TaxTMI 
TaxTMI 
2016 (11) TMI 650
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.... order dated 01/06/2016 (ITA No.1810/Mum/2012), considered identical issue and following the decision from Hon'ble jurisdictional High Court in the case of DIT vs Mahindra & Mahindra Ltd. (2014) 365 ITR 560 (Bom.) and the decision of the Special Bench of the Tribunal in the same case decided in favour of the assessee. 2.1. On the other hand, the ld. DR, Shri Rajesh Kumar Yadav, defended the addition made by the Assessing Officer and confirmed by the ld. Commissioner of Income Tax (Appeals) by contending that in the case of Hindustan Times Ltd. Vs UOI (AIR 1999 SC 688)(SC), held that where the legislature has made no provision for limitation, it could not be open to the Court to introduce such limitation on the grounds of fairness or justice. Reliance was also placed upon the decision from Hon'ble Punjab & Haryana High Court in the case of CIT (TDS) Chandigarh vs HMT Ltd. It was submitted that no limit is prescribed in the Income Tax Act, 1961 for an order to be passed u/s 201(1) and 201(1A) of the Act. 2.2. We have considered the rival submission and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion from t....
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....e Bombay High Court rendered in the case of DIT Vs. Mahindra and Mahindra Ltd (2014)(365 ITR 560). The above said decision has been rendered by the Hon'ble High Court on the appeal filed by the revenue challenging the decision rendered by the Special bench. The Special bench of Tribunal had rendered its decision on the issue of limitation period as under:- (a) The proceedings u/s 201(1) can be initiated in the extended period of six years from the end of the relevant assessment year if the income by virtue of sum paid without deduction of tax at source by the payer chargeable to tax in the hands of the payee is equal to or more than one lakh rupees. If on the other had such amount is less than Rs. 1 lakh, then the lower period of four years as prescribed u/s 149(1)(a) from the end of the relevant assessment year available for initiation of proceedings u/s 201(1). (b) The completion of proceedings u/s 201(1), that is the passing of the order under this sub-section, has to be within one year from the end of the financial year in which proceedings u/s 201(1) were initiated. The same time limits for initiation and passing of orders will be valid for the passing of order under sect....
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....r the order passed by the Assessing Officer is barred by limitation. So far as, passing of impugned orders is concerned, we have summarized the same in preceding paras of the order, which shows that the orders have been passed after expiry of eight years from the date of issuing of notice. Admittedly, the Income Tax Act does not prescribed any time limit for imitation of proceedings, u/s 201(1) and also for passing order after initiation of proceedings. It is noted that the Special Bench in the case of Mahindra & Mahindra took a decision on the issue of period of limitations and the Department challenged the said decision before the Hon'ble High Court, wherein, (DIT vs Mahindra & Mahindra Ltd. (2014) 365 ITR 560) (Bom.) it was held as under:- "6 It appears that after the Appeals were filed an additional ground was raised on 18.05.2006 which reads as under: "Whether on the facts and circumstances of the case and in law, the order passed by the Assessing Officer under Section 195 of the Income Tax Act, 1961 is void abinitio being barred by limitation?" 7 It appears that the Revenue made an application on 30.08.2006 before the learned President of Income Tax Appellate Tribunal f....
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....1(1) or (1A) is the same as prescribed u/s 149 i.e. four years or six years from the end of the relevant assessment year, as the case may be depending upon the amount of income in respect of which the person responsible is sought to be treated as Assessee in default. (x) The maximum time limit for passing the order u/s 201(1) or (1A) is the same as prescribed u/s 153(2) being one year from the end of the financial year in which proceedings u/s 201(1) are initiated. (xi) Any order passed under Section 201(1) or (1A) cannot be held as barred by limitation if it is not passed within four years from the end of the relevant financial year." 9 It is the correctness of these findings which is an issue before us. 10 Mr.Suresh Kumar, learned counsel appearing in support of this Appeal tendered the reframed questions of law and termed them as substantial. He submits that in relation to questions (1) and (2) the Assessee has challenged the order of the Tribunal in Income Tax Appeal No.1968/2009 filed before this Court. That Appeal has been admitted particularly because it raises the issue of applicability of Section 201(1) and Section 201(1A) of the Income Tax Act, 1961. He submits that s....
