TaxTMI 
TaxTMI 
2016 (7) TMI 1515
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.... 01/04/2010, hence these are not applicable to the present case. 3. The Ld. CIT (A) has erred in law and on facts of the case in relying on the case law in the case of Mahindra and Mahindra Ltd. Vs. DCIT 365 ITR 560 ignoring the fact that in the said case provision of sub-section (3) of section 201 was not the issue before the Hon'ble High Court." 2. The issue involved in the ground taken by the Revenue is that whether the order passed by the Assessing Officer u/s 201 of the Act is barred by limitation. 3. The facts of the case, in brief, are that the assessee is State Government corporation engaged in providing finance for trade and industry and for that purpose also resorts to borrowings. A survey was carried out by the Income Tax Department on the premises of the assessee on 16/10/2005 wherein it was noted that the assessee has not deducted the tax at source u/s 193 of the Act. The Assessing Officer therefore, issued show cause notice to the assessee u/s 201(1)/201(1A) of the Act on 09/02/2007. The assessee filed detailed submissions on 20/03/2007. The Assessing Officer was not satisfied with the explanation of the assessee and therefore, he passed an order u/s 201(1)/....
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.... and 11 months from end of the financial year in which proceedings under the aforesaid sections was initiated as also after a lapse of over 5 years and 11 months from the close of the relevant financial year. The only contention of the AO is that the impugned order dated 10-03-2011 was passed in accordance with proviso to section 201(3). He has further contended that at the time the decisions, as cited by the assessee in his written submissions, were rendered proviso to section 201(3) was not inserted which was only inserted by Finance (No.2) Act, 2009 w.e.f. 1- 04-2010. I find that in the decision cited by the assessee Corporation in the case of Mahindra and Mahindra Ltd. v. DCIT 313 ITR (AT) 263 which has been upheld by the Hon'ble Bombay High Court cited at 365 ITR 560. It is clearly upheld by the High Court that the maximum time limit for passing the order under section 201(1) or section 201(1A) is the same as prescribed under section 153(2) being one year from the end of the financial year in which proceedings under section 201(1) are inifiated. The Hon'ble Kerala High Court in the case of Iswara Bhat v. CIT (1993) 200 ITR 238 have very clearly laid down that:- ....
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....5th April 2010 much after insertion of section 201(3) in the I.T. Tax Act 1961, and relates to AY 2002-03. The issue before the Hon'ble High Court of Delhi was in relation to period of limitation in initiating proceedings u/s 201(1)/201(1A) of the I.T. Tax Act 1961. In the case of ACIT v. Catholic Relief Service (212) 28 Taxmann.com 168, order u/s 201(1)/201(1A) was passed on 27/04/2010 for FY 2002- 03, 2003-04 & 2004-05. The CIT (Appeals) following the decisions of Jurisdictional High Court held that the order dated 27.04.2010 passed by the AO were barred by limitation. The Tribunal in upholding the order of CIT (Appeals) held that since proceedings in this case have been initiated after the search on 16.11.2009, as concluded by the Commissioner (Appeals) and the amended provision had not come into force on the said date, the law on the date the proceedings were initiated was to be considered. Therefore, I quash the impugned order dated 10- 03-2011 passed under section 201(1)/201(1A) as barred by limitation. As the appeal of the assessee is being allowed on the issue of the impugned order dated 10.03.2011 being barred by limitation, I am not going into the merits of t....
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....r the expiry of- (i) 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; (ii) four 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. (4) The provisions of sub-clause (ii) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply 'to the time limit prescribed in sub-section (3)." 6. The Statement of Objects and Reasons of the Finance (No. 2) Bill, 2009 in relation to the amendment to Section 201 of the Act read as under: "Sub-clause (b) of clause 65 seeks to provide time limit for passing of order under sub-section (1) of section 201 in case of resident tax payers. It provides that no order shall be made under sub-section (1) of section 201, deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax in the case of a person resident in India, at any time after the expiry of ....
