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TMI Blog2018 (3) TMI 1758X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee against order passed by the AO u/s 201(1) of the Income Tax Act (for short 'the Act'). (b) The Department has filed cross appeal vide ITA Nos. 4637/MUM/2013, 4638, 4639, 4633, 4640/MUM/2012 against the aforesaid impugned orders passed by the Ld. CIT (A) challenging the relief granted by Ld CIT(A). (c) Vide ITA No. 5293, 5294, 5295, 5296 & 5297/MUM/2012, the department has challenged the impugned orders dated 11.05.2012 passed by the Ld. CIT (A) for the Assessment Years 2000-01 to 2004-05, whereby the Ld. CIT (A) has directed the AO to re-compute interest u/s 201(1A) of the Act. (d) Vide ITA No. 4808/Mum/2013, the revenue has challenged the appellate order passed by the Ld. CIT (A), whereby the Ld. CIT (A) has held that the order passed by TDS officer is barred by limitation. Since, all the appeals pertain to the same assessee for the different assessment years all the appeal were clubbed, heard together and are being dispose of by this common and consolidated order for the sake of gravity and convenience. 2. The appellant/assessee engaged in business of providing Cellular Services in the Mumbai Telephone Circle. A survey u/s 133A of the Act was conducted on the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently, rejecting the contentions of the assessee, the AO passed a common order dated 24-03-2011 u/s 201 (1) of the Act raising an aggregate demand of Rs. 38,41,04,984/- for the assessment years 2000-01 to 2004-05 against the assessee on account of non-deduction of taxes/short deduction of taxes on inter connection charges paid by the appellant to other telecom operators during the financial years 1999-2000-01 to 2003-04. The demand for short deduction of tax at source was raised in FY 2003-04 relevant to AY 2004-05. 5. Vide separate order dated 28-03-2011, the AO raised interest demand u/s 201(1A) of the Act for assessment years 2000-01 to 2004-05. 6. Aggrieved by the orders passed by the TDS officer u/s 201(1) and 201(1A) of the Act for the assessment years 2000-01 to 2004-05, the assessee filed appeals before the Ld. CIT (A). In the meantime, the Hon'ble Bombay High Court disposed of the Writ filed by the assessee directing the appellant to pursue its remedy before the CIT (A). The Hon'ble High Court further directed the CIT (A) to dispose of the appeal within a period of three months. 7. The grounds raised by the assessee in the first appeal filed before Ld. CIT(A) agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return. Without prejudice to the said grounds, the assessee also submitted that no tax demand u/s 201 (1) of the Act can be collected from the deductor; where taxes have been directly paid by the recipient. The Ld. CIT (A) after hearing the assessee directed the AO to take action in this regard after giving effect to his decision in respect of Ground No. 3 aforesaid. (e) Vide Ground No. 6, the assessee contended that the TDS Officer has erred in levying consequential interest u/s 201 (1A) of the Act considering that the taxes in respect of the income earned by the third parties service providers on account of inter connect charges would have already been paid by the payees and hence the assessee should not be treated as assessee in default. The Ld.CIT (A) dismissed this ground holding that since no interest u/s 201 (1A) of the Act has been charged by the AO and this issue has been raised by the assessee through separate appeals, this ground is not sustainable. (f) Vide Ground No. 7 the assessee challenged the initiation of penalty proceedings, u/s 271(c) of the Act. The Ld. CIT (A) dismissed this ground being premature. 8. In respect of appeals filed by the assessee challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the Appellant is not able to produce a certificate from the auditor of the respective IUC payees confirming that taxes have been paid by them, without appreciating the fact that the Appellant has provided the Permanent Account Number ('PAN') for all the IUC deductees and b) Erred in not accepting and applying the ratio laid down by the Hon'ble Mumbai Tribunal in the Appellant's own case for AY 2007-08 to AY 2009-10 (45 SOT 82) for the subject AY. In the said case, the Hon'ble Mumbai Tribunal held that where the Appellant had provided the PAN and also furnished declaration from the various deductees, to the extent possible, the Appellant had discharged its obligation as regards payment of taxes by the payees and that the onus was then on the TDS officer to verify payment of such taxes by the deductees. Each of the above grounds are independent and without prejudice to one another". 