TaxTMI 
TaxTMI 
2019 (9) TMI 307
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....e Act and consequently such deemed dividend is susceptible to TDS provision under s. 194 of the Act. The AO accordingly issued show-cause notice dated 27.01.2016 seeking explanation on applicability of sec. 201(1) for alleged default in non-deduction of tax and consequent liability of interest on such default committed as per s. 201(1A) of the Act. The AO, in conclusion, held that the assessee is to be regarded as an 'assessee in default' for having failed to deduct TDS as obliged under s. 194 of the Act. As a consequence, the AO imposed tax liability under s. 201(1) of the Act amounting to Rs. 30,89,000/- for the default under s. 201 and also imposed consequential interest under s. 201(1A) amounting to Rs. 24,40,310/ thereon by passing an order dated 17.10.2016 under s. 201(1)/201(1A) of the Act. 4. Aggrieved by the aforesaid action of the AO holding the assessee as 'assessee in default' in respect of payment of loans/advances to its shareholders purportedly hit by s. 2(22)(e) of the Act and hence having failed to deduct TDS under s. 194 of the Act on such loans advances, the assessee preferred appeal before the CIT(A). 4.1 Before the CIT(A) the assessee made two fold submis....
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....n of entire facts, it is observed that appellant has relied upon decision of Hon'ble Gujarat High court in the case of Tata Teleservices 66 Taxman.com 157 (referred supra) and argued that present order passed by AO is time barred. The Hon'ble High court has held as under: "Section 201 of the Income-Tax Act, 1961. Deduction of tax at source- Consequence of failure to deduct or pay (Time Limit for passing order) -Assessment years 2008-09 and 2009-10 Whether amendment in section 201(3) by Finance Act, 2014 is not made expressly with retrospective effect but as per plain language of amended section it was to take effect from 1-102014 - Held, yes - Whether thus increased limitation period of 7 years under section 201(3) as amended by Finance (No. 2) Act, 2014 with effect from 1-10-2014 shall not apply retrospectively to orders which had become time-barred under old time-limit set by unamended section 201(3) and no order under section 201(1) deeming deduct or to be asses see in default could have been passed if limitation had already expired as on 1-10-2014 - Held, yesfPara 15] [In favour of assessee] The Hon'ble Gujarat High court has explained the provisio....
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....Section 201 as amended by Finance Act No.2 of 2009 w.e.f. 1/4/2010 reads as under: "201. (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 sub-section (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 default in respect of such tax: Provided that no penalty shall be charged under section 121 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 sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act. he or it shall be liable to pay simple interest,- (i)....
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....ole or any part of the tax from a person resident in India, at any time after the expiry of - (i) two years from the end of the financial year in which the statement is filed 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 March, 2011." 12.5 Subsequently, section 201(3) of the Act has been further amended by Finance Act No.2 of 2014 w.e.f. 1/10/2014, which reads as under: "Consequences of failure to deduct or pay: 201 (3) No order shall he 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 seven years from the end of the financial year in which payment is made or credit is given." As stated hereinabove, question posed before this Court is whether section 201(3) of the Income Tax Act as amended by F....
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....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." It is observed that whether appellant is required to deduct TDS or not is for A. Y. 2010-11 and as per amendment brought by Finance Act, 2009 as discussed by Hon'ble Gujarat High court, AO was required to pass order u/s 201 of the Act on or before 31/03/2013 (within 2 years from end of financial year in which TDS return is filed) as appellant has filed TDS return for current assessment year on 04/06/2010 and received on 07/07/2010. It is also observed that when section 201 (3) was amended by Finance Act 2014 wherein time limit for passing order has been extended for 7 years from end of assessment year to which it pertains, time limit for passing order u/s 201(3) as required in Finance Act 2009 had already expired and the present order has been passed on 17/10/2016 which is clearly time barred, on considering the decision of Hon'ble Gujarat High court as discussed herein above. As the decision of Hon'ble Gujarat High court is binding on subordinat....
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....limitation placed under s. 201(3) of the Act. The Ld. DR accordingly submitted that the CIT(A) fell in gross error in holding the action of the AO under s. 201(1)/201(1A) to be time barred. 7. Ld. AR for the assessee on the other hand supported the order of the CIT(A). The Ld. AR referred to the provisions of sec. 201(3) of the Act and submitted that the aforesaid sub-section sec. 3 was originally inserted w.e.f. 01.04.2010 providing for a time limit of four years from the end of the financial year in which the payment is made or credit is given for the purposes of holding a person to be an assessee in default under s. 201(1) of the Act. The Ld. AR thereafter referred to the amendment made by Finance Act 2012, with retrospective effect from 01.04.2010 whereby the limitation period of four years was enlarged to six years. The Ld. AR thereafter submitted that the Finance (No. 2) Act 2014, however, yet again substituted the aforesaid sec. 201(3) w.e.f. 01.04.2014. As per the substituted section the limitation period has been re-fixed at seven years for holding a person as assessee in default under s. 201(1) for non-deduction/short deduction of tax in accordance with provisions o....
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....hereafter (towards non-deduction etc.) and hence the pre-amended period of six years would continue to apply to the case of the assessee, as the default relates to pre-amended period. On the other hand, it is the case of the Revenue that the amended period of seven years would become applicable as the enhanced limitation period will have to be reckoned for all pending matters where default under s. 201(1)/201(1 A) continues and subsists. It is further case of the Revenue that once the show-cause notice has been issued within the pre-amended period of six years i.e. at the time of existence of default, it was entitled to avail the extended period of seven years as limitation is only a procedural law. 9.2 A bare reading of sub section (3) to section 201 suggests that the aforesaid sub section was substituted by Finance (No. 2) Act 2014 w.e.f. 01.10,2014 whereby the limitation period for passing the order has been extended to seven years from the relevant financial year in which the payment is made or credit is given in substitution of erstwhile six years period. As per the pre-amended provisions, the order under s. 201(1) could be passed by 31.03.2016 whereas as per the substitute....
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.... express retrospective amendment Section 275 being only in the nature of a procedural provision, there is no question of any vested right accruing to any assessee by reason of the assessment being completed on. any particular date. It is now wellsettled that there is no vested right in any procedural matter. In the present case, therefore, the extended period of limitation would alone apply." 10. In the light of principles laid down by the Hon'ble Supreme Court and Hon'ble Madras High Court as aforesaid, we have to examine whether the period prescribed under the unamended sec. 201(3) cannot be considered as statute of repose or a procedural one. Section 201(3) deals with law of limitation. Law of limitation has been held to be procedural law always having retrospective effect unless the amended statute provides otherwise as noted in CIT vs. Sadhuram (1981) 127 ITR 517 (Pun. & Har.). The sub-section (3) under consideration before us providing limitation cannot be termed as substantive law much less a statute of repose. When it is not so termed, the exposition emanating from the above that in such cases of adjective law or procedural statute, amended provisions would apply. It ....