TMI Blog2012 (3) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the end of the relevant financial year. - ITA No.2742 to 2744/Del /2011 - - - Dated:- 13-1-2012 - SHRI A.D.JAIN, SHRI A N PAHUJA, JJ. Assessee by : - Dr. Ram Samujh,AR Revenue by: - Shr i Shri Krishna , DR O R D E R. A. N. PAHUJA : These three appeals filed on 27th May, 2011 by the Revenue against a common order dated 30th March, 2011 for the assessment years 2003-04 to 2005-06 of the ld. CIT (Appeals) XXX, New Delhi, raise the following similar grounds :- " 1. On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in agreeing with the submission of the assessee that the revenue has not filed SLP on the issue of limitation and charging of tax and interest u/s 201(1)/201(lA) against the order of Delhi High Court in the case of NHK Japan Broadcasting Corporation in ITA No.6-03/2007 for F.Y. 1990-91 dated 23.04.2008 and therefore the order of High Court has become final. This observation is wrong, incorrect and contrary to the fact available on record as the revenue had not accepted the order of High Court in the case of NHK Japan Broadcasting Corporation and filed SLP against it which is still to be decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sites of its following expatriate employees :- S. No. Name of the employee 1. MARC D'SILVA 2. ANNA HRYBYK 3. FRANCIS MCLAOGHLIN 4. CAROLINE BRENNAN 5. CLODAGH J McCUMISKEY 6. SARAH E CASHORE 7. TSEGAYE KASSA 8. JENNIFER POIDATZ 9. CASSANDRA DUMMETT 10. KRISTEN RICHARDSON 11. KEVIN HARTIGAN 12. STEPHEN HILBERT 13. LEELA MULUKUTLA 14. ALEX SCHEIN 15. KIM WILSON 16. SEAN CALLAHAN 17. LORI VICHCHART 18. MADELEINE SMITH 19. PAUL BUTLER 20. LEANNE HAGER 21. WILL LYNCH 22. LIONEL LAJOIS 23. DOMINIOUE A. MOREL 24. PROVASH BUDDEN 25. SARA L YN BOWERS 3. On verification of TDS returns for the years under consideration, the Assessing Officer[AO in short]) asked the assessee to submit details of salary paid in India and outside India to the aforesaid 25 expatriate emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CIT vs NHK Japan Broadcasting Corporation 172 (Taxman) 230 which was decided following the principle laid down by Hon 'ble Apex Court in the case of State of Punjab v. Bhatinda Distt. Co-operative Mills (P) Ltd. (2007) 11 SCC 633 fixing the limitation period of 4 years, wherever no specific limitation is provided. According to AR, in appellant's case, the proceedings for financial year 2002-03 to 2004-05 relevant to assessment year 2003-04 to 2005-06 were barred by limitation because of the fact the proceeding in this case was initiated on 16.11.2009, which was beyond the period of 4 years from the end of financial year. Hence, the A.O was not justified to treat the assessee in default and levied the taxes uls 201(1) and charged the interest uls 201 (1A) in these years. 4.1 0n going through the impugned order dated 27.04.2010, l find that the A.O has admitted the Ld. AR argument relating to limitation matter. 'Despite, he levied the taxes uls 201 (1) and charged the interest uls 201 (1A) with the observation, "The department has not accepted the decision of Hon 'ble High court of Delhi in the case of CIT vs NHK Japan Broadcasting Corporation and filed a SL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the 'Proviso' to section 201(3) in which the limitation is given upto 31.03.2011 is not applicable in this case. 4.3 I further find that Hon'ble Delhi High Court in the case of CIT Vs. Hutchison Essar Telecom Ltd. (2010) 323 ITR 230 (Del) has held the proceedings u/s 201 (1)/201(1A) for A.Y 2002-03 as barred by limitation because in that case proceedings was initiated beyond the period of four years from the end of the financial year. I further find that Hon'ble Delhi High Court has decided the aforesaid case vide order dated 15.04.2010 i.e. after insertion of new provision of section 201(3) by the Finance Act, 2009 w.e.f. 01.04.2010. Since the Hon'ble Delhi Court has decided the said case of Hutchison Essar Telecom Ltd. on 15.04.2010, i.e. after the date of application (0l.04.2010) of newly inserted provision of Section 201 (3) by holding period of limitation for 4 years, from the end of financial year, the date of limitation on or before 31.03.2011 is not applicable in those case where the proceeding on or before 01.04.2007 was not pending. In the light of facts and circumstances of the case, legal provision and case laws decided by Hon'ble Jurisdictional High Court and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made or credit is given as stipulated in section 201(3) of the Act. 7. