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TMI Blog2018 (6) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961 (for short "the Act") for alleged failure on the part of the assessee to withhold tax under section 195 of the Act in respect of payment made to two overseas companies, however, in ground no.1, the assessee has challenged the order passed under section 201(1) and 201(1A) of the Act as barred by limitation. Since the limitation issue raised in ground no.1 is a purely legal and jurisdictional issue going to the root of the matter, we propose to address this issue at the very outset. 2. Facts which are relevant for deciding this issue briefly are, the assessee an Indian Company is engaged in the business of providing software solution to its clients. From the information furnished by the assessee in Form no.15CA/CB and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation. 4. Before the first appellate authority, it was submitted by the assessee that the provisions of section 201 of the Act as existed during the assessment year 2008-09 did not prescribe any period of limitation for initiation of proceeding under the said provision. However, it does not mean that in the absence of any limitation period prescribed under the statute the Assessing Officer can initiate proceeding under section 201 of the Act at any time. It was submitted, even in the absence of any limitation period prescribed under the statute the Assessing Officer must initiate proceeding within a reasonable period. It was submitted, since, the Assessing Officer has initiated the proceedings and passed the order under section 201 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rejected assessee's claim that the order is barred by limitation. 5. The learned Authorised Representative submitted, as per the provisions of section 201 of the Act applicable to the relevant assessment year, no time limit was prescribed for initiation and completion of proceedings. He submitted, considering the fact that the deductors / assessees are put to much difficulty due to absence of limitation provision in section 201 of the Act which enabled the Assessing Officer to initiate and complete proceedings at any time, the Courts have interpreted the provisions of section 201 of the Act and have held that absence of limitation period under the said provision would not empower the Assessing Officer to pass order at any time. The Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-residents also reasonable period of limitation has to be read into the Act. Thus, he submitted, the order passed under section 201(1) of the Act being beyond the period of four years from the end of the relevant assessment year is barred by limitation, hence, deserves to be quashed. 6. The learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals). 7. We have considered rival submissions and perused materials on record. We have also applied our mind to the decisions cited before us. At the outset, it needs to be observed that the alleged failure on the part of the assessee to deduct tax at source under section 195 of the Act relates to payment made to two non-resident companies in the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of section 201 of the Act at a later stage. Thus, it is clear from the facts on record as well as the provisions of section 201 of the Act as applicable to the impugned assessment year no limitation period was prescribed under section 201 of the Act either for initiation or for completion of the proceedings. Therefore, as held in judicial precedents, absence of limitation period will not empower the Assessing Officer to pass an order under section 201 of the Act at any time at his sweet will. The Hon'ble Courts have held that, even, in the absence of limitation period prescribed under a particular provision, the order has to be passed within a reasonable period. In the context of section 201 of the Act itself, the Hon'ble Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under section 201(1) and 201(1A) of the Act deserves to be quashed. 8. There is another aspect to this issue. As stated earlier, the provisions of section 201 of the Act was amended by Finance Act, 2009 by insertion of sub-section (3) w.e.f. 1st April 2010. The aforesaid provision prescribes period of limitation for completion of proceedings under section 201 of the Act. The proviso to sub-section (3) of section 201 of the Act provided that in respect of a financial year commencing on/or before 1st April 2007, no order under section 201 of the Act can be passed after 31st March 2011. Though, the language employed in sub-section (3) of section 201 of the Act gives an impression that it is only applicable to resident deductees, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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