TaxTMI 
TaxTMI 
2016 (8) TMI 964
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....eals. It was noticed by the Assessing Officer that assessee had paid rent of Rs. 39,43,200/- to M/s.Anagram Finance Co. Ltd. for MD's accommodation during F.Y.1996-97 and not deducted tax at source of this rent payment. According to section 194-I, the tax is deductible from payment by way of rent, if such payment to the payee during the year is likely to be Rs. 1,20,000/- or more. The Assessing Officer noticed that the assessee failed to deduct tax from rent payment of Rs. 39,43,200/- which assessee had not deducted. Accordingly, the Assessing Officer passed order u/s. 201 & 201 (1A) and raised total demand of Rs. 18,15,843/- on 22.3.2006. 2.1 The assessee preferred an appeal before the CIT (A)-X, Ahmedabad against order u/s. 201 (1) & 201 (1A) of the I.T.Act, 1961. The Ld.CIT (A) had observed that the order passed by the Assessing Officer is beyond the limitation period of four years from the end of the Financial Year of Assessment Year 1997-98. The CIT (A) relied the decisions of various Tribunals and deleted the demand raised by the Assessing Officer u/s.201 (1) and 201 (1A) of the I.T.Act. 2.2 The department preferred an appeal before the Appellate Tribunal and the Tr....
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....g any limitation for passing the order under sections 201(1) and 201(1A) of the Act. According to the learned counsel, in view of the apex court judgment in Hindustan Times Ltd. v. Union of India, AIR 1998 SC 688, where no limitation is prescribed, the ru1e that power shou1d be exercised within reasonable time is not applicable in the to facts of the present case. Reference was also made to the judgment of of the Kerala High Court in CIT v. Trichur Cooperative Bank Ltd. [2004] 266, ITR 574 (Ker). It was urged that section 231 of the Act was omitted from April 1, 1989, and there no limitation prescribed for passing and order under section 201 (1) and 201(1A) of the Act which are in the nature of effecting recovery of taxes from the assessee in default. 8. On the other hand, learned counsel for the assessee supported the order passed by the Tribunal and reiterated the submissions made before the Tribunal. 9. We find considerable force in the submission of learned counsel for the Revenue. In Hindustan Times Ltd.'s case AIR 1998 SC 688, the employer had defaulted in making the payment of provident fund contributions. Notice was issued by the Department under the Emplo....
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....as no application to Labour Courts and, in our view, that principle is equally applicable to recovery by the concerned authority under section 14B. Further in Bombay Gas Co. Ltd. v. Gopal Bhiva [1964] 3 SCR 709 it has been held that in respect of an application under section 33C(2) of the Industrial Disputes Act, 1947, there is no period of limitation. In that context, it was stated that the courts could not imply a period of limitation. It was observed : 'It seems that where the Legislature has made no provision for limitation, it would not be open to the court to introduce any such limitation on the grounds of fairness or justice.' The above decisions have been recently accepted in Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker [1995] 5 SCC 5 (at pages 20-22) to which one of us (Majmudar, J.) was a party while dealing with the applicability of section 29(2) of the Limitation Act, 1963, to courts or tribunals. We may also point out in this connection that several High Courts have rightly taken the view that there is no period of limitation for exercise of the power under section 14B of the Act. 20. It is true that a principle has been laid down in S....
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....rinciples to the facts in hand, it cannot be concluded that the order passed by the Assessing Officer under section 201(1) and 201(1A) of the Act was liable to be annulled on the ground of delay and laches." 4.1 He has also relied upon the decision of the Calcutta High Court in the case of Bhura Exports Ltd. v. Income-Tax Officer reported in [2014] 365 ITR 548 (Cal), wherein it is held as under:- "14. In our opinion, if no period of limitation is prescribed under a statute for taking action under it and at the same time, the Limitation Act does not apply to such a statute, there cannot be any prohibition of the period of limitation for taking under the said statute unless there is any contrary intention expressed in the said statute. 15. In this connection, we may profitably refer to decision of a three-judge-Bench of the Supreme Court in the case of Uttam Namdeo Mahale v. Vithal Deo reported in AIR 1997 SC 2695 where the contention that in the absence of any period of limitation for filing application for execution under a given statute, a reasonable period of limitation should be applied and an application for execution filed after 12 years should not be ente....
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....f incorporation of such a provision in section 260A and that too, with effect from April 1, 2010. So far as the Income-tax Act is concerned, its scope and the nature has been defined by the Supreme Court in the case of Rao Bahadur Ravulu Subba Rao v. CIT reported in [1956] 30 ITR 163 (SC) thus (page 173) : "To Sum up, the Indian Income tax Act is a selfcontained Code exhaustive of the matters dealt with therein and its provisions show an intention to depart from the common rule, qua tacit per alium facit per se." 18. Therefore, in applying the provisions contained in section 201 of the Act where the previous bar of limitation was lifted by the amendment and there was no period of limitation fixed for exercising such power at the relevant point of time, no question of invoking a reasonable period of limitation arises. 19. We now propose to deal with the decisions cited by Ms.Roy Chowdhury in this regard. 20. In the case of State of Punjab v. Bhatinda District Co-operative Milk 20 Producers Union Ltd. (supra), a twojudge- Bench of the Supreme Court was dealing with a question as to what should be the period of limitation for taking suo motu action ....