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions referred to by the ld. CIT (Appeals). Indisputably, the assessee ,in the instant case, did not deduct tax at source at the time of payment or credit of salary to the aforesaid exptariates nor paid TDS to the credit of Government before the search on 11.9.2007. The impugned orders do not reveal any finding as to whether or not any statement referred to in sec. 200 of the Act was filed by the assessee nor even the date(s) of payment of salary or TDS or date of credit for such TDS to the Government account are evident .However, the assessee stated before the ld. CIT(A that no such statement was filed while adhoc payment of ₹ 97,28,267/- towards TDS was made on 24.8.2010 and that salary was credited to the accounts of expatriates in USA. Apparently, a portion of TDS liability in respect of some of the employees appears to have been deposited after the order of the AO. As is apparent from the findings in the impugned order, the ld. CIT(A) has merely decided the appeal on limitation without going in to merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as under: 50. Providing time limits for passing 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 canbe comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable period of time and considering the provisions of the Punjab General Sales Tax Act, 1948, it was held that a reasonable period of time for initiating proceedings would be five years. 17. There is a qualitative difference between Bharat Steel Tubes Ltd. s case (supra) and Bhatinda District Co-op. Mill (P.) Union of Ltd. s case (supra ). In the former case, the question pertained to completion of proceedings, while in the latter case it pertained to initiation of proceedings. We are concerned with initiation of proceedings. 18. Insofar as the Income-tax Act is concerned, our attention has been drawn to section 153(1)(a) thereof which prescribes the time-limit for completing the assessment, which is two years from the end of the assessment year in which the income was first assessable. It is well-known that the assessment year follows the previous year and, therefore, the time-limit would be three years from the end of the financial year. This seems to be a reasonable period as accepted under section 153 of the Act, though for completion of assessment proceedings. The provisions of re-assessment are under sections 147 and 148 of the Act and they are on a completely di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of limitation nor would it extend the reasonable time that is postulated by the scheme of the Income-tax Act. The assessee cannot be put, in a sense, in a worse position merely because it has admitted its liability. If the assessee had denied its liability the question that would have arisen would be whether the revenue could have initiated proceedings after a lapse of four years. The answer to that would of course have to be in the negative in view of the reason that we have already indicated above. The fact that the assessee agreed to pay the tax voluntarily cannot put the assessee in a situation worse than if it had contested its liability. 25. We may also note that under section 191 of the Act, the primary liability to pay tax is on the person whose income it is that is the deductee. Of course, a duty is cast upon the deductor, that is the person who is making the payment to the deductee, to deduct tax at source but if he fails to do so, it does not wash away the liability of the deductee. 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential tax.They have paid the interest and they further undertake not to claim refund for the amounts paid. Before concluding, we may also state that, in Eli Lilly Co. (India) Pvt. Ltd. (supra) vide Paragraph 21, this Court has clarified that the law laid down in the said case was only applicable to the provisions of Section 192 of the Income Tax Act, 1961. Leaving the question of law open on limitation, these civil appeals filed by the Department are disposed of with no order as to costs. 7.31 Apparently, the Hon ble Apex Court did not advert to the question of limitation nor even the ld. CIT(A) took cognizance of the aforesaid observations of the Hon ble Apex Court. 7.4 Following the aforesaid decision, Hon ble jurisdictional High Court in their decision dated 15.4.2010 in Hutchison Essar Telecom Ltd.(supra), held that the proceedings under section 201/201(1A) of the Act, can be initiated only within three years from the end of the assessment year or within four years from the end of the relevant financial year . 8. Since proceedings in this case have been initiated after the search on 16.11.2009, as concluded by the ld. CIT(A) and the amended provisions had not come i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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