TMI Blog2016 (2) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... was ended on 31.03.2002 and when the proceeding initiated on 15.11.2010 and order passed on 30.03.2011 u/s 201(1)/201(1A) for AY 2002-03 i.e. after approximately 9 years has to be held as time barred and thus we are of the opinion that the conclusion of the CIT(A) deserves to be confirmed and hence we uphold the same - Decided in favour of assessee - ITA No. 506/Del. /2014 - - - Dated:- 10-2-2016 - Sri C. M. Garg, JM And Sri O. P. Kant, AM For the Petitioner : Dr. Ram Sameyh, Adv For the Respondent : Ms. Rakhi Vimal, Sr. DR ORDER Per C. M. Garg, J. M. This appeal by the Revenue has been directed against the order of the CIT(A) XXX, New Delhi dated 25.11.2013 passed in appeal no. 0281/2011-12 for AY 2002-03. 2. The ground raised by the appellant read as under :- 1. On the facts and in the circumstances of the case as well as in law, the Ld. CIT(Appeals) has erred in holding that the order passed by the Assessing Officer for AY 2002- 03 is barred by limitation. 2. On the facts and circumstances of the case as well as in law, the Ld. CIT(Appeals) has erred in ignoring the Proviso to section 201(3) of the IT Act, wherein it is clearly provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. 4. On appeal, the ld. CIT (Appeals) concluded that the order passed on 27th April, 2010 under section 201(1) / 201(1A) of the Act for the FYs 2002-03, 2003- 04 and 2004-05 was barred by limitation. The findings of the ld. CIT (Appeals) read as under :- 4. I have considered the arguments of Ld. AR and perused the impugned order dated 27.04.2010 passed uls 201(1)/201(1A) for the aforesaid years. I have also perused the legal provisions and case laws as relied upon by the Ld. AR. I find that the appellant is a liaison office situated in New Delhi of a U.S. based NGO established in 1943 having its operation in India for many years as an approved agency under the Indo-US bilateral agreement. I further find that the Ld. AR instead of explaining the merits of the case, he has emphasized the limitation matter. The Ld. AR relied on the decision of the Hon'ble Delhi High 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, whereve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanatory Circular for Finance (No 2) Act, 2009 for which the copy has been placed as Annexure 7 of paper book, argued that in the light of para 50.2 of Explanatory Note, the order on or before 31.03.2011 could be passed only in those cases where the proceedings were pending on or before 01.04.2007. Since in appellant case, the proceeding was initiated on 16.11.2009, i.e. later than the date 01.04.2007 as mentioned in the 'Proviso', the proceeding for these years were not pending on 01.04.2007. On perusal of impugned order dated 27.04.2010, I find that the A.O has himself mentioned in the order, the assessee was further asked to file details of salary paid in India and outside India to all the 25 Expatriate employees for the period relevant to Financial Years 2001- 2002 to 2007-2008 vide order sheet entry dated 16.11.2009 Thus, it is established that in the appellant's case the proceedings u/s 201(1)/201(1A) was not pending as on 0l.04.2007. Hence, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were pending before the AO as on 1.4.2007 nor the amended provisions , applicable with effect from 1.4.2010,had come in to force on the date of initiation of proceedings . To a query by the Bench, the ld. AR admitted that the said proviso was not considered by the Hon ble Delhi High Court in their decision in CIT Vs. Hutchison Essar Telecom Ltd. [2010] 323 ITR 230 (Del.), which was decided on 15th April, 2010 i.e. after the insertion of amended provisions u/s201(1)(3) of the Act, even though the ld. CIT (Appeals) concluded that the Hon ble Delhi High Court having decided a similar issue in their order dated 15th April, 2010, were aware of the said amended provisions. To a further query by the Bench,neither the ld. AR on behalf of the assessee nor the ld. DR replied as to whether theproviso to the amended provisions of sec. 201(3) of the Act could enlarge the period forpassing any order under section 201 of the Act beyond the period 4 years from the end of the financial year in which payment is 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 201(3) was not applicable. Here , we may refer to the amended provisions of section 201(3) introduced by Finance Act, 2009 with effect from 1.4.2010,which read as under :- 201 (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) four years from the end of the financial year in which payment is made or credit is given, in any other case; Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011. 