TaxTMI 
TaxTMI 
2019 (3) TMI 1453
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....n the assessee's case on 17.09.2003 at office premises situated at 4th Floor, Raheja Corner of Main Avenue and V P Road, Santacruz (West), Mumbai. During the course of survey, it was noticed that the assessee company has failed to deduct tax at source u/s 194C of the Act on the expenses claimed by it. Accordingly, a show cause notice was issued and served on the assessee on 24.09.2004 and the assessee was asked to furnish month-wise and party-wise breakup of the expenses. In response thereof, the assessee submitted written reply inter alia contending that provisions of section 194C of the Income Tax Act do not apply to the assesee's case as the agreement entered into by the assessee with distributors is a distribution agreement and not a broadcasting agreement; the payments made by the assessee are taxable in the hands of the payees, hence in the light of the law laid down by the Hon'ble Supreme Court in M/s Hindustan Coca Cola Beverages Pvt'Ltd. vs. CIT 293 ITR 226 SC, recovery of tax from the assessee is not permissible. However, the AO rejecting the contentions of the assessee declared the assessee to be an assessee in default u/s 201 of the Act in respect of a sum of Rs. 1,53,0....
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....visions of section 194C are not applicable and therefore no tax was required to be deducted at source. 4. (a) The learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer of levying interest under section 201 (1A) of the Act amounting to Rs. 2,06,137/- on the ground that payment of interest is mandatory. (b) The learned Commissioner of Income Tax (Appeals) erred in law in holding that though the assessee should not be held to be an assessee in default, the appellant would be liable to interest under section 201 (1A) of the Act for the period commencing from the date on which tax was deducted to the date on which tax is actually paid. 5. The appellant submits that the Assessing Officer be directed: (i) Order under section 201 (1) and 201 (1A) passed beyond one year from the end of the financial year in which proceedings under section 201 (1) were initiated which is barred by limitation and same ought to be cancelled. (ii) Order under section 201 (1) and 201 (1A) passed beyond four years from the end of the financial year in which is barred by limitation and same ought to be cancelled. ....
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....asons in the assessee's appeal pertaining to the assessment year 2003-04, the delay of 661 days in the present case may be condoned in the interest of justice. 5. On the other hand the Ld. departmental representative (DR) fairly admitted that in a similar situation the Tribunal has condoned the delay and heard the assessee's appeal pertaining to the A.Y. 2003-04 on merits. However, the Ld. DR opposed the application on the ground that the delay is inordinate. 6. We have heard the rival submissions and perused the relevant record including the decision of the coordinate Bench relied on by the assessee. The coordinate Bench has condoned the delay in filing appeal pertaining to the assessment year 2003-04, holding as under:- "6. Before proceedings further, we may herein observe that the present appeal filed by the assessee before us involves a delay of 658 days. The assessee explaining the reason for the aforesaid delay in filing of the appeal had filed an „Affidavit‟, dated 15.06.2016 of Shri Vineet Garg, director of the assessee company. That Shri Vineet Garg in his affidavit had deposed that though the order of the CIT(A)-14, Mumbai was handed over ....
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.... the present appeal was backed by a bonafide mistake on the part of the assessee and not on account of any lapses and laches, therefore, the delay involved did merit to be condoned, relied on the judgment of the Hon'ble Supreme Court in the case of Ramnath Sao Vs. Gobardhan Sao, (AIR 2002 Supreme Court 1021). The ld. A.R taking us through the aforesaid judgment of the Hon'ble Supreme Court submitted that the Hon'ble Apex Court while condoning a delay of 130 days involved in the said appeal, had taken support of its earlier judgment in the case of N. Balkrishnan Vs. M. Krishnamurthi (1998) 7 Supreme Court case, wherein a delay of 883 days was condoned by the Hon‟ble Apex Court. The ld. A.R took us through the observations recorded by the Hon'ble Supreme Court, and taking support from the same submitted that merely for the reason that some lapse was there on the part of the litigant in filing appeal within the stipulated time period would not justify the turning down of his plea and declining the admission of his appeal on the said count. It was submitted by the ld. A.R that the Hon'ble Apex Court had observed that where the explanation of the appellant does not smack of malafi....
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....the present appeal before us. We find substantial force in the contention of the ld. A.R that the delay of 658 days involved in filing of the present appeal had occurred on account of an inadvertent mistake on the part of the Shri Pravin Kadam, Deputy Manager (Taxation) of the holding company of the assessee, viz. Hathway Cable Datacom Limited, who on account of bonafide mistake on his part had failed to deliver the order of the CIT(A) for the year under consideration, viz. A.Y 2003-04 to the Chartered accountant for taking the necessary action. We find that the facts as had been deposed by the Managing Director of the assessee, viz. Shri Vineet Garg are found duly supported by the affidavit of Shri Pravin Kadam (supra), who had categorically admitted the fact that he had inadvertently failed to deliver the order of the CIT(A) to the Chartered accountant. We are of the considered view that keeping in view the aforesaid facts, coupled with the fact that on the same issue which was involved in the case of the assessee for the immediately two preceding years, viz. A.Y 2001-02 and A.Y: 2002-03, the appeals of the assessee were pending disposal before the Tribunal, therefore, it can saf....
