TMI Blog2018 (3) TMI 1758X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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. 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. Accordingly we quash the orders passed by the tax authorities for the above said years. Demand for short deduction of tax as well as for non-payment of tax - Assessment Year: 2007-08 - A perusal of the order passed u/s 201(1)/(1A) would show that the AO has raised demand for short deduction of tax as well as for non-payment of tax after its deduction. We notice that the ld CIT(A) has wrongly applied the provisions of sec. 201(3) for the case of non-payment of tax after its deduction. We notice that there is no discussion about the same. Hence, we are of the view that the issue relating to non-payment of tax after its deduction should be adjudicated afresh by Ld CIT(A) as the provisions of sec. 201(3) shall not apply to the same. Accordingly, while upholding the order of Ld CIT(A) for the issue relating to short deduction of tax at source, we restore the issue relating to non-payment of tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the appellant on 25.02.2004 in order to verify the compliance of TDS provisions on payments made by the assessee. It was noticed that the assessee has not deducted tax at source on Inter connect charges paid by it and it was further noticed that the assessee has started deducting TDS from Financial year 2003-04 only. Consequently, Financial Years 1999-2000 to 2003-04 relevant to the assessment year 2000-01 to 2004-05 were identified for verification regarding compliance of TDS provisions. Accordingly a letter dated 08.03.2004 was issued to the assessee by the TDS officer asking for details regarding deduction of tax at source on payments made to various agencies/third parties, service providers and also to furnish reasons for non-deduction of taxes at source from those payments. In response to the notice, the assessee furnished certain details. The correspondences between the TDS officer and the assessee continued for some time. In some of the letters, the ITO mentioned that these details are required to complete the proceedings u/s 201(1) of the Act. 3. The TDS Officer issued letters dated 22.11.2004, 10-01-2005, 22-02-2005, 15-10-2007 and called for detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the assessee in the first appeal filed before Ld. CIT(A) against the demand raised u/s 201(1) of the Act and the gist of findings given by the Ld. CIT(A) are summarised as under: (a) Vide Ground No. 1 and 2, the assessee challenged the order passed u/s 201 (1) contending that the proceedings are barred by limitation and AO has passed the impugned order without following the law laid down by the Hon ble Supreme Court in the case GNK Driveshaft (India) Ltd. (supra). The assessee contended that the proceedings u/s 201 (1) of the Act were initiated by issuing notice on 08.03.2004 and the assessee furnished the details called for by the AO from time to time, however, no order was passed. Subsequently, the AO issued another notice dated 02.12.2010 and re-initiated the proceedings u/s 201 (1A) of the Act and directed the assessee to appear on 23.12.2010. The assessee opposed the action of the AO on the ground that the proceeding is barred by limitation. However, the Ld. CIT (A) rejected the contention of the assessee and decided both the grounds against the assessee holding that the proceedings are valid in terms of the amendment brought in section 201(3) w.e.f. 01.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 271(c) of the Act. The Ld. CIT (A) dismissed this ground being premature. 8. In respect of appeals filed by the assessee challenging the interest charged u/s 201(1A) of the Act, the Ld CIT(A) restored the issues to the file of the AO for deciding the same afresh, since the issues relating to demand raised u/s 201(1) was restored his file. 9. Against the orders passed by the Ld. CIT(A) in respect of orders passed u/s 201(1) of the Act, both the parties are in appeal before the Tribunal. Against the orders passed by Ld CIT(A) in respect of orders passed u/s 201(1A) of the Act, the revenue is in appeal before us. ITA Nos. 4511, 4512, 4513, 4514 4515/MUM/2012 (Assessment Years: 2000-01, 2001-02, 2002-03, 2003-04 2004-05) 10. Since the facts of the aforesaid five appeals filed by the assessee are similar and the issues involved in the said appeals are identical, we take up these appeals together. The grounds raised in AY 2000-01 are extracted below:- Ground No. 1- Order passed under Section 201 (1) of the Act though the proceedings are barred by limitation a) Erred in upholding the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the Income tax Act, prior to 1.4.2010, did not prescribe any time limit for initiation or completion of TDS proceedings. Hence the Courts were constrained to prescribe time limits for initiation of proceedings as well as for completion of proceedings. He submitted that the Hon ble Delhi High Court has prescribed a time limit of four years from the end of financial year (or 3 years from the end of assessment year) for initiation of TDS proceedings in the case of CIT Vs. NHK Japan Broadcasting Corporation (2008)(305 ITR 137)(Delhi). He further submitted that the Special Bench, in the case of Mahindra and Mahindra Ltd Vs. DCIT (2009)(122 TTJ 577)(SB) has prescribed time limit for completion of the TDS proceedings as one year from the end of the financial year in which proceedings u/s 201(1) of the Act was initiated. The decision of special bench has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011 . 