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Issues: Whether the limitation under Section 201(3) of the Income-tax Act, 1961 for issuing an order under Section 201(1) is to be computed on a quarter-wise basis (linked to quarterly TDS statement filings) or on an annual/cumulative basis.
Analysis: Section 201(3) prescribes that no order under Section 201(1) shall be made after two years from the end of the financial year in which the statement referred to in Section 200 has been filed. Rule 31A requires TDS statements to be filed quarterly with distinct due dates for each quarter. The filing of each quarterly TDS statement therefore constitutes the statutory event from which the two-year limitation period prescribed by Section 201(3) commences for that particular quarter. The statutory language links commencement of limitation to the financial year in which the relevant statement is filed and does not prescribe an annual cumulative computation. Treating each quarter as a separate compliance period aligns with the scheme of the Act and Rules and with the requirement that limitation provisions in fiscal statutes be strictly construed.
Conclusion: The limitation under Section 201(3) is to be computed quarter-wise linked to filing of the respective quarterly TDS statements under Rule 31A; the orders in respect of the first three quarters are time-barred and deleted, while the order in respect of the fourth quarter is within limitation. The decision is in favour of the assessee.
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