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2016 (2) TMI 629 - ITAT DELHI

2016 (2) TMI 629 - ITAT DELHI - TMI - Non-deduction of tax at source u/s 194H - non-cash payment to dealers - CIT(A) deleting the demand raised u/s 201(1) treating the same as incentives and discounts - whether the initiation of proceedings u/s 201 of the IT Act against the assessee in respect of FY 2001-02 was barred by limitation? - Held that:- We are inclined to hold that the present case of the assessee is also concerned with the FY 2001-02 pertaining to assessment year 2002-03 wherein notic .....

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inson Essar Telecom Ltd. ( 2010 (4) TMI 45 - DELHI HIGH COURT) and it was rightly concluded by the first appellate authority that impugned proceedings were beyond prescribed time limitation and thus the same deserve to be annulled. Therefore, we are unable to see any ambiguity, perversity or any other valid reason to interfere with the impugned order. - Decided in favour of assessee - ITA No. 4853/Del./2011 - Dated:- 19-2-2016 - Sri G. D. Agarwal, Hon ble Vice President And Sri C. M. Garg, Judi .....

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leting the demand raised u/s 201(1) on account of non-deduction of tax at source u/s 194H on non-cash payment to dealers treating the same as incentives and discounts. (b) in holding that the initiation of proceedings u/s 201 of the IT Act against the assessee in respect of FY 2001-02 was barred by limitation having been initiated beyond a reasonable period of time of four years. 3. We have heard argument of both the sides and carefully perused the relevant material placed on record before us, i .....

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see was rightly held as a assessee in default in respect of such tax payable to the department. The Ld DR strongly contended that the total amount of TDS liability and interest thereon u/s 201(1) and 201(1A) of the Act was rightly determined by the AO in this regard. The ld. DR challenging the relief granted to the assessee by the first appellate authority vehemently contended that the CIT(A) granted relief for the assessee without any reasonable basis merely on the surmises and conjectures. The .....

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. The Ld. AR strongly supporting the conclusion of the CIT(A) submitted that the Revenue authorities have no power to pass an order beyond prescribed limit and in the present case order has been passed beyond 4 years and if the AO (TDS) is not taking any action within a reasonable time of 4 years from the end of relevant financial year then he should not open such old cases, where the assessee - company cannot get records/ information from the deductee/companies due to non-availibility of such o .....

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The ld DR also pointed out at the time of initiation of proceedings and issuance of notice to the assessee on 9.2.2011, there was specific information with the AO for this valid action therefore order of the CIT(A) also not sustainable on this count. 6. On careful consideration on rival submissions at the very outset, from the operative part of the impugned order of the first appellate authority. We observe that the CIT(A) granted relief to the assessee on merits with following conclusion and fi .....

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tors, Redistributors, Dealers in various places had filed their I.T. returns and paid taxes for A.Y.2002-03, hence creating a demand on appellant company in 2010-11 F.Y. under TDS provisions the department cannot collect tax again which might have been paid by dealers earlier. As the sales from appellant Company to NDs, RDs Dealer are from Principal to Principal according to recent decision of DHC in the case of Jaya Drinks(P) Ltd. , the sect ion 144-H on TDS on brokerage/Commission paid to agen .....

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ss of TDS provisions so that AO (TDS) can verify from PAN of deductee companies, whether such payments and corresponding TDS are shown in their return or not . Hence the assessment order of AO is annul led. 7. In the present case, undisputedly and admittedly the assessing officer initiated proceedings by way of issuing a letter / notice dated 09.02.2011 and thereby asking the assessee to show cause as to why it should not be treated as an assessee in default within the meaning of section 201(1) .....

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ibed, within the period of 4 years. Their lordship explicitly hold that the acceptance of liability by the assessee would not by itself extent the period of limitation nor it would extent the reasonable time that was postulated by the scheme of the Act and merely because the assessee had admitted its liability and agreed to pay tax voluntarily, the assessee could not be put in a situation worse then if it had contested its liability. This preposition was again reiterated by Hon ble High Court of .....

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pted. In that context, it examined the provisions of Section 153(1)(a) and came to the conclusion :- "18. In so far 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 assesement, which is two year 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 t .....

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e been told that the Income-tax Appellate Tribunal has, in a series of decisions, some of which have been mentioned in the order which is under challenge before us, taken the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed. 20. The rationale for this seems to be quite clear-if there is a time limit for completing the assessment, then the time limit for initiating the proceedings much be the same, if not less. Neverthele .....

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years." (underlining added) 5. From the above, it is clear that the proceedings under Section 201/ 201(A) of the Income Tax Act, 1961 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. 6. In the present case, we are concerned with the Financial Year 2001-02 or the Assessment Year 2002-03. The proceedings under Sections 201/ 201(A) were admittedly initiated beyond the period of three years from the e .....

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