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2014 (10) TMI 32 - AT - Income TaxAssessee in default u/s 201(1)/201(1A) r.w.s. 195 – Failure of TDS – Period of limitation - Payment made to Lead Managers/Managers with the services rendered for GDR issue – Held that:- Following the decision in Mahindra And Mahindra Limited. Versus Deputy Commissioner Of Income-Tax [2009 (4) TMI 207 - ITAT BOMBAY-H] - The liability of the person responsible is dependent upon the deductee failing or otherwise to pay such tax directly - Thus the action u/s 201(1) is dependent on the outcome of the assessment of the payee and the time-limit for passing order u/s 201(1) - the person responsible for paying sum chargeable to tax can be treated as assessee in default at any time prior to the assessment of the payee or the time available for the making of the assessment of the payee - If the persons responsible is deemed to be an assessee in default after the assessment of the payee or the time available for making assessment has expired then such amount of tax will be incapable of adjustment against tax liability of the payee and would require return to such person who has been treated as assessee in default - Thus both the initiation of proceedings u/s 201(1) as well as the completion of such proceedings by passing order have to be prior to the time-limit within which the tax can be determined in the hands of the payee - It cannot be beyond such period - If the payee has included the amount received from payer in his total income but the tax has not been paid in full or part then the payer can be treated as assessee in default to the extent of the non-payment of tax on the sum paid to him provided the tax is not recovered from the payee. Thus, there remains no difficulty in answering the question that how much time is available with the revenue for treating the payer as assessee in default u/s 201(1) - The obvious answer is that the maximum time-limit available for assessment of the payee is the maximum time-limit within which the payer can be treated as assessee in default - With the expansion of the scope of section 147, also roping in the cases of assessment apart from reassessment, it is clear that the assessment of payee shall also include assessment made under section 147 - Thus the maximum time-limit for initiating and completing the proceedings under section 201(1) has to be at par with the time-limit available for initiating and completing the reassessment. Logically the person responsible for paying sum chargeable to tax can be treated as assessee in default at any time prior to the assessment of the payee or the time available for making of the assessment of the payee - both the initiation of proceedings u/s 201(1) of the Act as well as the completion of such proceedings by passing order have to be prior to the time limit within which the tax can be determined in the hands of the payee and accordingly the order passed by the A.O. u/s 201(1)/201(1A) of the Act within a period of six years was held to be not barred by time by the Tribunal - the order passed by the AO u/s 201(1)/201(1A) of the Act treating the assessee as in default cannot be sustained as there is no assessment which has been made in the hands of the payee in respect of the amount paid by the assessee and even the time limit for issuing notice u/s 148 for making such assessment has already come to an end – Decided in favour of assesse.
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