15. Relying upon the above said proviso, the tax authorities have held that the impugned orders passed by the TDS officer were valid in law. 16. The Ld. counsel submitted that the proceedings have become time barred for the impugned assessment years prior to the insertion of sub-section 3 in Sec. 201 by Finance Act 2009 w.e.f. 1.4.2010, as per the time limits prescribed by the Courts. He contended that the above said amendment will not revive the limitation. The Ld. counsel further submitted that the question of applying amended provision retrospectively was examined by Hon ble Gujarat High Court in the case of Tata Teleservices Vs. Union of India (2016)(385 ITR 497). The time limit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITO (TDS) Kanpur vs. Uttar Pradesh Financial Corporation [2016] 71 taxmann.com 370 (Lucknow-Trib.). In the above said case, the AO initiated proceedings u/s 201(1) of the Act for assessment year 2005-06 on 09-02-2007. The AO passed the orders on 10-03-2011. The assessee contended the same is barred by limitation, as the order was passed beyond the period of 3 years from the end of the relevant assessment year. The Tribunal rejected the contentions of the assessee by holding that the proceedings were initiated within 3 years from the end of the assessment year, i.e., within permissible time limit. The Ld D.R also placed reliance on the Circular issued by CBDT explaining the amendments brought in by Finance (No.2) Act, 2009, through which sub-section (3) to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst 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 the letter dated 10-01-2005 as mere letter in the show cause notice issued on 02-12-2010. There should not be any dispute that the letter calling for required details is different from Show cause notice . Accordingly we are of the view that No show cause notice u/s 201/201(1A) was issued by the TDS Officer prior to 02.12.2010 and it was issued for the first time on that date only. 23. Sub-Section 3 to section 201 was inserted by Finance Act, 2009 w.e.f. 01.04.2010. The same reads as under:- 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 afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 first time on 02-12-2010. The Hon ble Delhi High Couth s held in the case of Vodafone Essar Mobile Services Ltd (supra), by following its own decision rendered in the case of CJ International hotels P Ltd (supra) has held that the time limit of four years prescribed for initiating the proceedings u/s 201(1) of the Act by its decision rendered in the case of NHK Japan Broadcasting Corporation (supra) does not require reconsideration, in view of the amendment brought in sec. 201 by insertion of sub-section 3. Accordingly it was held that the ITO could not initiate proceedings u/s 201(1) for periods earlier than four years pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Accordingly we quash the orders passed by the tax authorities for the above said years. ITA Nos. 4637/MUM/2013, 4638, 4639, 4633 4640/MUM/2012 (Assessment Years: 2000-01, 2001-02, 2002-03, 2003-04 2004-05) 32. The aforesaid cross appeals have been filed by the revenue against the appellate orders passed by the Ld. CIT(A) in assessee s appeals against the orders passed u/s 201(1) of the Act for the assessment years 2000-01 to 2004-05 by raising the following common grounds:- 1. (i) The Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 this appeal against the order dated 30.03.2013 passed by the Ld. CIT(A) whereby the Ld. CIT(A) has quashed the order passed by the AO u/s 201(1)/201(1A) by holding the same as time barred. The revenue has raised following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):- (i) On the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by treating the same as time barred. The Ld. DR submitted that as per the proviso to section 201 (3) of the Act, the AO was competent to pass order u/s 201 (1)/201 (1A) of the Act before 31st day of March, 2011 pertaining to financial year commencing on or before the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 after deduction. The provisions of sec. 201(1) read as under:- 201(1) Where any person, including the principal officer of a company,-- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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