Reasonable period for Section 201 action bars delayed tax deduction proceedings where notice is issued after an excessive lapse of time.

Proceedings for demand and levy of interest under Section 201 of the Income-tax Act, 1961 must be initiated within a reasonable period even though the provision prescribes no express limitation. The HC applied the statutory scheme and held that, like other time-bound actions under the Act, action for failure to deduct tax at source cannot be left open-ended. On the facts, a notice issued nearly seven years after the relevant assessment years was beyond a reasonable time, particularly where commercial and financial positions may change over time. The levy under Sections 201 and 201(1A) was therefore time-barred, and the Tribunal's view was upheld.

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Issues: Whether proceedings for demand and levy of interest under Section 201 of the Income-tax Act, 1961 could be initiated after an unreasonable delay in the absence of an express limitation period.

Analysis: The statutory scheme was read as requiring proceedings under Section 201 to be taken within a reasonable period, even though the provision itself does not prescribe a limitation. The Court noted that the Act fixes limitation for several important actions, including proceedings for escaped assessment and suo motu revision, and held that a similar restraint applies to action for failure to deduct tax at source. On the facts, notice was issued nearly seven years after the relevant assessment years, which was held to be beyond a reasonable time, especially where commercial arrangements and financial positions may change over time.

Conclusion: The levy under Section 201 and Section 201(1A) after such delay was held to be time-barred by the standard of reasonable period, and the questions were answered against the Revenue and in favour of the assessee.

Final Conclusion: The appeal failed and the Tribunal's view that action under Section 201 could not be initiated after an unreasonable lapse of time was upheld.

Ratio Decidendi: Even where no express limitation is prescribed, proceedings for recovery or levy under Section 201 of the Income-tax Act, 1961 must be initiated within a reasonable period.

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