2023 (5) TMI 694 - AT - Income Tax

Delhi High Court restores appeal on TDS orders, holds demands barred by limitation.

Green Line (Punjab), Green Line (Delhi), Green Line Earth Ltd. Versus ITO (TDS), Ward-50 (5), New Delhi.

Green Line (Punjab), Green Line (Delhi), Green Line Earth Ltd. Versus ITO (TDS), Ward-50 (5), New Delhi. - TMI Issues Involved:1. Delay in filing the appeal.2. Imposition of interest and recovery of TDS.3. Limitation period for passing orders under section 201(1)/201(1A) of the Income-tax Act, 1961.Summary:Issue 1: Delay in Filing the AppealThe Tribunal initially dismissed the appeal due to an 8½ month delay in filing by the assessee. However, the Hon'ble Delhi High Court condoned the delay and restored the appeal to the Tribunal for adjudication on merits.Issue 2: Imposition of Interest and Recovery of TDSThe primary issue was whether the CIT(A) was justified in imposing interest and recovering TDS from the assessee. The Tribunal noted that the TDS proceedings were initiated following a survey operation on 17.03.2002, which revealed defaults under sections 194C and 194H of the Act. The TDS Officer had treated the assessee as an 'assessee in default' and levied interest for delayed remittance.Issue 3: Limitation Period for Passing OrdersThe interconnected issue was whether the orders passed under section 201(1)/201(1A) were barred by limitation. The Tribunal examined the provisions of section 201(3) as amended by the Finance Act, 2012, which stipulated that orders for financial years commencing on or before 01.04.2007 could be passed up to 31.03.2011. For the assessment year 2002-03, the order passed on 29.03.2011 was within this period.The Tribunal referred to the decision of the Hon'ble Delhi High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, which held that proceedings must be initiated within a reasonable period, typically four years, unless specified otherwise. The Court had established that the amendment to section 201(3) did not retrospectively extend the limitation period for earlier years.Given this interpretation, the Tribunal concluded that the orders passed by the TDS Officer were barred by limitation. Consequently, the demands raised were quashed.Conclusion:The Tribunal allowed all the appeals, holding that the orders passed by the TDS Officer under section 201(1)/201(1A) were barred by limitation. Therefore, the demands raised were quashed, and other grounds on merits were not adjudicated as they became academic in nature.Order Pronounced:The order was pronounced in the open court on 10.05.2023.