2019 (5) TMI 336 - AT - Income Tax

Appeals Dismissed Due to Limitation Issue

The Tribunal dismissed both the Revenue's and the assessee's appeals, upholding the Commissioner (Appeals)'s decision that the order under section 201(1) ... Period of limitation for order u/s 201(1) and 201(1A) - tds u/s 195 not deducted for remitting the amount to the Mauritius company - order barred by limitation - HELD THAT:- The present appeal, we are on the issue of validity of the order passed under section 201(1) and 201(1A) of the Act. Undisputedly, the financial year involved in the present appeal is F.Y. 2006–07. AO has issued the show cause notice u/s 201(1) and 201(1A) on 28th March 2013, and passed the order under the said provision on 27th March 2015 - the issue has now been fairly well settled by a plethora of decisions including the decisions of the Hon'ble Jurisdictional High Court as cited by the learned Authorised Representative. While considering identical issue in Tech Mahindra Ltd. [2018 (6) TMI 1602 - ITAT MUMBAI] the Co–ordinate Bench has held that the order passed under section 201(1) and 201(1A) of the Act after expiry of six years from the end of the financial in which payment was made is barred by limitation Undisputedly, the order passed u/s 201(1) and 201(1A) of the Act on 27th March 2015 is after expiry of six years from the end of the relevant financial year i.e., F.Y. 2005–06. That being the case, even as per the provisions of section 201(3) the order passed by the AO u/s 201(1) treating the assessee as assessee in default is grossly barred by limitation. - Decided in favour of assessee. Issues Involved:1. Whether the order passed under section 201(1) and 201(1A) of the Income-tax Act, 1961, is barred by limitation.Issue-Wise Detailed Analysis:1. Limitation of Order under Section 201(1) and 201(1A):The primary issue in the appeal was whether the order passed by the Assessing Officer under section 201(1) and 201(1A) of the Income-tax Act, 1961, was barred by limitation. The assessee had purchased shares from a Mauritius-based company and did not deduct tax at source based on a certificate issued under section 195(2) of the Act. The Assessing Officer later initiated proceedings under section 201 of the Act, alleging that the certificate was obtained by misrepresentation of facts. The order under section 201(1) and 201(1A) was passed on 27th March 2015, demanding Rs. 47,50,17,460 and levying interest of Rs. 54,62,70,079.The assessee contended before the Commissioner (Appeals) that the order was barred by limitation as it was passed after six years from the end of the relevant financial year. The Commissioner (Appeals) agreed, citing judicial precedents, including the decision of the Hon'ble Jurisdictional High Court in DIT v/s Mahindra & Mahindra Ltd., [2014] 365 ITR 560 (Bom.), which held that an order under section 201(1) and 201(1A) must be passed within six years from the end of the financial year.The Revenue argued that there was no prescribed limitation under section 201 of the Act and that the Assessing Officer was justified in raising the demand. However, the Tribunal noted that even in the absence of a prescribed limitation, orders must be passed within a reasonable period, typically six years, as established by various court decisions.The Tribunal referenced the case of Tech Mahindra Ltd. v/s ITO, [2018] 96 taxmann.com 357 (Mum.), where it was held that orders passed under section 201(1) and 201(1A) after six years from the end of the financial year are barred by limitation. The Tribunal also cited other relevant decisions, including CIT v/s NHK Japan Broadcasting Corp., [2008] 305 ITR 137 (Del.), and CIT v/s Hutchison Essar Telecome Ltd., [2010] 323 ITR 230 (Del.), which supported this view.The Tribunal concluded that the order passed by the Assessing Officer on 27th March 2015, for the financial year 2005-06, was indeed barred by limitation as it was beyond the six-year period. Therefore, the order was deemed void-ab-initio, and the Tribunal upheld the Commissioner (Appeals)'s decision to quash the order.2. Merits of the Case:Since the Commissioner (Appeals) had quashed the assessment order on the grounds of limitation, the issues on merits were not adjudicated. The Tribunal noted that normally, such issues would be remanded to the Commissioner (Appeals) for adjudication. However, given the decision on the limitation issue, the merits of the case became academic and did not require further adjudication.Conclusion:Both the Revenue's appeal and the assessee's appeal were dismissed. The Tribunal's decision reaffirmed that the order under section 201(1) and 201(1A) of the Income-tax Act, 1961, was barred by limitation and thus invalid. The merits of the case were not addressed due to the decision on the limitation issue.