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....case for the A.Y. 2003-04 and the reasons for delay in the present case are identical, hence, respectfully following the findings of the coordinate Bench, we condone the delay of 661 days in filing the present appeal in the interest of justice and allowed the Ld. counsel for the assessee to argue its case on merits. 8. At the outset, the Ld. counsel for the assessee submitted that the AO has passed the order u/s 201 (1) and 201(IA) beyond a period of one year from the end of the financial year in which the proceedings u/s 201 (1) were initiated. Hence, the order is not sustainable being barred by limitation. The Ld. counsel further submitted that the Mumbai Bench of the Tribunal has decided the identical issue in favour of the assessee in the assessee's own case, ITA No. 4112/Mum/2016 for the A.Y. 2003-04. Since, the facts of the present case and the issues involved are identical to that of the appeal pertaining to the assessment year 2003-04 aforesaid, the impugned order is liable to be quashed 9. On the other hand, the Ld. Departmental Representative (DR) relying on the order passed by the authorities below submitted that since there is no time limit prescribed under the Ac....
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....s the present for initiating proceedings. Learned counsel for the assessee relied upon State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd. [2007] 11 SCC 363 : [2007] 9 RC 637 to contend that if no period of limitation is prescribed, a statutory authority must exercise its jurisdiction within a reasonable period. What should be the reasonable period depends upon the nature of the statute, rights and liabilities there under and other relevant factors. Relying upon this decision, it is submitted by learned Counsel for the assessee that since Section 201 of the Act does not prescribe any period of limitation for initiating or for completing proceedings in declaring the assessee as an assessee in default, exercise of jurisdiction should commence insofar as the statutory authority is concerned within a reasonable period of time. We are unable to agree with learned Counsel for the Revenue inasmuch as the decision relied upon by him deals with reasonable time for completing the assessment or for completing the task on hand. In Bharat Steel Tubes Ltd. (1988) 70 STC 122 (SC) the question that arose before the Court (and which has been stated on page 130 of ....
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....reasonable period as prescribed by Section 153 of the Act for completion of proceedings, we have been told that the Income Tax Appellate Tribunal has, in a series of decisions, some of which have been mentioned in the order which is under challenge before us, taken the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed. The rationale for this seems to be quite clear if there is a time limit for completing the assessment, then the time limit for initiating the proceedings must be the same, if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings." 32 Mr. Suresh Kumar submitted before us that the Delhi High Court judgment does not take note of the principle that when there is no limitation prescribed by the statute, the Court cannot read into the provision any time limit or restriction. In that regard he relied upon the judgment of the Honourable Supreme Court in the case of Ajaib Singh v/s Sirhind Cooperative Marketing Cum Processing Service Society Limited and another reported in (1999) 6 SCC 82. The issue before the Honourable Supreme ....
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....then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: [Provided that any person, including the principal officer of a company, who 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 shall not be deemed to be an assessee in default in respect of such tax if such resident - (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:] [Provided further that] no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax.] [(1A) Without prejudice to the provisions of subsection (1), if any such person, principal....
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....ly to the time limit prescribed in subsection (3).] [Explanation. For the purposes of this section, the expression "accountant" shall have the meaning assigned to it in the Explanation to subsection (2) of section 288.]" 35. Once same provisions are invoked in the present case, then, the Honourable Delhi High Court, with respect, rightly concluded that though Section 201 does not prescribe 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/s Income Tax Officer (TDS), Ward 57(2) in G.A. No.1319 and ITAT No.118 and IT Appeal No.116/2011 and IT 1163/2011 decided on 30.08.2011. 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....
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....ssee and quash the order passed by the AO u/s 201 (1) and 201 (IA) of the Act. 12. Since, we have quashed the order passed u/s 201 (1) and 201 (IA) of the Act, the other grounds of appeal have become infructuous, hence, the same do not require adjudication. ITA No. 4049/MUM/2016 (Assessment Year: 2004-2005) The facts of the present case are identical to the facts of the assesse's appeal for the A.Y. 2001-02 discussed above. In the present case also, the Ld. CIT (A) has confirmed the order passed by the AO u/s 201 (1) and 201 (IA) of the Act against which the assessee has filed the present appeal. 2. The assessee has raised the following effective ground of appeal against the impugned order passed by the Ld. CIT (A):- 1. "The appellant submits that the order under section 201 (1) and 201 (1A) passed by the Assessing Officer beyond a period of one year from the end of the financial year in which proceedings under section 201 (1) were initiated was barred by limitation. The Appellant submits that even if no period of limitation is prescribed, the statutory powers must be exercised within a reasonable time. 2. Without prejudice to what stated above, the ap....
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..... (iii) Not to treat the payments made by the appellant to the distributors of signals (which includes payment in respect of feed charges) as a contract for work falling within the purview of section 194C of the Act. (iv) to delete the levy of tax under section 201 (1) of the Act amounting to a sum of Rs. 6,61,147/-. (v) to delete the interest levied under section 201 (1A) of the Act amounting to a sum of Rs. 6,08,319/- and to modify the order as per the provisions of the law. 6. Each of the above grounds of appeal are independent and without prejudice to each other." 3. There is a delay of 648 days in filing the present case. We have allowed the application for condonation of delay in the assessee's case for the A.Y. 2001-02 by following the findings of the coordinate Bench in the assessee's own case for the A.Y. 2003-04. Since, the reasons for delay in filing the present appeal are identical to the reasons for delay in the assessee's case for the A.Y. 2001-02 aforesaid and since we have condoned the delay of 661 days in the said case, consistent with our findings, we condone the delay of 648 days in the present case for the same reasons and ....