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....ble time depends on the facts and circumstances in each case. All that the Tribunal has held is that there is a reasonable time for invocation and exercise of the powers. That finding is in no way vitiated by any error of law apparent on the face of record or perversity. This Appeal, therefore, deserves to be dismissed. 14 After perusing the memo of Appeal and annexures thereto including the impugned order we are of the view that this Appeal can be said to be raising essentially only two grounds which read as under: (1) Whether the Tribunal was justified in prescribing the time limit for initiation and completion of proceedings under sub sections (1) and (1A) of Section 201 of the Income Tax Act, 1961 in the absence of any time limit provided under the said Act? (2) Whether the Tribunal was justified in prescribing the time limit statutorily provided for initiation and completion of reassessment proceedings under Section 147 of the Income Tax Act, 1961 for the purposes of subsections (1) and (1A) of Section 201 of the said Act? 15 Upon perusal of the order impugned in this Appeal we are inclined to agree with Mr.Mistry. The bare and essential facts have already been noted by us....
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....assing an order does not arise. That question is subsequent to the aspect of jurisdiction. If the Assessing Officer has jurisdiction to pass an order under Section 201(1) only, then, it can be decided whether such an order passed is within the period of limitation or not. If there is no lawful jurisdiction for proceeding under Section 201(1), there cannot be any question of examining the limitation. The Tribunal proceeded on the footing that there is certain liability to deduct tax at source on the payments made to non residents and the Assessee has failed to discharge his duty. Thereafter, the Tribunal examined as to whether Section 201(1) applies to the case of non deduction of tax at source and concluded that there is no substance in the contentions of the Assessee's representative. It held that Section 201 refers to not only the person deducting and failing to deposit tax with the Government, but also encompasses the person failing to deduct tax at source. We do not bother ourselves with this conclusion and for dealing with the only contention raised before us. 19 From paragraph 14.1 onwards of the order under challenge the Tribunal dealt with the issue as to whether any t....
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....point of time. It is naturally so for the reason that time is the core of every action under law. If the legislature is silent in prescribing a particular time limit then the action can be taken within a reasonable time. The Ld. D.R., during the course of subsequent arguments, was fair enough to concede that the time limit may be specified, but requested that it should not be kept rigid at four years as has been held in the case of Raymond Woolen Mills Ltd. Vs. ITO [(1996) 57 ITD 536 (Bom.)]. Now the next question is that what can be the reasonable period for action u/s 201(1). There cannot be a particular time limit say two years or five years or ten years, which can be described as reasonable for all the actions under the Act, when no time limit is prescribed. The reasonable time for taking action under a particular section largely depends on host of factors, inter alia, the nature of proceedings, the character of the order etc.. In order to determine the reasonable time for taking action u/s 201, it is important to have a look at such necessary factors." 22 Thereafter, the Tribunal dealt with the nature of the proceedings under Section 201(1) and type of the order under Section....
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....hen such amount of tax will be incapable of adjustment against tax liability of the payee and would require return to such person who has been treated as assessee in default. Thus both the initiation of proceedings u/s 201(1) as well as the completion of such proceedings by passing order have to be prior to the time limit within which the tax can be determined in the hands of the payee. It cannot be beyond such period. There may be different situations in the assessment of the payee. If the payee has included the amount received from payer in his total income but the tax has not been paid in full or part then the payer can be treated as assessee in default to the extent of the non payment of tax on the sum paid to him provided the tax is not recovered from the payee. If the payee has furnished the return of income without disclosing the sum paid by the payer on which tax was deductible as per the provisions of the Act then the tax deductible at source can be recovered from the payer by treating him as assessee in default if the income has not been assessed in the hands of the payee. Still in another situation where the payee has not at all filed his return of income again the perso....
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.... the completion of assessment, reassessment or recomputation u/s 147. It provides that "no order of assessment, reassessment or recomputation shall be made u/s 147 after the expiry of one year from the end of the financial year in which notice u/s 148 was served". As we have held above that the order u/s 201(1) is akin to assessment and further the assessment includes reassessment, naturally the reasonable time limits for initiation and completion of action u/s 201(1) have to be similar to those available for assessment u/s 147. Accordingly, we hold that proceedings u/s 201(1) can be initiated in the extended period of six years from the end of the relevant assessment year if the income by virtue of sum paid without deduction of tax at source by the payer chargeable to tax in the hands of the payee is equal to or more than one lakh rupee. If on the other hand such amount is less than Rs. 1 lakh then the lower period of four years as prescribed u/s 149(1) (a) from the end of the relevant assessment year is available for initiation of proceedings u/s 201(1). Going by the same logic and taking assistance from section 153(2), the completion of proceedings u/s 201(1), that is the passin....
