TaxTMI 
TaxTMI 
2018 (9) TMI 1962
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....ection 206C(6) read with section 206C(7) of the Act and passed the order dated 31st March, 2015. The assessee challenged the order passed by the AO under section 206C(6)/206C(7) of the Act before the ld. CIT (A) and also raised an objection against the validity of the said order on the ground of limitation. The ld. CIT (A) rejected the ground of validity of the order passed by the AO being barred by limitation. However, a part relief was granted to the assessee to the extent of return of income filed by the purchasers of Tendu leafs for which the assessee issued Form No. 27BA produced before the ld. CIT (A). Aggrieved by the order of the ld. CIT (A), the assessee has filed the present appeal and raised the following grounds :- "1. The impugned order passed u/s 206C(6) r/w 206C(7) of the Act is bad in law and on facts of the case, for want of jurisdiction and for various other reasons and hence, the same kindly be quashed. 2. The ld. CIT (A)-III, Jaipur erred in law as well as on the facts of the case in holding that the impugned order passed u/s 206C(6) r/w 206C(7) of the Act dated 31.03.2015 by the ITO is not barred by limitation and therefore, erred in upholding the validity ....
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....he order passed on 31st March, 2015 is within the period of limitation of 7 years. 6. We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue was considered by this Tribunal in assessee's own case for the assessment year 2009-10 vide order dated 29.08.2018 in ITA No. 316/JP/2018 in para 6 as under :- "6. We have considered the rival submissions as well as the relevant material on record. There is no dispute that Section 206C or any other provisions of the Income Tax Act do not provide any limitation for passing the order by the Assessing Officer U/s 206C(6)/206C(7) of the Act holding the assessee in default due to failure to collect tax at source. However, nonproviding the limitation in the statute would not confer the jurisdiction/powers to the Assessing Officer to pass order U/s 206C at any point of time disregarding the amount of time lapse from such default of collection of tax at source. If the contention of the revenue is accepted that the Assessing Officer is free to initiate the action and pass the order U/s 206C at any time depending upon the circumstances of the case, it would amount to give an....
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....pted under section 153 of the Act, though for completion of assessment proceedings. The provisions of reassessment are under sections 147 and 148 of the Act and they are on a completely different footing and, therefore, do not merit consideration for the purposes of this case. 19. Even though the period of three years would be a 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. 20. 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. 21. We are not inclined to disturb the time-limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the Supreme Court in Bhatinda Dis....
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....tee. It is still the liability of the deductee to pay the tax. In that sense, the liability of the deductor is a vicarious liability and, therefore, he cannot be put in a situation which would prejudice him to such an extent that the liability would remain hanging on his head for all times to come in the event the Income-tax Department decides not to take any action to recover the tax either by passing an order under section 201 of the Act or through making an assessment of the income of the deductee." The Hon'ble High Court was of the view that the time limit for completing the assessment as per Section 153(1)(a) is two years from the end of the assessment year in which the income was first assessable which was considered as reasonable period for passing the order U/s 201(1)/201(1A) of the Act. The Hon'ble High Court has turned down the contention of limitation provided U/s 147/148 of the Act and hence, it was observed that three years would be a reasonable period as prescribed by Section 153 for completion of proceedings. However, since the Tribunal in a series of decisions had taken a view that the period within which the order U/s 201(1)/201(1A) shall be passed would ....
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....ces of the case, there shall be no order as to costs." Thus, the Hon'ble High Court has specifically dealt with the issue of applicability of amendment brought to the provisions of Section 201 of the Act and held that the proceedings in the assessment year 2007-08 and 2008-09 had become time barred as the limitation U/s 201(3) has already expired and otherwise amendment cannot be applicable retrospectively. The Hon'ble Gujarat High Court in the case of CIT (TDS) Vs. Anagram Wellington Assets Management Co. Ltd. (supra) has again considered this issue and held in para 7 as under: "7. It is true that it is the duty of the assessee to deduct TDS and the question is whether it is likely to cause any loss to the revenue if it is not deducted in time. If TDS is not deducted, it is required to be paid in the first installment of advance tax, which is required to be paid within four months from the date of filing of return. Therefore, even if the contention of Mr. Bhatt is accepted, loss that may be caused to the revenue is only to the tune of interest of four months on delayed payment of tax. Not only that when the declaration about this is made in the return, it comes within the ....
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....d by limitation as the period of limitation would be four years from the end of the financial year in question. As such, we answer the first question raised in this appeal, in favour of the respondent assessee and against the Revenue. Question No.2; 25. Now, coming to the second question of law, it is true that in view of the first question having been decided in favour of the assessee, this question remains only academic in nature. However, since the question would be relevant for the other assessment years (more particularly, assessment year 2004-05 and 2005-06), the appeals regarding which assessment years are also connected with this appeal, learned counsel for both the parties submitted that this question may also be considered and decided in this appeal, which would then govern the other appeals of the Revenue filed against the same assessee. 26. Sri K V Aravind, learned counsel for the Revenue has submitted that subsection (1A) of Section 201 of the Act provides for payment of interest. The sub-section, as it stood at the relevant time, prior to 1.7.2010, reads as under: "(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer o....
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....tion of tax at source as a similar measure for compliance of deduction of tax at source is provided U/s 201 of the Act. The department has accepted those decisions and consequently brought amendment to the provisions of Section 201 and thereby provided the limitation for passing the orders U/s 201(1)/201(1A) of the Act which was inline with the view taken by the Hon'ble High Courts on this issue. Though, subsequently an amendment vide Finance Act, 2014 was again brought in the said provisions of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. Accordingly, the liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. Therefore, in our considered opinion, the analogy and reasoning given in the decisions of various Hon'ble High Courts cited supra in respect of the limitation for passing the order U/s 201 of the Act, is also applicable for considering the reasonable time period for passing the order U/s 206C of the Act. The provisions....