11. Vide ground No. 1 of the appeal the assessee has challenged the jurisdiction assumed by the ITO (OSD) TDS -3(1) for passing order dated 24.03.2011 u/s 201(1) of the Act for all the years under consideration contending that the proceedings were barred by limitation. The Ld. Counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The impugned orders passed by the TDS officer are required to be cancelled, if the date of notice is taken as 08-03-2004, as the orders have been passed beyond 31.3.2005. Accordingly he contended that the Ld. CIT(A) was not justified in upholding the validity of the orders therefore the entire proceedings including the impugned orders passed by the Ld. CIT(A) are liable to be quashed. 14. The Ld. counsel further submitted that both the assessing officer and the Ld CIT(A) has taken support of the above said proviso to hold that the orders passed for AY 2000-01 to 2004-05 are valid. He submitted that the provisions of section 201 (3) of the Act were inserted by Finance Act, 2009 w.e.f. 01.04.2010, providing time limit for passing an order under sub section(1) of section 201 of the Act. Prior to insertion of this sub-section, as stated earlier, no limit was provided for passing an order under section 201(1) of the Act by the Statute. The time limits for initiation of proceedings and time limit for completion of proceedings were fixed by the Courts. The newly inserted sec.201(3) was having following proviso:- "Provided that such order for a financial year commencing on or before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Delhi High Court took note of the fact that it has prescribed a time limit of four years from the end of financial year for initiating proceedings u/s 201(1) in its decision rendered in the case of CIT vs. NHK Japan Broadcasting Corporation (supra). The Court also noted its decision rendered in the case of CIT (TDS)-I vs. CJ International Hotels Pvt Ltd (ITA No.57/2015), wherein it was held that the its decision prescribing time limit of four years for initiation of proceedings in the case of NHK Japan Broadcasting Corporation (supra) does not require re-consideration. It was also held in CJ International hotels Pvt Ltd (supra) that the amendment brought in sec. 201(3) will not overrule its decision rendered in the case of NHK Japan Broadcasting Corporation (supra). 18. On the other hand, the Ld. Departmental Representative (DR) relying on the order passed by the Ld. CIT(A) submitted that since the proceedings against the assessee were pending before 01.04.2007, proviso to the old section (3) was applicable and hence the TDS officer was competent to pass order before 31st day of March 2011. The Ld. DR relied on the decision rendered by the 'A' Bench of ITAT Lucknow in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a show cause notice dated 02.12.2010 was issued under section 201(1)/201(1A) of the Act for the first time to the assessee with the direction to appear on 23.12.2010 along with details. In that show cause notice also, the ITO has requested the assessee to submit balance details called for by him, vide letter dated 10-01-2005. This fact would show that the ITO himself has considered the letters issued from 08-03-2004 to 29-09-2009 as mere letters issued by him, meaning thereby, a proper show cause notice u/s 201(1) of the Act was issued for the first time for the years under consideration only on 02-12-2010. 21. In the light of the aforesaid facts, the fundamental question raised by the assessee needs to be adjudicated first as to whether the order passed by the TDS officer is void ab initio and bad in law being passed beyond limitation period as contended by the assessee or the same had been passed within limitation as contended by the Ld DR. 22. As per the discussions made in the foregoing paragraphs, we are of the view that the TDS Officer was only collecting required details by issuing various letters starting from 08.03.2004. We have also noticed that the ITO himself refers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act by its decision rendered in the case of NHK Japan Broadcasting Corporation (supra) does not require reconsideration. Accordingly it was held that the ITO could not initiate proceedings u/s 201(1) for periods earlier than four years prior to 31st March 2011. The Hon'ble Delhi High Court has held in the case of Tata Teleservices vs. Union of India (supra), by placing reliance on the decision rendered by Hon'ble Supreme Court in the case of S.S. Gadgil vs. M/s Lal & Co. (supra), held that the amendment brought in to sec. 201(3) by Finance Act No.2 of 2014 extending the time limits will not apply to AY 2007-08 and 2008-09, which has become time barred as per the pre-amended provisions. 