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....8. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors." 28 Then, again in the case of Santoshkumar Shivgonda Patil and others v/s Balasaheb Tukaram Shevale and others reported in (2009) 9 SCC 352, the Honourable Supreme Court followed the ratio in the judgments of Patel Raghav Natha (supra) and the State of Punjab v/s Bhatinda District Cooperative Milk Producers' Union (supra) and reiterated the principle as referred above. 29 The same view appears to have been taken earlier also in the case of the Government of India v/s Citadel Fine Pharmaceuticals and others reported in 1990 (Vol.184) ITR 467 (SC). 30 Our attention has also been invited to two judgments of the Honourable Delhi High Court which are on the same principle and as to whether in the absence of any time limit the proceedings under Sections 201 and 201(1A) of the Income Tax Act, 1961 could be initiated at any Income Tax v/s NHK Japan Broadcasting Corporation reported in (2....
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....d and that would depend upon the facts of each case. Considering the facts of the case, the Supreme Court gave a direction to the assessing authority to complete all the pending assessments within a period of four months from the date of delivery of the judgment. Insofar as Bhatinda District Coop. Milk Producers Union Ltd. [2007] 9 RC 637 : 11 SCC 363 is concerned, the question that arose before the Supreme Court was regarding initiation of proceedings by exercise of jurisdiction by the statutory authority. The Supreme Court held that exercise of jurisdiction must be within a reasonable period of time and considering the provisions of the Punjab General SalesTax Act, 1948, it was held that a reasonable period of time for initiating proceedings would be five years. There is a qualitative difference between Bharat Steel Tubes Ltd. [1988] 70 STC 122 (SC) and Bhatinda District Coop. Milk Producers Union Ltd. (2007) 9 RC 637 : 11 SCC 363. In the former case, the question pertained to completion of proceedings, while in the latter case is pertained to initiation of proceedings. We are concerned with initiation of proceedings. Insofar as the IncomeTax Act is concerned, our attention ha....
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....d that Article 137 of the Limitation Act, 1963 has not been specifically made applicable to the proceedings under the Industrial Disputes Act, 1947 seeking reference of Industrial Disputes to the Labour Court. Therefore, neither this provision nor any principle incorporated therein is applicable to the proceedings under the Industrial Disputes Act, 1947 and that is how the Honourable Supreme Court proceeded to analyze the ambit and scope of the proceedings under the special provision, namely, a Reference by the concerned workman under the Industrial Disputes Act, 1947. The judgment of the Honourable Supreme Court deals with a case where any provision in the nature of limitation or outer limit is prescribed for reference under the Industrial Disputes Act, 1947. The Honourable Supreme Court was not dealing with a case of exercise of powers enabling reopening of Assessment under the Income Tax Act, 1961 or any Taxing Statute. In fact, it was not deciding a case concerned with invoking of any suomotu powers or reopening of assessment finalized under the Tax Law. Therefore, this judgment is clearly distinguishable on facts. 33 If one carefully peruses Section 201(1) and 201(1A) of the ....
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....ax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub section (3) of section 200:] [Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to subsection (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.] (2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub section (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 subsection (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 - (i) two years fr....
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....claims in that regard. Therefore, we do not express any opinion on the rival contentions particularly as to whether there is any liability in terms of Section 201 of the Income Tax Act, 1961 in the present case. 38 As a result of the above discussion we are of the view that the present Appeal does not raise any substantial question of law. It is, accordingly, dismissed. There will be no order as to costs." 2.4. We note that while coming to a particular conclusion, after considering various judicial pronouncement concluded as under:- "Even though section 201 does not prescribe any limitation period for Assessee being declared as an Assessee in Default, yet Revenue is required to exercise the powers in that regard within a reasonable time, and thus tribunal was justified in prescribing time limit statutorily provided for initiation and completion of reassessment proceedings under Section 147 for purposes of subsections (1) and (1A) of Section 201." This is exactly the issue before us. The Hon'ble Court also considered that no time limit has been specified in the Act but still the order must be passed within a reasonable time and thus passing of order has to be within one yea....