TaxTMI 
TaxTMI 
2018 (9) TMI 1234
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....at for the F.Y. 2007-08 to 2014-14 relevant to assessment year 2008-09 to 2015-16, the assessee firm was liable to collect tax at source (TCS) @ 5% on sale of Tendu leaves as per provisions of Section 206C(1) of the Act but it has defaulted for non-collecting of TCS. Accordingly, the Assessing Officer proceeded to pass order U/s 206C(6)/206C(7) of the Act on 30/03/2016 whereby the assessee was held as "assessee in default" within the meaning of Section 206C(6) read with Section 206C(7) of the Act for non-collection of tax of Rs. 98,84,195/- including interest. 3. The assessee challenged the order passed by the Assessing Officer U/s 206C(6)/206C(7) of the Act before the ld. CIT(A) and also raised objection against the validity of the said order on the ground of limitation. The ld. CIT(A) has rejected the ground of time barred order passed by the Assessing Officer, however, granted part relief to the assessee to the extent of return of income filed by the purchaser of tendu leave, for which they issued form No. 27BA which were produced before the ld. CIT(A). Hence, both the assessee as well as the revenue are aggrieved by the impugned order of the ld. CIT(A) and filed these cro....
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....s of the case in raising demand of interest in relation to the alleged non Collection of Tax at Source (TCS) u/s 206C(7) of the Act, which is completely contrary to the provisions of law and facts hence, kindly be quashed and deleted in full. 4. The Id. CIT(A)-lll, Jaipur further erred in law as well as on the facts of the case in not considering that the present case fall u/s 206C(1A) r/w Rule 37C in as much as the entire subjected sales was made to the ultimate consumers for use in manufacturing, processing or producing and hence the provision of S.206C was not applicable. 5. The appellant prays your honour indulgence to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing." 4. In the ground Nos. 1 and 2 of the assessee's appeal, a legal issue of validity of order passed by the Assessing Officer U/s 206C(6)/206C(7) of the Act has been raised. This issue being the order passed by the Assessing Officer is barred by limitation is purely a legal issue and goes to the root of the matter, therefore, we will first take up grounds NO. 1 and 2 of the assessee's appeal for consideration and adjudication. The ld AR of the assessee ....
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....ion U/s 201 shall be four years and the order passed beyond time limit of four years is time barred. The ld AR has then relied upon the decision of Hon'ble Gujarat High Court in the case of CIT (TDS) Vs. Anagram Wellington Assets Management Co. Ltd. (2016) 389 ITR 654 (Guj) and submitted that the Hon'ble Gujarat High Court has also concurred with the view of the Hon'ble Delhi High Court and held that the Assessing Officer cannot be given unrestricted powers which can be exercised beyond reasonable period of four years. Hence, the ld AR has submitted that on the similar analogy, the order passed by the Assessing Officer dated 30/3/2016 is beyond the period of four years from the end of the financial year in which the transaction was carried out. Hence, the ld AR has submitted that the order passed by the Assessing Officer U/s 206C(6)/206C(7) of the Act is invalid being barred by limitation and liable to be quashed. 5. On the other hand, the ld DR has submitted that when no limitation is provided in the statute for initiation of action and passing the order U/s 206C of the Act then there is no bar on the jurisdiction and power of the Assessing Officer to pass the order. Further th....
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....section (3) was inserted to Section 201 of the Act and limitation has been provided for passing the order U/s 201(1) and 201(1A) of the Act. When this issue of limitation for passing the order U/s 201(1)/201(1A) of the Act came before the Courts, it was held that the Assessing Officer cannot be given unfettered powers which can be exercises even beyond a reasonable time because of non-providing the limitation in the statute. Hence, the courts have taken a consistent view that reasonable time period for passing the order U/s 201(1)/201(1A) of the Act would be four years. The Hon'ble Delhi High Court in the case of CIT Vs. NHK Japan Broadcasting (supra) has considered and decided this issue in para 18 to 25 as under: "18. Insofar as the Income-tax Act is concerned, our attention has been drawn to section 153(1)(a) thereof which prescribes the time-limit for completing the assessment, which is two years from the end of the assessment year in which the income was first assessable. It is well-known that the assessment year follows the previous year and, therefore, the time-limit would be three years from the end of the financial year. This seems to be a reasonable period as acc....
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....with learned counsel for the revenue in this regard. 24. It appears that the assessee paid the tax voluntarily as well as interest thereon but the acceptance of the liability by the assessee would not by itself extend the period of limitation nor would it extend the reasonable time that is postulated by the scheme of the Income-tax Act. The assessee cannot be put, in a sense, in a worse position merely because it has admitted its liability. If the assessee had denied its liability the question that would have arisen would be whether the revenue could have initiated proceedings after a lapse of four years. The answer to that would of course have to be in the negative in view of the reason that we have already indicated above. The fact that the assessee agreed to pay the tax voluntarily cannot put the assessee in a situation worse than if it had contested its liability. 25. We may also note 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. Of course, a duty is cast upon the deductor, that is the person who is making the payment to the deductee, to deduct tax at source but if he fails to do s....
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....14 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014. Under the circumstances, the impugned notices / summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted. 16. In view of the above and for the reasons stated above, all these petitions succeed. The impugned notices / summonses are held to be invalid and the same are hereby quashed and set aside and the respondents herein are hereby restrained by writ of prohibition from proceedings with the impugned notices / summonses which are, as such, hereby quashed and set aside. Rule is made absolute....
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....nataka High Court has dealt this issue in para 23 to 27 as under: "23. In the memorandum explaining the provisions in the Finance (II) Bill, 2009, it was clearly stated that 'to provide sufficient time for pending cases, it is proposed to provide that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011. As such, the memorandum itself clarified that the proviso is for pending cases, and not decided cases. The Circular dated 3.6.2010, issued by the CBDT, also clearly specifies that the said proviso would be for pending cases and not decided cases. With regard to the applicability of the amendment made by the Finance Act, 2009 with effect from 1.4.2010, it was also clarified to be from the assessment year 2011-12 and subsequent years. As such, it is clear that proviso to sub-section (3) did not legalize the cases where action had already been taken, but was meant for only such cases which were pending at the time of insertion of sub-section (3) to Section 201 of the Act. 24. Thus, for the reasons given above, we find that the Tribunal was correct in holding that the order passed under Sec....
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.... is only of compensatory nature. It cannot be a means to penalise the payer. The provision for payment of interest would arise from the date when it ought to have been deducted i.e., from the date of payment by the payer to the Recipient. The liability to pay interest would end on the date when such tax has been deposited by the Recipient, either by way of advance tax or along with the return of income. Interest, herein, being compensatory in nature, cannot be thus charged for the period beyond the date when such tax has already been deposited by the Recipient. If the Revenue is permitted to charge interest even after the Recipient has deposited the tax, the same would amount to undue enrichment of the Revenue, as even after receiving the tax, it would continue to get interest on the amount which has already been paid or deposited with it. As such, the liability of the assessee herein would not be for payment of interest after the period of deposit of tax by the Recipient." Thus, a consistent view has been taken by the various Hon'ble High Courts on this issue that when no limitation is provided in the statute then a period of four years is considered as reasonable for passi....