26. In our view, the ratio of the decision rendered in the case of S.S. Gadgil vs. M/s Lal & Co. (supra) by Hon'ble Supreme Court and the decision rendered by Hon'ble Delhi High Court in the case of Vodafone Essar Mobile Services Ltd (supra) can be conveniently applied to the facts of the present case. We have earlier held that the various letters issued by the ITO from 08-03-2004 were only letters calling for various details. We have also held that the ITO has issued show cause notice for the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has expired long back prior to insertion of sec. 201(3) by Finance Act No.2 of 2009. 29. The Hon'ble Gujarat, in the case of Tata Teleservices (supra) has considered the Memorandum of Finance Bill No.2 of 2009 explaining the provisions of sec. 201(3). The following explanation was considered by Hon'ble Gujarat High Court:- "..... To provide sufficient time for pending cases, it is proposed to provide that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011." 30. Accordingly, the Hon'ble Gujarat High Court has held that, in respect of F.Y 2007-08 and earlier years only proceedings that were pending could be completed by 31.3.2011 and as such no fresh proceedings could be commenced for the said period. (Paragraph 12.07 of the order). In the instant cases, we have held that the proceedings have become time barred prior to 01-04-2007 and hence no fresh proceedings could be commenced for the impugned years by virtue of the proviso to sec. 201(3) of the Act. 31. Accordingly we hold that the initiation of proceedings u/s 201(1) of the Act for the assessment years 2000-01 to 2004-05 is barred by limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A):- 1. "The Ld. CIT (A) has erred on facts and in law in deleting the demand of Rs. 4,95,11,200/- without properly appreciating the factual and legal matrix of the case as clearly brought out by the A.O. in orders u/s 201 (1A) of the Income Tax Act, 1961. 2. The Ld. CIT (A) has erred on facts and in law and on the facts and circumstances of the case in issuing directions for recalculation of interest u/s 201 (1A) on the basis of order to give effect to his order in appeal no. CIT (A)/14/I.T. 719/TDS Rg. 3/11-12 dt. 27.4.2012 and thereby in substance and in effect in setting aside this issue pertaining to interest u/s 201 (1A) despite the fact that he is not competent in law to set aside an issue. 3. It is prayed that the matter may be restored back to the file of CIT (A) and he may be directed to specifically decide the issue afresh. 36. Since we have held in the preceding paragraphs that the proceedings initiated by the ITO for assessment years 2000-01 to 2004-05 are barred by limitation and accordingly quashed the orders, the above said appeals filed by the revenue are liable to be dismissed. ITA No. 4808/MUM/2013 (Assessment Year: 2007-08) 37. The revenue has preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO for the A.Y. 2007-08 which was filed on 15-06-2007 i.e. proceedings are pending on or before 1st April 2009. The date of issue of notice for completing the TDS proceedings u/s 201 (1) shall not be taken into for the reason that there is no time limit prescribed in the Act for issue of notice for TDS proceedings. (v) On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in quashing/annulling the order passed by the AO and also erred in accepting the submission of the assessee that the payments were already made without appreciating the fact that the TDS payments claimed to have been made by the assessee are not reflecting in the system due to which the short payment and consequential interest are worked out in the system. (vi) On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in quashing/annulling the order passed by the AO without properly appreciating the factual and legal matrix brought out by the AO in the order u/s 201/201 (1A) of the IT Act." 38. The revenue has challenged the order passed by the Ld. CIT (A) on the ground that the Ld. CIT (A) has wrongly quashed the order passed by AO u/s 201 (1) /201 (1A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct the whole or any part of tax. For the sake of convenience, we extract below the relevant provision at the cost of repetition:- "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- (iii) 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. (iv) Six 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". 42. So the time limit prescribed in sec. 201(3) of the Act would apply to the cases, where there was failure to deduct the whole or any part of the tax, meaning thereby, the time limit prescribed in sec. 201(3) of the Act would not apply to the cases of non-payment or failure to pay the whole or any part of the tax. The provisions of sec. 201(1) cover the case of non-deduction, non-payment or non-payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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