TMI Blog2016 (11) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... -9-2016 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Assessee : Shri Nitesh Joshi and Shri Manoj Dixit For The Revenue : Shri Rajesh Kumar Yadav-DR ORDER Per Joginder Singh, Judicial Member This bunch of thirteen appeals pertains to Hathway Group against the orders of the Ld. First Appellate Authority, Mumbai. The assessee has taken additional ground to the effect that the order passed by the Assessing Officer u/s 201(1) and 201(1A) has not been passed within a reasonable time and hence the said order is barred by limitation. 2. During hearing, the ld. Counsel for the assessee, Shri Nitesh Joshit along with Shri Manoj Dixit, contended that for Assessment Year 2001-02, the Tribunal in the case of assessee itself, vide order dated 01/06/2016 (ITA No.1810/Mum/2012), considered identical issue and following the decision from Hon ble jurisdictional High Court in the case of DIT vs Mahindra Mahindra Ltd. (2014) 365 ITR 560 (Bom.) and the decision of the Special Bench of the Tribunal in the same case decided in favour of the assessee. 2.1. On the other hand, the ld. DR, Shri Rajesh Kumar Yadav, defended the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed before us challenging the order passed by Ld CIT(A), the assessee has urged a legal issue before us, i.e., the contention of the assessee is that the order passed by the AO is barred by limitation. Since this is a legal issue and the facts relating thereto are already available on record, we admit the same. We have noticed in the preceding paragraph that the assessing officer has passed the impugned order on 28.3.2011 in pursuance of notice issued on 23.9.2003, i.e., he has passed the order after expiry of eight years from the date of issuing of notice. It is pertinent to note that the Income tax Act does not prescribe any time limit for initiation of proceedings u/s 201(1) and also for passing order after initiation of proceedings. 6. The Ld A.R relied on the decision rendered by the jurisdictional Hon ble Bombay High Court rendered in the case of DIT Vs. Mahindra and Mahindra Ltd (2014)(365 ITR 560). The above said decision has been rendered by the Hon ble High Court on the appeal filed by the revenue challenging the decision rendered by the Special bench. The Special bench of Tribunal had rendered its decision on the issue of limitation period as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is noted that the assessee companies were engaged in the business of receiving and distributing local and satellite channel programs. A survey action was conducted u/s 133A of the Act at the office premises of Hathway Nasik Cable Network Pvt. Ltd., which is also a group concern of the assessee on 17/09/2003. The assessee company was operating from the same premises, where the survey was conducted. The ld. Assessing Officer after a period of six years passed an order u/s 201 and 201(1A) of the Act holding that the assessee has committed default u/s 201(1) of the Act by not deducting the tax on the payments as required u/s 194C of the Act. The Assessing Officer determined the impugned sums to be paid as tax and also levied interest u/s 201(1A) of the Act. However, without going into much deliberation, the issue to be adjudicated on legal issue whether the order passed by the Assessing Officer is barred by limitation. So far as, passing of impugned orders is concerned, we have summarized the same in preceding paras of the order, which shows that the orders have been passed after expiry of eight years from the date of issuing of notice. Admittedly, the Income Tax Act does not presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action can be taken only within a reasonable time by harmoniously considering the scheme of the Act. (v) Tax recovery proceedings are initiated only after the passing of order u/s 201(1) and that too if the person responsible fails to comply with notice of demand u/s 156. (vi) The order u/s 201(1) is akin to the assessment order. Assessment includes reassessment . (vii) The time limit for initiating the proceedings u/s 201(1) cannot be the same as that for the passing of order under this subsection. Time for initiation is always prior to the time for completing the proceedings. (viii) The reasonable time for initiating and completing the proceedings u/s 201(1) has to be at par with the time limit available for initiating and completing the reassessment as the assessment includes reassessment. (ix) The maximum time limit for initiating the proceedings u/s 201(1) or (1A) is the same as prescribed u/s 149 i.e. four years or six years from the end of the relevant assessment year, as the case may be depending upon the amount of income in respect of which the person responsible is sought to be treated as Assessee in default. (x) The maximum time limit for passing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of powers, is an extreme one. The Assessee's Appeal is in relation to the finding on the point of time. The Tribunal has held that six years would be reasonable time within which the power can be exercised whereas the Assessee submits that it should not be six years, but shorter. Such an issue or question cannot be equated with the controversy raised by the Revenue, namely, that there should be no period of limitation at all. 13 Even otherwise, according to Mr.Mistry, the Tribunal has applied a settled principle of law. That has been applied in series of judgments of the Honourable Supreme Court and other High Courts. That principle is that when a statute is silent on the period or time for invoking any provision or exercising any power, then, what is required to be read in it is the principle or doctrine of reasonable time. Mr.Mistry submits that what would be the reasonable time depends on the facts and circumstances in each case. All that the Tribunal has held is that there is a reasonable time for invocation and exercise of the powers. That finding is in no way vitiated by any error of law apparent on the face of record or perversity. This Appeal, therefore, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits we would not be required to go into the correctness of the findings rendered by the Tribunal. In other words, if we are satisfied with the conclusions of the Tribunal on the point of limitation, then, all the contentions of both sides on merits can be kept open for being decided in an appropriate case. We clarify accordingly. 