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....e a case of defalcation of government dues, (b) the employer has failed to pay the tax wholly or partly, under sub-section (1A) of section 192, as the employee would not have paid tax on such perquisites, (c) the deductee is a non-resident as it may not be administratively possible to recover the tax from the nonresident. It is proposed to make these amendments effective from 1st April, 2010. Accordingly it will apply to such orders passed on or after the 1st April, 2010." 8. It is claimed that, therefore, as far as the Department was concerned it understood the insertion of the proviso to Section 201(3) as providing "sufficient time for pending cases" in respect of which the proceedings were to be completed by 31st March, 2011. 9. However, it appears that contrary to the above understanding by the Department itself depicted in the above circular issued by the CBDT, the Department understood the above amendment as permitting it to initiate proceedings under Section 201 of the Act for treating an Assessee as an Assessee in default even in respect of alleged failure to deduct TDS for a period more than four years earlier to 31st March, 2011. 10. This question, after the ....
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....es on different occasions. The decision in NHK Japan was rendered on 23.04.2008. The Revenue's appeal was rejected on 3.7.2014. Although, the Supreme Court had granted special leave and has apparently stated in its final order rejecting the Revenue's appeal that the question is left open, the mere circumstance that the Parliament did not spell out any time limit before it did eventually in 2009 - and subsequently in 2014 - would not lead to the sequitur that this Court's ruling in NHK Japan requires consideration. In that judgment, the Division Bench had given various reasons, including the application of the rationale in Bhatinda District (supra). In NHK Japan, the Court had noticed that the facts in Bhatinda District (supra) judgment concern exercise of jurisdiction by a statutory authority in the absence of specific period of limitation. The Court in Bhatinda District (supra) held as follows: "17. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder an....
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....the issue is answered against the Revenue." 11. We have also gone through the decision on Hon'ble Delhi High Court rendered in the case of Vodafone Essar Mobile Services ltd. (supra). We noted that in this case while interpreting Circular No. 5 of 2010 dated 03/06/2010 of CBDT under para 28 of its order, the Hon'ble High Court held as under: "28. Circular 5 of 2010 of CBDT clarifying that the proviso to Section 201(3) of the Act was meant to expand the time limit for completing the proceedings and passing orders in relation to 'pending cases'. The said proviso cannot be interpreted, as is sought to be done by the Department, to enable it to initiate proceedings for declaring an WP (C) Nos.8535, 8536, 8537/2011 and Assessee to be an Assessee in default under Section 201 of the Act for a period earlier than four years prior to 31st March, 2011." 11.1 From the said finding of Hon'ble High Court, it is apparent that the proviso to section 201(3) was meant to expand the time limit for passing the order in relation to the pending cases. In the case of the assessee, we noted that the Assessing Officer initiated the proceedings u/s 201(1)/201(1A) for the impugned ....
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....ions along with the proviso to section 201(3) and the facts of the case. In the decisions with which the CIT(A) got confused related to the initiation of proceedings and the proceedings were not pending before the Assessing Officer when the proviso to section 201(3) was inserted with effect from 01/04/2010. In the case of the assessee before us, it is not denied that the proceedings have been initiated by the Assessing Officer within the permissible time i.e. on 09/02/2007 and therefore, the proceedings were pending as on the date when the proviso to section 201(3) was inserted into the statute and as per the provisions of section 201(3), the Assessing Officer could have passed the order at any time on or before the 31st March 2011 for financial year commending on or before 01/04/2007. 11.2 We have also gone through the decision of Hon'ble Gujarat High Court in the case of Tata Teleservices vs. Union of India [2016] 66 Taxmann.com 157 (Gujarat). In this case the question before the Hon'ble High Court was whether the section 201(3), as amended by the Finance Act, 2014 on 01/10/2014, would be applicable retrospectively or prospectively or whether the said provision would be ....