of the decision of the Hon'ble jurisdictional High Court in CIT Vs. NHK Japan Broadcasting Corporation, 172 Taxman 230. However, the AO did not accept the submissions of the assessee on the ground that the aforesaid decision had not been accepted by the Department and SLP was pending before the Hon'ble Apex Court. While referring to amended provisions of section 201 by the Finance Act, 2009 with effect from 1.4.2010, the AO pointed out that order u/s 201(1) of the Act can be passed at any time on or before the 31st day of March, 2011 in respect of financial years expiring before 1st April, 2007. Since the assessee did not deduct tax at source from the salary paid to the aforesaid employees within the prescribed time, the AO treated the assessee company in default in terms of provisions of section 201(1) of the Act and accordingly, raised demand u/s 201(1) and 201(1A) of the Act as detailed hereunder :- Sl.No. Financial Year. T D S deductible [In Rs.] Interest u/s 201(1A)[In Rs.]. 1. 2002-03 55,54,681/- 63,18,450/- 2. 2003-04 58,03,063/- 47,00,481/- 3. 2004-05 27,20,873/- 19,20,644/- 4. On appeal, the ld. CIT (Appeals) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) which was reported in 172 Taxman 230 and secondly, against the Citizen Individual Inhabitant Tax Act, which was a Japanese Law, which was reported in (2007)210CTR(Del)349. The SLP was filed against the second decision which has been decided by the Hon'ble Apex Court as reported in (2009) 225 CTR SC 258. The copy of all these three judgments have been placed in the paper book. On perusal of these judgments, I find that the Hon'ble Delhi High Court judgment given in aforesaid NHK Japan Broadcasting Corporation as reported in 172 (Taxman) 230 on the issue of levy of tax and charging of interest uls 201(1)/201(1A) has become final as no SLP was filed against it. 4.2 Further, on going through the impugned order dated 27.04:2010; I find that the A.O has relied on the newly inserted 'Proviso' to section 201(3) by the Finance Act, 2009 w.e.f. 01.04.2010. According to the A.O, in the light of newly inserted 'Proviso' to section 201(3) of the Income Tax Act, 1961, the order could be passed on or before 31.03.2011 in this case. In this regard, the Ld. AR relying on the Explanatory Circular for Finance (No 2) Act, 2009 for which the copy has been placed as Annexure 7 of paper book, argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.04.2010 for the financial year 2002-03 to 2004-05 relevant to A.Y 2003-04 to 2005-06 are cancelled. " 5. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT (Appeals). The ld. DR while carrying us through the impugned orders invited our attention to the relevant provisions of section 201(3) , introduced by the Finance Act, 2009 with effect from 1.4.2010 and contended that in terms of proviso to section 201(3) of the Act, order for a financial year commencing on or before 1.4.2007 can be passed at any time on or before 31st day of March, 2011. Since proceedings in this case were initiated on 16/11/2009 in consequent of search u/s 132 of the Act, apparently the order passed by the AO was within the limitation and thus, the ld. CIT (Appeals) was not justified in quashing the said order on the ground that the same was barred by limitation. 6. On the other hand, the ld. AR on behalf of the assessee supported the findings of the ld. CIT (Appeals) while contending that no proceedings were pending before the AO as on 1.4.2007 nor the amended provisions , applicable with effect from 1.4.2010,had come in to force on the date of initiation of proceedings . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Finance Act, 2009 with effect from 1.4.2010, the AO concluded that he was competent to pass such orders for the aforesaid financial years at any time on or before 31.3.2011 while the ld. CIT(A),following the decisions of the Hon'ble jurisdictional High Court in NHK Japan Broadcasting Corporation (supra) & . Hutchison Essar Telecom Ltd.(supra) held that the order dated 27.4.2010 passed by the AO was barred by limitation .Indisputably, in none of these decisions, the amended provisions of sec. 201(3) were considered. Moreover, the ld. CIT(A) observed that no SLP was filed in NHK Japan Broadcasting Corporation (supra) and therefore, the ratio of this decision has become final while in the grounds of appeal, the AO mentioned that on SLP filed by the Revenue, the Hon'ble Apex Court have disposed of the SLP while leaving the question of limitation open. Inter alia, the ld. CIT(A) concluded that since in the instant case the proceedings uls 201(1)/201(1A) were not pending as on l.04.2007, the 'Proviso' to section 201(3) was not applicable. Here , we may refer to the amended provisions of section 201(3) introduced by Finance Act, 2009 with effect from 1.4.2010,which read as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employee would not have paid tax on such perquisites, (c) the deductee is a non-resident as it may not be administratively possible to recover the tax from the non-resident. 50.4 Applicability - This amendment has been made applicable with effect from 1st April, 2010 and will accordingly apply in relation to assessment year 2011-12 and subsequent assessment years." 7.2 Before proceeding further, we may have a look at the decision in NHK Japan Broadcasting Corporation (supra) ,where in while relying upon the decision of the Hon'ble Apex Court in Bhatinda District Co-op. Milk Producers Union Ltd. [2007] 9 RC 637; 11 SCC 363. Hon'ble jurisdictional High Court held as under: "14. We are unable to agree with learned counsel for the revenue inasmuch as the decision relied upon by him deals with reasonable time for completing the assessment or for completing the task on hand. 15. In Bharat Steel Tubes Ltd.'s case (supra) the question that arose before the Court (and which has been stated on page 130 of the Report) is whether an order of assessment under section 11(3) of the Punjab General Sales Tax Act, 1948 or section 28(3) of the Haryana General Sales Tax Act, 1973 could now b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er challenge before us, taken the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed. 20. The rationale for this seems to be quite clear - if there is a time-limit for completing the assessment then the time-limit for initiating the proceedings must be the same if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings. 21. We are not inclined to disturb the time-limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the Supreme Court in Bhatinda District Co-op. Mil (P.) Union Ltd.'s case (supra) action must be initiated by the competent authority under the Income-tax Act where no limitation is prescribed as in section 201 of the Act within that period of four years. 22. Learned counsel for the revenue submitted that the Department came to know that the assessee was an assessee in default only in November, 1998 when a survey was conducted and it came to be known only then that when the assessee had not deducted tax at source on the global salary. We are of the opinion that the date of knowledge is not relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Tribunal and, therefore, we answer the question in the affirmative in favour of the assessee and against the revenue and hold thatthe initiation of proceedings under section 201 of the Act against the assessee in respect of the assessment year 1990-91 was barred by limitation having been initiated beyond a reasonable period of time of four years. 7.3 Subsequently, the Hon'ble Apex Court in their common decision dated 20.1.2010 in civil nos.751 to 766 of 2010 & others, including on an SLP filed by the Revenue in NHK Japan Broadcasting Corporation, concluded as under: "The following substantial question of law arises for consideration in this batch of civil appeals: "Whether the Income Tax Appellate Tribunal was correct in law in holding that the orders passed under Sections 201(1) and 201(1A) of the Income Tax Act, 1961 are invalid and barred by time having been passed beyond a reasonable period." Having heard learned counsel on both sides, we are of the view that, on the facts and circumstances of these cases, the question on the point of limitation formulated by the Income Tax Appellate Tribunal in the present cases need not be gone into for the simple reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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