Limitation for section 201 proceedings bars delayed TDS default action after the reasonable period applied by ITAT.

Section 201(1) proceedings for alleged failure to deduct tax at source must be initiated within a reasonable period, and the Tribunal applied a four-year outer limit from the date of default. As the impugned order was passed beyond that period, the action was held time-barred, invalid, and not sustainable in law. The assessee succeeded.

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Issues: Whether the order passed under section 201(1) of the Income-tax Act, 1961 for alleged non-deduction of tax at source was barred by limitation and liable to be set aside.

Analysis: The Tribunal applied the jurisdictional High Court's principle that proceedings under section 201 are drastic in nature and must be initiated within a reasonable period. It treated four years from the date of default as the governing outer limit for initiating action under section 201(1). Since the impugned order related to assessment year 2015-16 but was passed on 21.02.2025, the Tribunal held that the action had been taken beyond the permissible period.

Conclusion: The order under section 201(1) was held to be time-barred, invalid, and not sustainable in law, and the assessee succeeded.

Ratio Decidendi: Proceedings under section 201(1) of the Income-tax Act, 1961 must be initiated within four years of the default, failing which the action is barred by limitation.

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