2012 (5) TMI 88 - HC - Income Tax

Revenue's Time-Barred Action Under Section 201 of Income Tax Act

Commissioner of Income Tax (TDS) Chandigarh Versus M/s Satluj Jal Vidyut Nigam Ltd.,

Commissioner of Income Tax (TDS) Chandigarh Versus M/s Satluj Jal Vidyut Nigam Ltd., - TMI Issues:1. Interpretation of time limitation for passing orders under Section 201(1) & 201(1A) of the Income Tax Act, 1961.Analysis:The case involved the interpretation of the time limitation for passing orders under Section 201(1) & 201(1A) of the Income Tax Act, 1961. The appellant raised a substantial question of law regarding the validity of the order passed by the Assessing Officer beyond four years, contending that there was no specific provision for time limitation under these sections. The respondent, engaged in a hydro-electric power project, failed to deduct tax at source before making payments to landowners, leading to notices under Section 201 and 201(1A) being issued in 2003.The Assessing Officer found the assessee liable for penalties and interest for non-compliance. However, the Tribunal held that since the notices were issued beyond the four-year limitation, the claim by the Revenue was time-barred. The Tribunal's decision was supported by a previous judgment by the Delhi High Court, which stated that even in the absence of a specified time limit, the power under Section 201 should be exercised within a reasonable period. The High Court concurred with this reasoning, emphasizing that a period of four years is considered reasonable for initiating such proceedings.Referring to the Supreme Court's decision in a related case, the High Court concluded that the Revenue's action was indeed time-barred, as it did not fall within the reasonable period of four years for initiating proceedings under Section 201. Therefore, the High Court dismissed the appeal, citing that the matter had already been adjudicated upon and that the Revenue's action was outside the prescribed period of limitation under the Act.