7.1 The relevant extracts from the explanatory notes to the aforesaid newly inserted provisions, which have been referred to by the ld. CIT(A) in para of his order, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the date of delivery of the judgment. 16. Insofar as Bhatinda District Co-op. Mill (P.) Union Ltd. s case (supra) is concerned, the question that arose before the Supreme Court was regarding initiation of proceedings by exercise of jurisdiction by the statutory authority. The Supreme Court held that exercise of jurisdiction must be within a reasonable period of time and considering the provisions of the Punjab General Sales Tax Act, 1948, it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment came to know that the assessee was an assessee in default only in November, 1998 when a survey was conducted and it came to be known only then that when the assessee had not deducted tax at source on the global salary. We are of the opinion that the date of knowledge is not relevant for the purposes of exercising jurisdiction insofar as the provisions of the Income-tax Act are concerned. If it were so, the limitation period, as for example prescribed under section 147/148 of the Act would become meaningless if the concept of knowledge is imported into the scheme of the Act. 23. The second part of the argument of learned counsel for the revenue in this regard was that the question of limitation did not at all arise because the assessee had itself admitted its liability and it voluntarily paid the tax and interest on that amount. Again, we are not in agreement with learned counsel for the revenue in this regard. 24. It appears that the assessee paid the tax voluntarily as well as interest thereon but the acceptance of the liability by the assessee would not by itself extend the period of limitation nor would it extend the reasonable time that is postulated by the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by time having been passed beyond a reasonable period. Having heard learned counsel on both sides, we are of the view that, on the facts and circumstances of these cases, the question on the point of limitation formulated by the Income Tax Appellate Tribunal in the present cases need not be gone into for the simple reason that, at the relevant time, there was a debate on the question as to whether TDS was deductible under the Income Tax Act, 1961, on foreign salary payment as a component of the total salary paid to an expatriate working in India? This controversy came to an end vide judgement of this Court in the case of Commissioner of Income Tax vs. Eli Lilly Co. (India) Pvt. Ltd., reported in [2009] 312 I.T.R. 225. The question on limitation has become academic in these cases because, even assuming that the Department is right on the issue of limitation still the question would arise whether on such debatable points, the assessee(s) could be declared as assessee(s) in default under Section 192 read with Section 201 of the Income Tax Act, 1961. Further, we are informed that the assessee(s) have paid the differential tax. They have paid the interest and they further under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. It is pertaining to mention that since proceedings for AY 2002-03 has been also initiated after search on 16.11.2009 when the amended provision did not come into existence on the said date, and the law applicable on the said date was pronounced by Hon ble Jurisdictional High Court of Delhi in the case of Hatchison Essan Telecom Ltd. (Supra) and CIT vs. NHK Japan (Supra). As per dicta laid down by Hon ble Jurisdictional High Court of Delhi and in the light of the same we are inclined to uphold the conclusion of the Ld. CIT(A) as in these judgments the Hon ble High Court explicitly held that in absence of any time frame in the statue a reasonable time limit was to be read into, which was four year for the end of relevant financial year. In the present case, the relevant financial year 2001-02 was ended on 31.03.2002 and when the proceeding initiated on 15.11.2010 and order passed on 30.03.2011 u/s 201(1)/201(1A) for AY 2002-03 i.e. after approximately 9 years has to be held as time barred and thus we are of the opinion that the conclusion of the CIT(A) deserves to be confirmed and hence we uphold the same . Accordingly, ground no. 1 to 3 of the Revenue are dismissed. 8. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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