TMI Blog2018 (9) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly, we quash the impugned order passed U/s 206C(6)/206C(7) of the Act.- decided in favour of assessee - ITA No. 316/JP/2018 And ITA No. 248/JP/2018 - - - Dated:- 29-8-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Revenue : Shri J.C. Kulhari (JCIT-DR) For The Assessee : Shri Mahendra Gargieya And Shri Fazlur Rahman (Adv) ORDER PER: VIJAY PAL RAO, J.M. These cross appeals are directed against the order dated 21/12/2017 of ld. CIT(A)-3, Jaipur arising from the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g details of challans in the prescribed Form 27BA before submission with claim of relief in view proviso to Sec. 206C read with Notification No. 12/2016 dated 08/12/2016. That the appellant craves leave to add, amend or alter the grounds of appeal on or before the date the appeal is finally heard for disposal. Grounds of assessee s appeal: 1. The impugned order passed u/s 206C(6) r/w 206C(7) of the Act dated 30.03.2016 is bad in law and on facts of the case, for want of jurisdiction and for various other reasons and hence, the same kindly be quashed. 2. The Id. CIT(A)-lll, Jaipur erred in law as well as on the facts of the case in holding that the impugned order passed u/s 206C(6) r/w 206C(7) of the Act dated 30.03.2016 by the ITO, is not barred by limitation and therefore, erred in upholding the validity of the impugned order. The impugned order so passed on dated 30.03.2016 i.r.t. F.Y. 2008-09 after a lapse of a long period, is contrary to the intention of the legislature and to the various judicial pronouncements and hence, is certainly barred by limitation and therefore, the same kindly be quashed in lime line. 3.1 ₹ 24,40,544/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the comprehension as it will lead to give the power to the Assessing Officer to take an action even after lapse of indefinite period. Thus, under the law, unlimited time is not permissible to the authorities for taking action U/s 206C of the Act. Thus, the ld AR has submitted that the ITO cannot exercise its jurisdiction after lapse of a reasonable time which can be considered as a proper time period and limitation for initiation of proceedings and passing the order U/s 206C of the Act, otherwise it would result in unsettling the finality of the matter even after an indefinite period. He has referred to the various decisions of the Hon'ble High Courts as well as this Tribunal on the point where the courts have taken a view that the period of four years is a reasonable time within which any proceeding can be initiated and completed but not beyond that unless otherwise provided. Thus, the ld AR has submitted that a similar situation was prevailing in respect of the orders passed U/s 201(1) and 201(1A) of the Act prior to the amendment whereby the limitation was provided under the said provision. Therefore, prior to the amendment, various courts while examining the issue had hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 206C(6)/206C(7) of the Act holding the assessee in default due to failure to collect tax at source. However, non-providing the limitation in the statute would not confer the jurisdiction/powers to the Assessing Officer to pass order U/s 206C at any point of time disregarding the amount of time lapse from such default of collection of tax at source. If the contention of the revenue is accepted that the Assessing Officer is free to initiate the action and pass the order U/s 206C at any time depending upon the circumstances of the case, it would amount to give an unfettered powers to the Assessing Officer to take action at any point till an indefinite period. Therefore, such interpretation or inference would defy or defeat the very purpose and scheme of the statute and further the concept of finality of matters. Hence, in such a situation, a reasonable time period is allowed to the taxing authority for a particular action or an order to be passed otherwise it would lead to unregulated powers and authorities to the taxing authority. The law is to be followed by the authorities concerned as well as the persons governed by the said law and therefore, in absence of the limitation on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 must be the same if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings. 21. We are not inclined to disturb the time-limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the Supreme Court in Bhatinda District Co-op. Mil (P.) Union Ltd. s case (supra) action must be initiated by the competent authority under the Income-tax Act where no limitation is prescribed as in section 201 of the Act within that period of four years. 22. Learned counsel for the revenue submitted that the Department 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 juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment as per Section 153(1)(a) is two years from the end of the assessment year in which the income was first assessable which was considered as reasonable period for passing the order U/s 201(1)/201(1A) of the Act. The Hon'ble High Court has turned down the contention of limitation provided U/s 147/148 of the Act and hence, it was observed that three years would be a reasonable period as prescribed by Section 153 for completion of proceedings. However, since the Tribunal in a series of decisions had taken a view that the period within which the order U/s 201(1)/201(1A) shall be passed would be four years and therefore, the Hon'ble High Court has refrained from disturbing the view taken by this Tribunal. Following the said decision, the Hon ble Delhi High Court in a subsequent decision in the case of Vodafone Essar Mobile Services Ltd. Vs Union of India ors. (supra) has reiterated the view taken in the case of CIT Vs NHK Japan Broadcasting (supra). The Hon ble Gujarat High Court in the case of Tata Teleservices Vs. Union of India Anr. (supra) has held in paras 15 and 16 as under: 15. Considering the law laid down by the Hon'ble Supreme Court in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 7 as under: 7. It is true that it is the duty of the assessee to deduct TDS and the question is whether it is likely to cause any loss to the revenue if it is not deducted in time. If TDS is not deducted, it is required to be paid in the first installment of advance tax, which is required to be paid within four months from the date of filing of return. Therefore, even if the contention of Mr. Bhatt is accepted, loss that may be caused to the revenue is only to the tune of interest of four months on delayed payment of tax. Not only that when the declaration about this is made in the return, it comes within the knowledge of the Assessing Officer even if the TDS is not deducted. Therefore, we are of the view that the period of four years is reasonable period and we concur with the view taken by the Delhi High Court. It is true that the Court cannot legislate the Act, however, the Assessing Officer also cannot be given unfettered powers, which he can exercise even beyond the reasonable period of four years. Therefore, in our view, period of four years is just and proper and the Tribunal has not committed any error while passing the impugned order. Therefore, all these appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2004-05 and 2005-06), the appeals regarding which assessment years are also connected with this appeal, learned counsel for both the parties submitted that this question may also be considered and decided in this appeal, which would then govern the other appeals of the Revenue filed against the same assessee. 26. Sri K V Aravind, learned counsel for the Revenue has submitted that subsection (1A) of Section 201 of the Act provides for payment of interest. The sub-section, as it stood at the relevant time, prior to 1.7.2010, reads as under: ( 1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section 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 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 actually paid and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. Accordingly, the liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. Therefore, in our considered opinion, the analogy and reasoning given in the decisions of various Hon'ble High Courts cited supra in respect of the limitation for passing the order U/s 201 of the Act, is also applicable for considering the reasonable time period for passing the order U/s 206C of the Act. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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