TMI Blog2019 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... led and thus the case was not time barred as wrongly assumed. The reliance placed on behalf of assessee on the decision of Tata Teleservices [ 2016 (2) TMI 414 - GUJARAT HIGH COURT] in totally misplaced as right of the Revenue to pass order has already become time barred at time of amendment by Finance (No. 2) Act 2014 in that case. Thus, with the lapse of time a substantive right had already accrued to the assessee which could not be taken away by a subsequent amendment. The limitation already barred could not be revived by later amendment. This is not the factual situation in the instant case as noted earlier. The other decisions relied upon by assessee are also clearly distinguishable as the issue in the instant case relates to law of limitation which is procedural one. The ratio of decision of Hon ble Supreme Court in Brij Mohan vs. CIT [ 1979 (8) TMI 2 - SUPREME COURT] is also not applicable as no return has been filed by the assessee in the instant case and the default is not merely committed in this case but is also continuing. The issue is thus decided against the assessee and in favour of the Revenue. The order of the CIT(A) therefore requires to be set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of loans/advances to its shareholders purportedly hit by s. 2(22)(e) of the Act and hence having failed to deduct TDS under s. 194 of the Act on such loans advances, the assessee preferred appeal before the CIT(A). 4.1 Before the CIT(A) the assessee made two fold submissions. (1) The action of the AO in passing the order under s. 201(1)7201(1 A) is time barred as such order could not be passed beyond six years from the financial year in which such default has been committed as contemplated under s. 201(3) of the Act and (2) the action of the AO in holding the routine business transactions with the shareholder as advance contemplated under s. 2(22)(e) of the Act and consequently holding assessee in default under s. 194 of the Act is not justified on merits. 4.2 The CIT(A), however, found merits in the first limb of arguments itself and held that the action of the AO in passing the order under s. 201(1) and 201(1A) vide order dated 17.10.2016 itself to be time barred as such order could not be passed beyond six years from the end of the financial year in terms of pre-amended s.201(1) of the Act. The CIT(A) thus quashed the order of the AO under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ospectively to orders which had become time-barred under old time-limit set by unamended section 201(3) and no order under section 201(1) deeming deduct or to be asses see in default could have been passed if limitation had already expired as on 1-10-2014 - Held, yesfPara 15] [In favour of assessee] The Hon'ble Gujarat High court has explained the provisions of section 201(3) as amended by Finance Act 2009, 2012 and 20[4 as under: 12. While considering the aforesaid question, provisions of section 201 of the Income Tax Act, as amended from time to time, are required to be considered. 12.1 Section 201 of the Act provides for consequences of failure to deduct tax in accordance with the provisions of the Act. Section 201 of the Act as amended by Finance-Act of 2008 with retrospective effect from 1/6/2002 reads as under: Consequences of failure to deduct or pay. 201. (1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (IA) of section 192, being an emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 121 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. (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,- (i) 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 deducted; and (ii) at one and one half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted 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 section 200. (2). Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.5 Subsequently, section 201(3) of the Act has been further amended by Finance Act No.2 of 2014 w.e.f. 1/10/2014, which reads as under: Consequences of failure to deduct or pay: 201 (3) No order shall he 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 seven years from the end of the financial year in which payment is made or credit is given. As stated hereinabove, question posed before this Court is whether section 201(3) of the Income Tax Act as amended by Finance Act No. 2 of 2014 would be applicable prospectively or retrospectively. 12.6 From the aforesaid chronological events and section 201 as amended from time to time, it emerges that prior to section 201 came to be amended by Finance Act No.2 of 2009, Income Tax Act did not provide for any limitation of time for passing an order under section 201(1) holding a person to be an assessee in default. It appears that in absence of such a time limit, dispute arose when the proceedings were taken up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/03/2013 (within 2 years from end of financial year in which TDS return is filed) as appellant has filed TDS return for current assessment year on 04/06/2010 and received on 07/07/2010. It is also observed that when section 201 (3) was amended by Finance Act 2014 wherein time limit for passing order has been extended for 7 years from end of assessment year to which it pertains, time limit for passing order u/s 201(3) as required in Finance Act 2009 had already expired and the present order has been passed on 17/10/2016 which is clearly time barred, on considering the decision of Hon'ble Gujarat High court as discussed herein above. As the decision of Hon'ble Gujarat High court is binding on subordinate authorities, hence following the ratio laid down by the Hon'ble Court, present order is held as time barred by limitation and consequential TDS liability raised by AO does not survive. The grounds of appeal are allowed in favour of the appellant. The CIT(A) accordingly set-aside the order of the AO and on the grounds of barred of limitation which resulting in question of liability under s. 201 (1)/201(1A) of the Act. 5. Aggrieved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted w.e.f. 01.04.2010 providing for a time limit of four years from the end of the financial year in which the payment is made or credit is given for the purposes of holding a person to be an assessee in default under s. 201(1) of the Act. The Ld. AR thereafter referred to the amendment made by Finance Act 2012, with retrospective effect from 01.04.2010 whereby the limitation period of four years was enlarged to six years. The Ld. AR thereafter submitted that the Finance (No. 2) Act 2014, however, yet again substituted the aforesaid sec. 201(3) w.e.f. 01.04.2014. As per the substituted section the limitation period has been re-fixed at seven years for holding a person as assessee in default under s. 201(1) for non-deduction/short deduction of tax in accordance with provisions of Chapter XVII-B of the Act. To elaborate, the Ld. AR submitted that at the time of payment made or credited giving rise to alleged default, that is financial year 2009-10, the assessee was governed by the pre-substituted provision of sec. 201(3) whereby a period of six years was provided for passing the order fixing liabilities for default. The Ld. AR contended that the default, if any, was committed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be reckoned for all pending matters where default under s. 201(1)/201(1 A) continues and subsists. It is further case of the Revenue that once the show-cause notice has been issued within the pre-amended period of six years i.e. at the time of existence of default, it was entitled to avail the extended period of seven years as limitation is only a procedural law. 9.2 A bare reading of sub section (3) to section 201 suggests that the aforesaid sub section was substituted by Finance (No. 2) Act 2014 w.e.f. 01.10,2014 whereby the limitation period for passing the order has been extended to seven years from the relevant financial year in which the payment is made or credit is given in substitution of erstwhile six years period. As per the pre-amended provisions, the order under s. 201(1) could be passed by 31.03.2016 whereas as per the substituted provisions, the Revenue was entitled to make the order on or before 31.03.2017. Thus, the order dated 17.10.2016 has been passed as per the limitation available under post-amended provision which however stands barred by limitation specified under pre-amended law. The question that is to be decided is whether the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no vested right in any procedural matter. In the present case, therefore, the extended period of limitation would alone apply. 10. In the light of principles laid down by the Hon ble Supreme Court and Hon ble Madras High Court as aforesaid, we have to examine whether the period prescribed under the unamended sec. 201(3) cannot be considered as statute of repose or a procedural one. Section 201(3) deals with law of limitation. Law of limitation has been held to be procedural law always having retrospective effect unless the amended statute provides otherwise as noted in CIT vs. Sadhuram (1981) 127 ITR 517 (Pun. Har.). The sub-section (3) under consideration before us providing limitation cannot be termed as substantive law much less a statute of repose. When it is not so termed, the exposition emanating from the above that in such cases of adjective law or procedural statute, amended provisions would apply. It is a trite proposition that neither Assessee nor Revenue should be given a step-motherly treatment. Hence, it is equitable to held that Revenue can claim benefit of extension of time under limitation provision provided by way of amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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