2023 (5) TMI 694 - AT - Income Tax

Order passed u/s 201(1)/201(1A) - Failure to deduct TDS in certain cases - whether assessment barred by limitation? - reasonable period of four years - Period prior to the amendment in section 201(3) by the Finance Act, 2012 w.r.e.f. 01.04.2010 - HELD THAT:- Prior to the amendment in section 201(3) by the Finance Act, 2012 w.r.e.f. 01.04.2010, there was no stipulation provided in the Act for passing an order u/s 201(1)/201(1A) holding a person to be an assessee in default. In fact, this fact is also explained by the CBDT Circular No.05/2010 dated 03.06.2010 which explains the amended provisions w.r.e.f. 01.04.2010 prescribing time limit for framing an order u/s 201 of the Act. In fact, the said Circular says that this amendment would be effective from 01st April, 2010 only and would apply to such orders passed on or after 1st April, 2010. We find that the ld. DR took shelter based on this CBDT Circular before us stating that since the order in the instant case was passed on 29.03.2011 which is after 01.04.2010, the said order is passed within the time limit prescribed in section 201(3) of the Act r.w. proviso thereto.

We find that the very same issue was subject matter of consideration before the Hon’ble jurisdictional High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, reported in [2016 (8) TMI 509 - DELHI HIGH COURT] referred to supra. The Circular has to be interpreted in such a manner that the time limit stipulated in section 201(3) of the Act would apply only for those orders passed on or after 1.4.2007 and not earlier.

we hold that the order passed by the ld. TDS officer u/s 201 / 201 (1A) of the Act is barred by limitation. Hence the demand raised thereon is directed to be quashed. Decided in favour of assessee.