AI Drafter 
TaxTMI 
TaxTMI 
2022 (8) TMI 1360
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....ows:- "19. In the considered opinion of this Court, keeping in view Rule 29 of the income Tax (Appellate Tribunal) Rules, 1963 and also keeping in view the fact that the material on the basis of which the order has been passed was not furnished to the appellant at any point time, the order passed by the Tribunal is certainly violative of principles of natural justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study. 20. Another important aspect of the case is that details of the material has also not been reflected in the order passed by the Tribunal and therefore, this Court is of the opinion that as there is a violation of principles of natural justice and fair play, the matter deserves to be remanded back to the Tribunal for hearing it afresh in accordance with law. 21. In light of the aforesaid, the questions are answered in favour of the assessee and against the revenue and the other questions are left open. Accordingly, the appeal in ITA.No.879/2017 is allowed. The order passed by the Tribunal is set aside. The matter is remanded back to the Tribunal for fr....
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....nvolved in rendering the Adword Program. Therefore, the sums so paid were not chargeable to tax under the relevant Double Taxation Avoidance Agreement [DTAA]. Accordingly, there was no deduction of tax on such payments in the absence of primary charge of tax. The AO issued notice u/s. 201(1) of the Income-tax Act, 1961 [the Act] to the assessee to show cause why the distribution fees payable to GIL should not be regarded as 'royalty' under the Act and consequently proceeded for withholding of tax deduction at source u/s. 195 of the Act. In response, the assessee provided the requisite details and also made submissions in this regard. However, the AO proceeded to pass an order dated 22.2.2013 u/s. 201(1) & 201(1A) of the Act. In the order, the AO held the assessee to be in default for non-deduction of tax at source u/s. 195 of the Act and raised a demand as under:- FY Total amounts payable to Google Ireland Liability u/s. 201 Interest u/s. 201(1A) Total payable 2006-07 42,57,53,347 4,25,75,33 3,14,72,518 7,40,47,853 2007-08 119,82,61,982 11,98,26,198 7,51,93,499 19,50,19,697 6. Aggrieved, the assessee preferred appeals before the CIT(A....
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.... 201 i.e., beyond 4 years from the end of the financial year in which payment is made or credit is given. Therefore, the assessments are barred by limitation and liable to be quashed. In this regard, he placed reliance on the decision of the coordinate Bench of the Tribunal in the case of Mphasis Ltd. v. DDIT (IT), [2022] 136 taxmann.com 160 (Bang. Trib). 10. The ld. DR argued that the aforesaid decision of the Tribunal has not reached finality and therefore cannot be relied upon. He further submitted that there are time limits prescribed under sub-section (3) of section 201 with respect to orders u/s. 201(1), however, there is no time limit for passing orders u/s. 201(1A) of the Act. The ld DR submitted that the Supreme Court in the case of CIT v. Eli Lily & Co. (India) (P.) Ltd., [2009] 312 ITR 225 (SC) has held that the interest u/s. 201(1A) is compensatory in nature and therefore submitted that for a demand which is compensatory in nature there cannot be any limitation of time on a reasonable basis. Further the ld DR submitted that issue of interest payable u/s.201(1A) being compensatory in the judgment of the Hon'ble Supreme Court is not discussed in the case decided by the....
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....ng 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: ............" 12. Prior to the decision of the Special Bench of ITAT Mumbai in the case of Mahindra & Mahindra Ltd. v. Dy. CIT [2009] 30 SOT 374 there was no period of limitation prescribed for passing order u/s.201(1) & 201(1A) of the Act. In the said decision it was held that though section 201(1) does not impose any time limit for the initiation of proceedings or the passing of an order, a reasonable time limit would have to be read in as otherwise the authorities would have an indefinite period to take action and the sword of uncertainty would hang forever over an assessee. It was further held that a 'reasonable period' would have to be determined bearing in mind the fact that an order u/s. 201 is to be treated as akin to an assessment order and that it is dependent on the outcome of the assessment of the payee. Accordingly, the maximum time limit for initiating and completing proceedings u/s. 201(1) has to be on par w....
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.... of orders u/s. 201(1) holding a person to be an assessee in default 50.1 Currently, the Income Tax Act does not provide for any limitation of time for passing an order u/s. 201(1) holding a person to be an assessee in default. In the absence of such a time limit, disputes arise when these proceedings are taken up or completed after substantial time has elapsed. In order to bring certainty on this issue, specific time limits is provided in the Act within which order u/s. 201(1) will be passed. 50.2 It has been provided that an order u/s. 201(1) for failure to deduct the whole or any part of the tax as required under this Act, if the deductee is a resident taxpayer, shall be passed within two years from the end of the financial year in which the statement of tax deduction at source is filed by the deductor. Where no such statement is filed, such order can be passed up till four years from the end of the financial year in which the payment is made or credit is given. To provide sufficient time for pending cases, it is provided that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011. ....
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.... of limitation is laid down in the Act. 19. In such circumstances, there are two ways of addressing the issue of limitation when payments are made to non-residents for passing order u/s.201(1) & 201(1A) of the Act. 20. Firstly, it can be held that as held in judicial precedents, absence of limitation period to pass an order u/s.201(1) of the Act where the payee is a non-resident, will not empower the Assessing Officer to pass an order under section 201 of the Act at any time at his sweet will. The Hon'ble Courts have held that, even, in the absence of limitation period prescribed under a particular provision, the order has to be passed within a reasonable period. In the context of section 201 of the Act itself, the Hon'ble Delhi High court in NHK Japan Broadcasting Corpn. (supra) approving the decision of the Tribunal has held that a period of four years would be reasonable period of time for initiation of proceeding under section 201 of the Act. The aforesaid decision of the Hon'ble Delhi High Court has been approved and followed in subsequent decisions of the Hon'ble Delhi High Court in case of Vodafone Essar Mobile Services Ltd. v. Union of Indi....
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....n the present case, Parliament consciously amended the Act. In doing so, it prescribed a limitation only for residents. Instead of actively barring the applicability of the provision on non-residents, did the Parliament choose to passively do so by remaining silent on nonresidents and only amending the provision, for residents. The question is, whether the petitioner is right in contending that if the Act does not specify a time period, then a reasonable time period should be read into the Act. This contention is based on judgments which were delivered when the Legislature had not made a distinction between residents and non-residents. The question is when such a distinction exists, can one read a "reasonable time period" into the Act. 13. The amendment ipso facto is undoubtedly silent about the application of periods of limitation to amounts deducted and payments made to non-residents. It is quite possible to argue that the demarcation and distinction between payments made to residents and non-residents through the amendment, can mean that where no period of limitation for sections 200 and 201 has been prescribed, one cannot be read into the Act. However, the legislative ....
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.... such proceedings were required to be initiated, the court limited such discretion in the following terms (page 691 of 362 ITR) : '44. In the result, we hold that for the purpose of section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages : (a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act ; (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person.' 10. An added reason why the submission of the Revenue is unacceptable is that had Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of section 201(1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring section 201(3) in the firs....