2010 (4) TMI 45 - HC - Income Tax

Proceedings under Sections 201/201A are time-barred if instituted after three years from assessment year or four years from financial year

HC held that proceedings under sections 201/201A must be instituted within three years from the end of the assessment year or within four years from the ... Period of limitation - proceeding u/s 201 and 201(1) were were initiated after the period of four years from end of the Financial Year in question had elapsed. - HELD THAT:- We have examined the impugned decision as well as the decision of this Court in the case of NHK Japan Broadcasting Corporation [2008 (4) TMI 182 - DELHI HIGH COURT], wherein it has been clearly indicated that although no specific period of limitation has been prescribed or indicated under Section 201 and 201(A), a reasonable time limit has to be adopted. In that context, it examined the provisions of Section 153(1)(a). Thus, it is clear that the proceedings under Section 201/ 201(A) of the Income Tax Act, 1961 can be initiated only within three years from the end of the Assessment Year or within four years from the end of the relevant Financial Year. In the present case, we are concerned with the Financial Year 2001-02 or the Assessment Year 2002-03. The proceedings under Sections 201/ 201(A) were admittedly initiated beyond the period of three years from the end of the relevant Assessment Year as also beyond the period of four years from the end of the Financial Year. Consequently, the Tribunal has correctly concluded that the proceedings were beyond time. No substantial question of law arises for our consideration. The appeals are dismissed. Issues:- Appeal arising from a common order passed by the Income Tax Appellate Tribunal.- Preliminary issue of limitation raised by the Respondent/Assessee.- Interpretation of time limit for initiating proceedings under Sections 201 and 201(A) of the Income Tax Act, 1961.- Applicability of the decision in the case of CIT Vs. NHK Japan Broadcasting Corporation.- Determination of the time limit for initiating proceedings under Section 201/201(A).Analysis:The judgment delivered by the High Court involved appeals arising from a common order passed by the Income Tax Appellate Tribunal. The Respondent/Assessee raised a preliminary issue of limitation, arguing that the proceedings under Sections 201 and 201(A) were initiated after the prescribed time limit. The Tribunal, following the decision in the case of CIT Vs. NHK Japan Broadcasting Corporation, agreed with the Assessee's contention, holding the proceedings to be time-barred. The Tribunal allowed the cross objections and dismissed the Revenue's appeal, leading to the Revenue filing the present appeals before the High Court.The High Court examined the impugned decision and the precedent set by the NHK Japan Broadcasting Corporation case. It emphasized the need for adopting a reasonable time limit for initiating proceedings under Section 201/201(A) of the Income Tax Act. The Court referred to Section 153(1)(a) of the Act, which prescribes a time limit of three years from the end of the relevant Financial Year for completing assessment proceedings. However, it noted that the Tribunal had considered four years as a reasonable period for initiating action in cases where no specific limitation is prescribed.Based on the above analysis, the High Court concluded that proceedings under Section 201/201(A) must be initiated within three years from the end of the Assessment Year or within four years from the end of the relevant Financial Year. In the case at hand, concerning the Financial Year 2001-02 or Assessment Year 2002-03, the proceedings were initiated beyond both the three-year and four-year time limits. Consequently, the Tribunal's decision that the proceedings were time-barred was upheld by the High Court, leading to the dismissal of the appeals. The Court determined that no substantial question of law arose for consideration in this matter, thus bringing the case to a close.