18 In paragraph 12.1 of the order the Tribunal considered the question as to whether the order under Section 195 r/w Section 201 of the Income Tax Act, 1961 is barred by limitation within four years from the end of the relevant financial year in the absence of any express provision in the Income Tax Act, 1961. The Tribunal held that the Authority must have firstly jurisdiction and on that assumption an inquiry can be held on the point of limitation. In the present case the Tribunal found that unless and until the Authority had jurisdiction the question of limitation for passing an order does not arise. That question is subsequent to the aspect of jurisdiction. If the Assessing Officer has jurisdiction to pass an order under Section 201(1) only, then, it can be decided whether such an order passed is within the period of limitation or not. If there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the payment of tax on the amount which is paid to him with or without deduction of tax at source. Hence we do not find any match between the facts of the case of Hindustan Times Limited (supra) and others on similar lines, relied upon by the learned D.R. visavis the facts under consideration. On the contrary so many authorities have been cited on behalf of the Assessee, some of which have been referred to above in which it has been categorically held that the statutory power should be exercised within a reasonable time even if no time limit is prescribed. The same opinion has been expressed by the Hon'ble Supreme Court in the case of Mohamad Kavi Mahamad Amin Vs. Fatmabai Ibrahim [(1997) 6 SCC 71]. In view of the foregoing discussion we are of the considered opinion that there is no merit in the contention of the learned D.R. that in the absence of time limit specified u/s 201, action can be taken at any point of time. It is naturally so for the reason that time is the core of every action under law. If the legislature is silent in prescribing a particular time limit then the action can be taken within a reasonable time. The Ld. D.R., during the course of subsequent arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where the payee is not liable to pay tax on the amount of income received by him without deduction of tax at source, then also the person responsible cannot be treated as assessee in default. To sum up 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) has to be viewed in the light of the fate of the assessment in the hands of the recipient. 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 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 proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave elapsed from the end of the relevant assessment year unless the case falls under clause (b). Clause (b) further states that no notice u/s 147 shall be issued if four years but not more than six years have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupee or more for that year. The present twofold time limit for issuing notice u/s 149 has clear cut demarcation of its applicability in one situation or the other. Where the income chargeable to tax which has escaped assessment, by reason or underassessment or no assessment, amounts to or is likely to amount to one lakh rupees or more for that year then the extended period of six years is available but if the amount of such income is less than ₹ 1 lakh then the shorter period of four years is provided for. Section 153(2) deals with the time limit for the completion of assessment, reassessment or recomputation u/s 147. It provides that no order of assessment, reassessment or recomputation shall be made u/s 147 after the expiry of one year from the end of the financial year in which notice u/s 148 was served . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner can revise an order made under Section 65 at any time. It is true that there is no period of limitation prescribed under Section 211, but it seems to us plain that this power must be exercised in reasonable time and the length of the reasonable time must be determined by the facts of the case and the nature of the order which is being revised. 27 In the case of the State of Punjab and others v/s Bhatinda District Cooperative Milk Producers' Union limited reported in (2007) 11 applied it to even tax law. The Honourable Supreme Court in the context of revisional powers conferred by the Punjab General Sales Tax Act, 1948 enabling reopening of the assessment, followed the principle aforequoted and held as under: 17. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo motu power can be exercised at any time. 18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the report) is whether an order of assessment under Section 11(3) of the Punjab General Sales Tax Act, 1948 or Section 28(3) of the Haryana General Sales Tax Act, 1973 could now be completed or it would be barred by limitation. In that case, the assessment proceedings had been unduly delayed and the Supreme Court came to the conclusion that for completing the assessment proceedings there is no period of limitation prescribed and that would depend upon the facts of each case. Considering the facts of the case, the Supreme Court gave a direction to the assessing authority to complete all the pending assessments within a period of four months from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court in that case was whether there is any period of limitation prescribed for initiation of proceedings under Section 33C(2) of the Industrial Disputes Act, 1947. In that regard the Honourable Supreme Court noted the factual position, namely, that services of workman were terminated on 16.07.1974. He had issued the notice of demand only on 18.12.1981. However, it was not disputed that no plea regarding delay was raised by the Management before the Labour Court. It was also acknowledged that Article 137 of the Limitation Act, 1963 has not been specifically made applicable to the proceedings under the Industrial Disputes Act, 1947 seeking reference of Industrial Disputes to the Labour Court. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 officer or company as is referred to in that subsection 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) at one per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and onehalf per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub section (3) of section 200:] [Provided that in case any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment 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 overlooks the fundamental principles noted above. They need not be reiterated here. 37 However, we clarify that our order shall not have any impact on the Appeal which has been filed by the Assessee in this Court and which is stated to be pending. Our judgment and order shall not be construed as expression of any opinion as to what should be the reasonable time. In other words, whether it should be as indicated in the Delhi High Court Judgments or otherwise is an aspect which is kept open. Equally, once we uphold the view of the Tribunal on the point of limitation, then, we must also clarify that we have expressed no opinion on merits of the impugned deductions/ claims in that regard. Therefore, we do not express any opinion on the rival contentions particularly as to whether there is any liability in terms of Section 201 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 467 (SC), Delhi High Court in CIT vs NHK Japan Broadcasting Corporation (2008) 305 ITR 137 (Del.) supports our view. Further, the Hon'ble Apex Court in Bhatinda District Cooperative Milk Producers Union Ltd. (2007) 11 SCC 363 on a question, which arose from the Hon'ble Apex Court regarding initiation of proceedings by exercise of jurisdiction by the statutory authority held that it must be within a reasonable period of time. 2.5. So far as, the decision of Hindustan Times Ltd., AIR 1998 SC 688, relied upon by the ld. DR, is concerned, we find that the Hon'ble High Court has already commented upon the decision and the Special Bench of the Tribunal in the case of Mahindra Mahindra in para 14.4 has already discussed this case including the case of Mohamad Kavi Mohamad Amin vs Fatmabai Ibrahim (1997) 6 SCC 71, therefore, the objection of the ld. DR had already been met with by the Special Bench as well as by the Hon'ble jurisdictional High Court. To sum up the matter, we find that the Hon'ble Bombay High Court has held that proceedings initiated u/s 201(1)/201(1A) should be completed within one year from the end of the Financial Year in which proceedings u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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