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....come from assessment in future. Therefore, in our opinion, the above Division Bench decision of the Delhi High Court does not reflect the correct position of law." 4.2 In view of above observations of different High Courts, he contended that the view taken by the Tribunal is not correct and the same is required to be reversed. He submitted that so far as proceedings under Section 201 (1) of the Act are concerned, there is no limitation. He submitted that nondeduction of TDS would create a great loss to the exchequer and, therefore, this provision is required to be interpreted in favour of the revenue so that no revenue loss is caused. Accordingly, he prayed to allow present appeals. 5. Mr.B.S.Soparkar, learned counsel for the respondent submitted that relevant Assessment Years for the assessment in question are 1997-1998, 1998-99, 1999-2000 and the proceedings in question are initiated four years after the same. He submitted that in the case of Commissioner of Income Tax v. NHK Japan Broadcasting Corporation reported in [2008] 305 ITR 137 (Delhi), Delhi High Court, which has been followed by all other Courts, Delhi High Court has considered the decision of the Supreme Court i....
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.... bound to deduct tax even on the salary paid in the native country of the employees. The assessee in fact did not dispute its liability in this regard. The question which arose before the Delhi High Court was whether any period of limitation is applicable to proceedings under section 201 and 20l(1A) of the Act? The Delhi High Court noted that under section 191 of the Act, the primary liability to pay tax is on the person whose income it is that is the deductee. A duty is cast upon the person who makes the payment to deduct tax at source but it does not wash away the liability of the person whose liability it is to pay the same. It is still the liability of the earner of the income or the deductee to pay the tax. The liability of the deductor in that sense is vicarious. The Delhi High Court, after referring to a number of judgments including the judgment State of Punjab v. Bhatinda District Cooperative Milk Producers Union Ltd. [2007] 9 RC 637 ; [2007] l l SCC 363, referred to above, came to the conclusion that a period of four years is a reasonable period in which power under section 201 of the Act should be exercised. The court held thus (page l40) : "In so far as the Inc....
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....s under:- "33. If one carefully peruses Section 201 (1) and 201 (1A) of the Income-tax Act, 1961, then, the principle laid down in the Delhi High Court decisions in NHK Japan Broadcasting Corpn. Ltd. and Hutchison Essar Telecom Ltd. (supra) would squarely apply. 34. ........ 35. Once same provisions are invoked in the present case, then, the Hon'ble Delhi High Court, with respect, rightly concluded that though Section 201 does not prescribed any limitation period for the assessee being declared as an Assessee in Default yet the Revenue will have to exercise the powers in that regard within a reasonable time. In such circumstances we are of the view that the Tribunal's order in this case does not suffer from any error of law apparent on the face of record or perversity warranting our interference in appellate jurisdiction. 36. We are also shown the judgment of the Calcutta High Court in the case of Bhura Exports Ltd. v. ITO (TDS) [2012] 202 Taxman 88/ [2011] 13 taxmann.com 161. With respect and for the reasons indicated by us above we cannot agree with the view taken by the Division Bench of the Calcutta High Court. That decision overlooks....
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....rovisions for reassessment under Sections 147 and 148 of the Act would be on a completely different footing, and therefore, would not merit consideration. However, keeping in view the fact that the Tribunal, in various decisions, had taken the view that four years period would be a reasonable period of time to initiate action, the Delhi High Court held that where no limitation was prescribed (as under Section 201 of the Act), reasonable period would be four years. Following such decision of the Delhi High Court, the Tribunal also held that four years period would be a reasonable period for initiating action under Section 201 of the Act. 22. Much reliance was placed by learned counsel for the Revenue on the proviso added to sub-section (3) of Section 201 of the Act, which provides that such order for a financial year commencing on or before 1.4.2007 may be passed at any time on or before 31.3.2011. It is noteworthy that the words used in the said provision are 'may be passed', which means, it relates to something to be done in future, and not what has already been done, in which case, the words ought to have been 'may have been passed', which are not there. ....
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....Court in the case of Vodafone Essar Mobile Services Ltd. v. Union of India reported in [2016] 67 taxmann.com 124 (Delhi) and contended that while considering the provisions of Section 201, it has been held in favour of the assessee that four years' period is reasonable period. 6. We have heard learned counsel appearing on both sides. Before proceeding with the judgment, in view of above submissions, it is clear that there are two views of different High Courts with regard to the question involved in the present appeals. Therefore, it is appropriate to consider the provisions of Section 201 of the Act, which reads as under:- "201. Consequences of failure to deduct or pay:- (1) Where any person, including the principal officer of a company, (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in subsection (IA) of section 192, being an employer does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in d....
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.... after it is deducted. the amount of the tax together with the amount of simple interest thereon referred to in subsection (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in subsection (1 ). (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of- (ii) two years from the end of the financial year in which the statement is tiled in a case where the statement referred to in section 200 has been filed; (ii) six years from the end of the financial year in which payment is made or credit is given, in any other case: Provided that such order for a financial year commencing on or before the 1st day of April 2007 may be passed at any time on or before the 31st day of March. 2011 (4) The provisions of sub-clause (ii) of sub-section (3) of section (ii) and of [Explanation l to section 153 shall, so far as may, apply to the time-limit prescribed in subsection (3). Explanation.- For the purposes of this section, the expression ....