Reasonable time limitation for section 201 proceedings bars delayed tax recovery action beyond the accepted outer limit.

Proceedings under sections 201 and 201A of the Income-tax Act must be initiated within a reasonable time, even though no express limitation period is prescribed. The Delhi High Court applied the earlier principle that four years from the end of the relevant financial year may be treated as the outer limit, drawing support from the time structure in section 153(1)(a). On the facts, the action had been commenced beyond both the three-year period from the end of the assessment year and the four-year period from the end of the financial year, so the proceedings were barred by time and unsustainable.

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Issues: Whether proceedings under sections 201 and 201(A) of the Income-tax Act, 1961 were initiated within a permissible period of limitation.

Analysis: The Court applied the earlier ruling that, although no express limitation period is prescribed for proceedings under section 201, action must be initiated within a reasonable time. It accepted the period of four years from the end of the relevant financial year as the outer limit, with reference to the time framework reflected in section 153(1)(a) of the Income-tax Act, 1961. On the facts, the proceedings had been started beyond both the three-year period from the end of the assessment year and the four-year period from the end of the financial year.

Conclusion: The proceedings were barred by time and were not sustainable.

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